Does Corporate Reputation Still Affect the Cost of Equity in an Emerging Market? Evidence from Managerial Overconfidence

• 영문명: Does Corporate Reputation Still Affect the Cost of Equity in an Emerging Market? Evidence from Managerial Overconfidence
• 발행기관: People & Global Business Association
• 저자명: Nguyen Thi Hoa Hong Le Thi Thanh Tam
• 간행물 정보: 『Global Business and Finance Review』Vol.29 No.5, 19~32쪽, 전체 14쪽
• 주제분류: 경제경영 > 경영학
• 파일형태: PDF
• 발행일자: 2024.06.30

영문 초록

Purpose: This paper examines the relationship between corporate reputation, managerial overconfidence, and the cost of equity in the context of Vietnam - a fast-growing emerging market. Design/methodology/approach: The paper employs Pooled Ordinary Least Square, Fixed Effect Model and Random Effect Model to test the effects of corporate reputation and managerial overconfidence on the cost of equity on 391 non-financial Vietnamese listed firms during 2011 and 2020. In addition, Principal Component Analysis is also applied for calculating the corporate reputation score. Findings: The finding shows that firms with higher corporate reputation are associated with a lower cost of equity. The results also indicates that despite the insignificant relationship between managerial overconfidence and the cost of equity, firms operated by overconfident managers can promote the negative effect between corporate reputa-tion and the cost of equity. In addition, the more reputable corporates increase, the lower the cost of equity will be. Research limitations/implications: Firms in Vietnam can manage the cost of equity better. Furthermore, based on the managers' characteristics and the state of corporate reputation, investors can make appropriate investment decisions. Originality/value: Prior research shows that corporate reputation is negatively related to the implied cost of equity. However, in Vietnamese stock market, under managerial overconfidence, the association between corporate reputa-tion and the cost of equity is also greatly affected. Furthermore, changes in corporate reputation also have certain effects on the cost of equity, especially when corporate reputation is enhanced every year.

목차

I. Introduction

II. Literature Review and Hypotheses Development

III. Research Design

IV. Empirical Results and Discussion

V. Conclusion and Recommendations

References

키워드

Corporate reputation Cost of equity Emerging market Managerial overconfidence