The Impact of Applying Corporate Governance on Firm Value from the Perspective of the Cost of Capital: An Applied Study on the Egyptian Stock Market

Author

Rabab Mohamed Hassan

Abstract

This research aims to identify the impact of the application of corporate governance on
the value of the enterprise from the perspective of the cost of capital through an applied study,
and to identify the concept, objectives and advantages of applying corporate governance as
well as accounting principles and mechanisms, and also the impact of corporate governance
on disclosure and transparency, and the importance and mechanism of quality disclosure and
transparency In light of corporate governance, and to identify disclosure and transparency and
their impact on the cost of capital through knowledge of the elements of the cost of capital,
the relationship between transparency and the cost of capital, and approaches to studying the
relationship between the degree of information transparency and the cost of capital, which is
divided into the direct approach to studying the relationship between the degree of
information transparency And the cost of capital – the indirect approach to studying the
relationship between the degree of information transparency and the cost of capital, as well as
analyzing the value of the enterprise in the light of the impact of the cost of capital through
the approaches to measuring the value of the enterprise, which are divided into the book entry

the market entrance – the discounted cash flows entrance. The study concluded that the
importance of the cost of capital is due to its direct impact on maximizing the value of the
enterprise, and it also entails many financial decisions taken by the management, such as
using it when calculating the present value of net cash flows as a basis for differentiating
between available investment projects. The study recommends the need to develop and spread
awareness of transparency among preparers and users of financial statements and reports, as
well as the need to encourage investors to deal with financial analysts to follow up on the
activities of the facility and provide investors with information, which may reduce
information asymmetry.

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