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 firm‐year observations for 584 nonfinancial firms with a Twitter account and listed on the U.S. NASDAQ stock exchange over the period 2009–2015, 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

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

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

Determining Factors of the Level of Disclosure of Information on Business Combinations with the Entry into Force of the Accounting Standard CPC 15

This paper aimed to investigate information disclosure on business combination transactions that took place in Brazil in 2010, when the Accounting Standard CPC 15 entered into force, and evaluate which were the determining factors of the level of disclosure of information related to it. To evaluate the disclosure level, a disclosure index of business combinations (INDCOMB) was prepared, having the disclosure index developed by Shalev (2009) as a basis. We evaluated, in the light of the literature on disclosure and business combinations, whether the following factors influenced on the disclosure level: acquiring company size, recognized percentage of overprice for expected future profitability in relation to the transaction value, dispersion of capital of the acquiring company, audit firm size, and participation of the acquiring company in American Depositary Receipts (ADRs) programs. The control variables used were listing of the acquiring company in the various segments of BM&FBOVESPA, operation sector, origin (state, private company with national capital or private company with foreign capital), and relative acquired company size in relation to the acquiring company. We analyzed business combination transactions that took place in 2010, reported by 40 open capital companies involved in 76 transactions. We conclude that the audit firm size and the relative acquired company size were factors that influenced on the level of disclosure of information regarding business combinations in 2010. The other factors showed no conclusive results

A relação entre o nível voluntário de transparência e o custo de capital próprio das empresas brasileiras não-financeiras

O objetivo principal desta pesquisa é verificar empiricamente a existência de relação significativa entre o nível de disclosure voluntário de informações e custo de capital próprio de empresas brasileiras não financeiras. É esperado que um maior nível de disclosure esteja relacionado a um menor custo de capital próprio pela redução do risco percebido pelos investidores. A fim de medir o nível de disclosure voluntário das empresas foi utilizado um questionário desenvolvido para este fim. O custo de capital próprio foi obtido com base em informações publicamente disponíveis das empresas. Foi encontrada uma relação negativa e significante entre as variáveis de interesse, indicando que as empresas que mais divulgam informações voluntariamente conseguem captar capital próprio a uma taxa mais barata