The effect of the board of directors' characteristics on the cost of capital of the French companies

Abstract

The board of directors and the cost of capital play fundamental roles in the profitability and the perennity of any business organization. The objective of this research is to try to evaluate the effect of the board of directors' characteristics on the cost of capital of the French companies. The results of this study, based on a sample of 87 French companies belonging to the French index SBF120 during 2005, show that the majority of the board of directors' characteristics have an important and significant effect on the cost of equity capital, on the cost of debt and on the balanced average cost of capital of the French companies.