Relationship between Directors with Multiple Directorships and Cost of Capital

[Purpose]This study empirically analyzes the effect of a registered director with multiple directorships on cost of capital. It clarifies whether corporate governance changes according to the ratio of registered directors with multiple directorships, and whether this is actively reflected in cost of capital in the capital market. [Methodology]From 2011 to 2019, 4,032 samples were targeted. Correlation and OLS analyses were performed. To enhance the robustness of the study, a balanced panel was formed by extracting the firm with all nine years of data from 2011 to 2019, and a two－way fixed－effect model was used to simultaneously consider the heterogeneity of panel objects and time. [Findings]The study found that the increase in the number of directors with multiple directorships was negatively related to cost of capital. However, the presence of external directors did not present significant results. The results were the same in the analysis conducted using the balance panel. In the analysis that classified the cost of debt and weighted average cost of capital, only the latter was significant. [Implications]This study is meaningful as it confirmed that a director with multiple directorships has a significant effect on the governance structure. This was actively reflected in the capital market.