Table 2

Corporate integrity culture and the implied cost of equity capital

(1)(2)(3)(4)
Corporate Integrity−0.047**−0.050**  
(−2.162)(−2.321)  
Corporate Integrity Dummy  −0.106***−0.110***
  (−2.583)(−2.664)
Beta Value-Weighted 0.081** 0.081**
 (2.244) (2.247)
Idiosyncratic Risk 0.799*** 0.795***
 (5.086) (5.070)
Market Value of Equity−0.451***−0.399***−0.451***−0.400***
(−8.885)(−7.751)(−8.903)(−7.770)
Market-to-Book−0.030***−0.031***−0.030***−0.031***
(−4.904)(−5.115)(−4.916)(−5.126)
Book Leverage1.755***1.713***1.752***1.711***
(8.064)(7.920)(8.057)(7.911)
Momentum−0.270***−0.309***−0.269***−0.309***
(−6.120)(−6.961)(−6.121)(−6.960)
Analyst Forecast Dispersion−0.028−0.052−0.026−0.050
(−0.355)(−0.663)(−0.332)(−0.638)
Long-Term Growth Rate1.783***1.724***1.787***1.729***
(6.363)(6.184)(6.386)(6.211)
Return on Assets−1.768***−1.569***−1.766***−1.568***
(−4.876)(−4.342)(−4.871)(−4.337)
Year Fixed EffectsYesYesYesYes
Firm Fixed EffectsYesYesYesYes
Observations17,91017,91017,91017,910
Adjusted R20.6280.6290.6280.629

Note(s): The table presents the relation between corporate integrity culture and the implied cost of equity capital. The dependent variable is the implied cost of equity capital. The independent variables of interest are Corporate Integrity in Columns (1) and (2) and Corporate Integrity Dummy in Columns (3) and (4). Other variables are defined in Appendix A. The regressions also include year fixed effects and firm fixed effects. t-statistics is based on standard errors adjusted for heteroscedasticity and clustered at the firm level. *, ** and *** denote significance at the 10%, 5% and 1% levels, respectively

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