Lyu & Zhang: Institutional Investors and the Cost of Equity Capital – Evidence from Chinese Listed Companies


This paper investigates the relationship between institutional investors and the company’s cost of equity capital. Especially considering the large proportion of state-owned shares in China’s capital market; we divide the Chinese listed companies into state-owned shares and non-state-owned shares, and investigate the different effects of institutional investors on the company’s cost of equity capital in two groups. This study confirms that with the increase of the proportion of institutional ownership, the company reduced the cost of equity capital; Relative to state-owned enterprises, institutional investors help to reduce much more cost of equity capital of non-state-owned enterprises.


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