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221013 ||| eng |
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|a Love, Inessa
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| 245 |
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|a Investor Protection, Ownership, and the Cost of Capital
|h Elektronische Ressource
|c Love, Inessa
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| 260 |
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|a Washington, D.C
|b The World Bank
|c 2002
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| 300 |
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|a 56 p.
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| 653 |
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|a Macroeconomics and Economic Growth
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| 653 |
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|a Financial Development
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| 653 |
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|a Microfinance
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| 653 |
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|a Investment
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| 653 |
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|a Financial Literacy
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| 653 |
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|a Finance
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| 653 |
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|a Political Economy
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| 653 |
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|a Investor Protection
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| 653 |
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|a Capital Investment
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| 653 |
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|a Investment and Investment Climate
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| 653 |
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|a Social Protections and Labor
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| 653 |
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|a Emerging Markets
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| 653 |
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|a Investor
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| 653 |
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|a Debt Markets
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| 653 |
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|a Private Sector Development
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| 653 |
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|a Finance and Financial Sector Development
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| 653 |
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|a Equity
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| 653 |
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|a Economic Theory and Research
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| 653 |
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|a Holding
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| 653 |
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|a Labor Policies
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| 653 |
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|a Contract
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| 653 |
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|a Capital Stock
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| 653 |
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|a Investment Decisions
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| 653 |
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|a Equity Stakes
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| 700 |
1 |
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|a Hubbard, Glenn R.
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| 700 |
1 |
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|a Love, Inessa
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| 700 |
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|a Himmelberg, P. Charles
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| 041 |
0 |
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|a eng
|2 ISO 639-2
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| 989 |
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|b WOBA
|a World Bank E-Library Archive
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| 856 |
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|u http://elibrary.worldbank.org/content/workingpaper/10.1596/1813-9450-2834
|x Verlag
|3 Volltext
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|a 330
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| 520 |
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|a Himmelberg, Hubbard, and Love combine the agency theory of the firm with risk diversification incentives for insiders. Principal-agent problems between insiders and outsiders force insiders to retain a larger share in their firm than they would under a perfect risk diversification strategy. The authors predict that this higher share of insider ownership and the resulting exposure of insiders to higher idiosyncratic risk will result in underinvestment and higher cost of capital. Using firm-level data from 38 countries, the authors provide evidence in support of their theoretical model, showing that the premium for bearing idiosyncratic risk varies between zero and six percent and decreases in the level of outside investor protection. The results of the study imply that policies aimed at strengthening investor protection laws and their enforcement will improve capital allocation and result in higher growth. This paper—a product of Finance, Development Research Group—is part of a larger effort in the group to study corporate governance and access to finance. The authors may be contacted at cph15@columbia.edu or ilove@worldbank.org
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