We assess how owner's commitment to a firm influences the firm cost of capital, and whether the relation between the former and the latter is the consequence of the owner's higher opportunity cost of capital resulting from under-diversification. Using data on private Mediterranean firms and clustering projects by country, industry, and Initial Public Offering-year, we show that the cost of capital is magnified by entrepreneur's commitment, project total risk, and correlation between project and market return. © 2012 Elsevier B.V.
Cost of entrepreneurial capital and under-diversification: A Euro-Mediterranean perspective
Poti V.;
2013-01-01
Abstract
We assess how owner's commitment to a firm influences the firm cost of capital, and whether the relation between the former and the latter is the consequence of the owner's higher opportunity cost of capital resulting from under-diversification. Using data on private Mediterranean firms and clustering projects by country, industry, and Initial Public Offering-year, we show that the cost of capital is magnified by entrepreneur's commitment, project total risk, and correlation between project and market return. © 2012 Elsevier B.V.File in questo prodotto:
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