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| Author: | Botosan, C. A. |
| Title: | Disclosure level and the cost of equity capital |
| Journal: | Accounting Review
1997 : JUL, VOL. 73:3, p. 323-349 |
| Index terms: | DISCLOSURE EQUITY CAPITAL COSTS CORPORATE STRATEGY |
| Language: | eng |
| Abstract: | The effect of disclosure level on the cost of equity capital is a matter of considerable interest and importance to the financial reporting community. The ongoing debate between proponents and opponents of greater disclosure has been unproductive because the benefits of greater disclosure are difficult to quantify. This article provides direct evidence of an association between cost of equity capital and disclosure level, and an indication of the magnitude of its effect. For a sample of companies with relatively low analyst following, the evidence suggests that greater disclosure is associated with a lower cost of equity capital , holding cross-sectional variation in market beta and firm size constant. |
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