Disclosure and the cost of equity in international cross-listing

Abstract

International accounting standards, Disclosure, Cost of equity, Analyst following, G38, K22, M41,

Do corporate governance attributes affect adverse selection costs? Evidence from seasoned equity offerings

“…Coller and Yohn (1997), Healy andPalepu (1993, 2001), Schrand and Verrecchia (2004), and Zhang and Ding (2006) find that firm disclosure polices reduce the severity of information asymmetries. Consistent with the effect of reduced information asymmetries, Lang and Lundholm (2000) and Marquardt and Wiedman (1998) report that persistently high disclosure levels are associated with more positive announcement returns accompanying equity issues, and Eaton et al (2007) find a negative relation between disclosure levels and the cost of equity for international crosslistings.…”

Earnings management and market liquidity

“…Cheng et al (2006) find firms with greater transparency (based on S&P's financial transparency and information disclosure rankings) combined with stronger shareholder rights are associated with a lower cost of equity capital. Eaton et al (2007) empirically link measures of disclosure quality based on accounting standards with the cost of equity for internationally cross-listed firms. They find increased disclosure is associated with a lower cost of equity capital.…”

Financial disclosure, investor protection and stock market behavior: an international comparison

“…Glosten and Milgrom (1985), Diamond and Verrecchia (1991) and Kanodia and Lee (1998) also find that information asymmetry decreases as a firm's disclosure increases. Eaton et al (2007) study the relation between financial disclosure and information asymmetry by examining a sample of international firms cross-listed on the NYSE to see whether the increased disclosure associated with cross-listing results in a decrease in disclosure risk and systematic risk. The study examined three types of disclosure enhancement: accounting standards, disclosure accomplished through intermediaries such as analysts that follow a stock, and exchange/regulatory investor protections.…”