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

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.