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January 1, 2015 Countries Can Boost Business by Increasing Citizens’ Rights Companies find it cheaper to acquire growth capital in countries where civil rights are stronger, because investors see less risk that their capital will be arbitrarily expropriated, according to a study of firms in 44 countries by Narjess Boubakri of American University of Sharjah in the UAE and colleagues. A 1-standard-deviation increase in political rights is associated with a 38-basis-point decrease in corporations’ cost of equity capital. Thus there are strong economic reasons for countries to ensure their citizens’ civil rights. SOURCE: Political rights and equity pricing

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