Table 8

Lagged corporate integrity culture and the implied cost of equity capital

(1)(2)(3)(4)
Corporate Integrity t-1−0.023*−0.026*  
(−1.681)(−1.686)  
Corporate Integrity Dummy t-1  −0.078*−0.078*
  (−1.713)(−1.709)
Beta Value-Weighted t-1 0.056 0.056
 (1.288) (1.282)
Idiosyncratic Risk t-1 0.575*** 0.571***
 (3.176) (3.163)
Market Value of Equity t-1−0.360***−0.326***−0.361***−0.327***
(−5.885)(−5.224)(−5.906)(−5.244)
Market-to-Book t-1−0.029***−0.030***−0.029***−0.030***
(−3.882)(−4.015)(−3.885)(−4.017)
Book Leverage t-11.540***1.517***1.541***1.518***
(6.351)(6.263)(6.355)(6.265)
Momentum t-1−0.247***−0.274***−0.247***−0.274***
(−4.843)(−5.331)(−4.854)(−5.338)
Analyst Forecast Dispersion t-1−0.035−0.058−0.033−0.056
(−0.363)(−0.597)(−0.345)(−0.577)
Long-Term Growth Rate t-11.876***1.826***1.875***1.826***
(5.522)(5.386)(5.528)(5.395)
Return on Assets t-1−1.295***−1.159***−1.296***−1.161***
(−3.085)(−2.762)(−3.087)(−2.764)
Year Fixed EffectsYesYesYesYes
Firm Fixed EffectsYesYesYesYes
Observations14,48914,48914,48914,489
Adjusted R20.6460.6460.6460.646

Note(s): This 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 corporate integrity measure and other control variables are from the past year. 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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