In this study, we investigate how labor protection institutions and the presence of controlling shareholders interact to determine a frm’s cost of equity capital in an international setting. Our frm- and country-level analyses reveal that frms in countries with greater labor rights have a higher cost of equity, over and above the diferences explained by investor protection environments and frm- and country-level risk factors. We fnd that operating leverage and information asymmetry serve as channels through which labor protection increases the cost of equity capital. More interestingly, the detrimental efect of labor protection on the cost of equity is mitigated in the presence of controlling shareholders, especially in the case of a family controlling owner, indicating the efectiveness of controlling owners at coping with difcult labor relations. The economic signifcance of this advantage is non-trivial: a one-unit increase in the labor market regulation index increases the annual cost of equity by 0.776% in widely held frms, whereas it increases by only 0.415% in frms with controlling shareholders. Our study identifes better labor relations as a potential channel through which concentered ownership afects the interaction of labor power and the cost of equity capital.