Risk Committees and Implied Cost of Equity Capital

Risk Committees and Implied Cost of Equity Capital

We investigate the association between the existence of risk committee and implied cost of equity capital in a unique institutional setting where the formation of the board risk committee as part of the risk governance mechanism is not mandatory in the Gulf Cooperation Council (GCC) financial instit...

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Veröffentlicht in:International review of finance 2018-12, Vol.18 (4), p.689-703
Hauptverfasser: Al‐Hadi, Ahmed, Hussain, Syed Mujahid, Al‐Yahyaee, Khamis Hamed, Al‐Jabri, Hamdan Saif
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Capital costs
Cost of capital
Equity capital
Risk premiums
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container_issue 4
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container_title International review of finance
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creator Al‐Hadi, Ahmed
Hussain, Syed Mujahid
Al‐Yahyaee, Khamis Hamed
Al‐Jabri, Hamdan Saif
description We investigate the association between the existence of risk committee and implied cost of equity capital in a unique institutional setting where the formation of the board risk committee as part of the risk governance mechanism is not mandatory in the Gulf Cooperation Council (GCC) financial institutions. Using data from the six GCC countries, we find that implied cost of equity capital is negatively associated with the existence of board risk committee. These findings indicate that GCC financial firms with better risk governance practices at board level have lower implied cost of equity capital. We contribute to the extant literature on‐board risk governance in emerging market context.
doi_str_mv 10.1111/irfi.12147
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source EBSCOhost Business Source Complete; Access via Wiley Online Library
subjects Capital costs
Cost of capital
Equity capital
Risk premiums
title Risk Committees and Implied Cost of Equity Capital
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