625 research outputs found
The effect of carbon dissemination on cost of equity
This study examines whether firms can influence their cost of equity (COE) by broadly disseminating their carbon information over Twitter. We study firms' dissemination decisions of carbon information by developing a comprehensive measure of carbon information that a firm makes on Twitter, referred to as iCarbon . Using a sample of 1,737 firmâyear observations for 584 nonfinancial firms with a Twitter account and listed on the U.S. NASDAQ stock exchange over the period 2009â2015, we find that iCarbon is significantly and negatively associated with COE. Our results are consistent after determining the effect of Bloomberg's environmental and environmental, social, and governance disclosure. The findings also hold when using alternative measures of COE and iCarbon
Disentangling the Effects of Corporate Disclosure on the Cost of Equity Capital: A Study of the Role of Intellectual Capital Disclosure
In this article, we investigate whether intellectual capital (IC) and financial disclosures jointly affect the firmâs cost of equity capital. In contrast to prior research, we disaggregate disclosures into IC and financial disclosures and examine whether the two disclosure types are jointly related to the cost of equity capital. We also investigate whether IC and financial disclosures have an interaction effect on the cost of equity capital. Using data for a sample of 125 U.K. firms, we find a negative relationship between the cost of equity capital and IC disclosure. We find that the relationship between financial disclosure and the cost of equity capital is magnified when combined with IC disclosure. In addition, we find that IC and financial disclosures interact in shaping their effects on the cost of equity capital. Further analyses suggest that the effect of financial disclosure on the cost of equity capital is augmented for firms characterized by a medium level of IC disclosure. These results provideimportant insights into the relationship between disclosures and cost of equity capital and have policy and practical implications
Implied cost of capital investment strategies - evidence from international stock markets
Investors can generate excess returns by implementing trading strategies based on publicly available equity analyst forecasts. This paper captures the information provided by analysts by the implied cost of capital (ICC), the internal rate of return that equates a firm's share price to the present value of analysts' earnings forecasts.
We find that U.S. stocks with a high ICC outperform low ICC stocks on average by 6.0% per year. This spread is significant when controlling the investment returns for
their risk exposure as proxied by standard pricing models. Further analysis across the world's largest equity markets validates these results
Risk management and the cost of equity: evidence from the United Kingdomâs non-life insurance market
Terminal valuations, growth rates and the implied cost of capital
This article is published with open access at Springerlink.comWe develop a model based on the notion that prices lead earnings,
allowing for a simultaneous estimation of the implied growth rate and the cost of
equity capital for US industrial sectors. The major difference between our approach
and that in prior literature is that ours avoids the necessity to make assumptions
about terminal values and consequently about future growth rates. In fact, growth
rates are an endogenous variable, which is estimated simultaneously with the
implied cost of equity capital. Since we require only 1-year-ahead forecasts of
earnings and no assumptions about dividend payouts, our methodology allows us to
estimate ex ante aggregate growth and risk premia over a larger sample of firms than
has previously been possible. Our estimate of the risk premium being between 3.1
and 3.9 % is at the lower end of recent estimates, reflecting the inclusion of these
short-lived companies. Our estimate of the long run growth is from 4.2 to 4.7 %
Impact of Excess Auditor Remuneration on the Cost of Equity Capital around the World
This study examines the relation between excess auditor remuneration and the implied required rate of return (IRR hereafter) on equity capital in global markets. We conjecture that when auditor remuneration is excessively large, investors may perceive the auditor to be economically bonded to the client, leading to a lack of independence. This perceived lack of independence increases the information risk associated with the credibility of financial statements, thereby increasing IRR. Consistent with this notion, we find that IRR is increasing in excess auditor remuneration, but only in countries with stronger investor protection. Finding evidence of a relation only in stronger investor protection countries is consistent with the more prominent role of audited financial statements for investors' decisions in these countries. In settings in which investors are less likely to rely on audited financial statements and instead rely on alternative sources of information (i.e., in countries with weaker investor protection), the impact of client-auditor bonding should have less of an effect on investors' decisions.Yeshttps://us.sagepub.com/en-us/nam/manuscript-submission-guideline
A relação entre o nĂvel voluntĂĄrio de transparĂȘncia e o custo de capital prĂłprio das empresas brasileiras nĂŁo-financeiras
O objetivo principal desta pesquisa Ă© verificar empiricamente a existĂȘncia de relação significativa entre o nĂvel de disclosure voluntĂĄrio de informaçÔes e custo de capital prĂłprio de empresas brasileiras nĂŁo financeiras. Ă esperado que um maior nĂvel de disclosure esteja relacionado a um menor custo de capital prĂłprio pela redução do risco percebido pelos investidores. A fim de medir o nĂvel de disclosure voluntĂĄrio das empresas foi utilizado um questionĂĄrio desenvolvido para este fim. O custo de capital prĂłprio foi obtido com base em informaçÔes publicamente disponĂveis das empresas. Foi encontrada uma relação negativa e significante entre as variĂĄveis de interesse, indicando que as empresas que mais divulgam informaçÔes voluntariamente conseguem captar capital prĂłprio a uma taxa mais barata
Mandatory IFRS Reporting Around the World: Early Evidence on the Economic Consequences
Ownership, competition, and financial disclosure
A firm's incentive to disclose has been linked empirically to a range of variables, including information asymmetry, agency costs, political costs, and proprietary costs. While the intuition underlying each of the variables seems plausible, Verrecchia (2001) argues that disclosure models can be characterized as an eclectic mingling of highly idiosyncratic economic-based models, and challenges researchers to take the first steps to unification. First, we investigate the role of ownership and competition variables in explaining voluntary segment disclosures in Australian firms and find support for both these variables. Second, drawing on theory supported by the corporate governance, strategic management and industrial organization literatures, we introduce a new economic variable that unifies both ownership and competition variables. We find that the unifying variable performs better than our model focusing on ownership and competition variables alone. We conduct a series of robustness tests on the model and find that its significance is not affected by the inclusion of disclosure control variables identified in prior literature, the change in standard, and acquisitions and disposals of physical assets
- âŠ