Ownership Structure and Cost of Debt: Evidence from Emerging Markets

This research provides a complex investigation of the impact of ownership structure characteristics on the cost of debt in BRICS companies in 2004-2014. Specifically, we focus on the role of ownership concentration, institutional ownership, government ownership, and insider ownership for dependent variable. The cost of debt, as the dependent variable, here is considered from two methodological points of view: as a spread of corporate bonds originated that reflects riskiness of a company at the issuance of a bond, and as implied cost of total interest-bearing debt of a company, that measures the real cost of financing. The empirical study includes sample collection (202 non-financial public companies throughout BRICS), construction and testing of the model using advanced econometric tools: multivariate OLS regressions, static panel data analysis, and dynamic panel data analysis with GMM estimator. As a result, there are revealed the following relationships: the ownership concentration, the institutional ownership, the government ownership has a negative impact on the cost of debt, while the insider ownership affects the cost of debt positively.