01371nas a2200169   4500008004100000245009100041210006900132260000900201300001200210490000700222520078800229653001201017653001701029100001801046700001701064856012001081       2007                        eng d00aShareholder Protection and the Cost of Capital: Evidence from German and Italian Firms0 aShareholder Protection and the Cost of Capital Evidence from Ger  c2007  a153-1720 v183 aWe investigate the interaction of investor protection, ownership concentration and firms’ financing and investment decisions in a model where investor protection is allowed to vary across firms. Using firm panel data for Italy, we construct firm level variables to capture the degree of investor protection which is specific to the firm and observable by outside shareholders. We find that the stronger the investor protections the lower the fraction of equity that is owned by insiders. We also find that the higher the insider equity ownership the higher the idiosyncratic risk premium in the cost of capital. Finally, our results indicate that the magnitude of capital stock distortions is quite important when shareholder protection is weak and ownership concentration is high.10aFinance10aOSU-Cascades1 aElston, Julie1 aRondi, Laura  u/biblio/shareholder-protection-and-cost-capital-evidence-german-and-italian-firms-0