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.

P. Pattitoni, B. Petracci, V. Potì, M. Spisni (2013). Cost of Entrepreneurial Capital and Under-diversification: a European Mediterranean Small Medium Businesses Perspective. RESEARCH IN INTERNATIONAL BUSINESS AND FINANCE, 27, 12-27 [10.1016/j.ribaf.2012.04.004].

Cost of Entrepreneurial Capital and Under-diversification: a European Mediterranean Small Medium Businesses Perspective

PATTITONI, PIERPAOLO;PETRACCI, BARBARA;SPISNI, MASSIMO
2013

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.
2013
P. Pattitoni, B. Petracci, V. Potì, M. Spisni (2013). Cost of Entrepreneurial Capital and Under-diversification: a European Mediterranean Small Medium Businesses Perspective. RESEARCH IN INTERNATIONAL BUSINESS AND FINANCE, 27, 12-27 [10.1016/j.ribaf.2012.04.004].
P. Pattitoni; B. Petracci; V. Potì; M. Spisni
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/119604
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