Ownership structure and cost of equity capital: Tunisian evidence

Mejda Dakhlaoui, Marjène Rabah Gana

Research output: Contribution to journalJournal articlepeer-review

4 Scopus citations


This paper aims to examine the effect of ownership structure on the cost of equity capital in the Tunisian context. Using panel data, the study provides evidence for a negative relationship between ownership concentration and cost of equity capital. However, most ownership composition variables validate the entrenchment effect. Results show an inverted U-shaped relationship between institutional ownership, foreign ownership and cost of equity capital. However, a U-shaped relationship is found between state ownership and the dependent variable. To alleviate endogeneity concerns and establish that the results are robust, the authors re-estimated the regressions using a dynamic approach. It supports the entrenchment effect of ownership concentration. A U-shaped relationship between this variable and the cost of equity capital is confirmed. However, a concave relationship is found when considering ownership composition variables. As for family ownership, the results from static and dynamic approaches are convergent and in favour of entrenchment effects.

Original languageEnglish
Pages (from-to)96-121
Number of pages26
JournalInternational Journal of Business Governance and Ethics
Issue number1
StatePublished - 2020


  • Corporate governance
  • Cost of equity capital
  • Dynamic panel GMM estimator
  • Nonlinear effects
  • Ownership structure


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