Disclosure interactions: accounting policy choice and voluntary disclosure effects on the cost of raising outside capital

Gietzmann, Miles B.; Trombetta, Marco

doi:10.1080/00014788.2003.9729646

Cited by 69 publications

(91 citation statements)

References 31 publications

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“…According to (Poshakwale & Courtis, 2005) higher information disclosure decreases the investors' ambiguities, thereby enabling them to obtain stable good results, which in turn enables the company to absorb long-term investments, since these investments seem better than short-term ones, which positively influences the firm's market price and supply capacity and therefore decreases, the cost of capital. This result is consistent with the results of (Zare et al, 2013;Articah & Clarkson, 2010;Kothari et al, 2009;Bertomeu et al, 2011;Gietzmann & Ireland, 2005;Gietzmann & Trombetta, 2003;Botosan, 1997). Thus, this result leads to the rejection of the second main null hypothesis in this study.…”

Section: Results Of Main Research Hypotheses Testsupporting

confidence: 82%

“…It is also supported by the results of (Khalifa & Ben Othman, 2015;Zare et al,. 2013;Lara et al, 2011;Gietzmann & Trombetta, 2003). Thus, this result leads to the rejection of the first main null hypothesis in this study.…”

Section: Results Of Main Research Hypotheses Testmentioning

confidence: 68%

“…They observed that accounting-based earnings' characteristics explain more of the cross-sectional differences in cost of equity capital than market-based characteristics do, but they failed to find a guide for a relation between cost of equity and their Basu's (1997) proxy as a gauge of conservatism. (Gietzmann & Trombetta, 2003) showed that accounting conservatism acts as a substitute for voluntary disclosure, given that voluntary disclosure reduces the cost of equity capital. They found a significant negative relationship between timely disclosure and cost of capital.…”

Section: Introductionmentioning

confidence: 99%

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The Impact of Accounting Conservatism and Voluntary Disclosure on the Cost of Capital of Industrial Companies in Jordan

Warad¹,

Al-Debi’e

2017

AFR

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This study aims at examining the impact of accounting conservatism and voluntary disclosure on the cost of capital of industrial companies in Jordan during the period (2009)(2010)(2011)(2012)(2013). Panel OLS regression analysis was employed to test the hypotheses of the study. The results of the full sample model revealed that accounting conservatism and voluntary disclosure have significant negative impacts on the firms' cost of capital.Furthermore, the results of the sub-samples which distinguish between large and small, as well as between high and low leverage firms showed that the sub-sample of large and small firms conforms to the full sample results. Across the sub-sample of high leverage firms, the results showed that only voluntary disclosure has a significant negative impact on the firm's cost of capital. On the other hand, only accounting conservatism has a significant negative impact on the firm's cost of capital across the sub-sample of low leverage firms.

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Section: Results Of Main Research Hypotheses Testsupporting

confidence: 82%

Section: Results Of Main Research Hypotheses Testmentioning

confidence: 68%

Section: Introductionmentioning

confidence: 99%

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The Impact of Accounting Conservatism and Voluntary Disclosure on the Cost of Capital of Industrial Companies in Jordan

Warad¹,

Al-Debi’e

2017

AFR

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“…Gietzmann and Trombetta (2003) claim accounting conservatism to be a substitute for voluntary disclosure. Hence, as the firms increase the extent of their voluntary disclosures, the cost of raising capital is alleviated since this cost depends on how much information is attained by the firms' potential investors.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

An Empirical Analysis On How Conservatism Influences Cost Of Equity Capital: Evidence From Turkey

Öner¹,

Aybars²,

Ekizler³

2017

Öneri Dergisi

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An extensive review of literature focusing on theoretical and analytical studies reveals that equity markets will benefit from accounting conservatism due to the increase in overall information quality. Conditional conservatism, which is evaluated as to the asymmetry between the impact of good and bad news on earnings, is regarded to be a substitute of discretionary disclosure. Therefore, as the firms increase the extent of their voluntary disclosures, the cost of raising capital is alleviated since this cost depends on how much information is attained by the firms' potential investors. This study conducts a two stage analysis on a data set of nonfinancial firms listed on Borsa Istanbul 2005-2014, inclusive. Accordingly, the existence of conditional conservatism is tested by using cross-sectional regression based on the asymmetric timeliness model developed by Basu (1997) modified by Khan and Watts (2009). Consequently, the resulting firm-year measure of conditional conservatism is used as the explanatory variable of the panel data analysis. The originality of the paper stems from the fact that it attempts to provide evidence on the economic consequences of discretionary accounting practices from Turkey in this specific strand of literature related to the equity investors' required rates of return. Mehtap ÖNER • Aslı AYBARS • Hüseyin EKİZLER İHtİyAtliliğin ÖZ sErmAyE mAlİyEtİ ÜZErİndEkİ Etkİsİ: tÜrkİyE ÖrnEğİ ÖzTeorik ve analitik çalışmalara dayanan geniş bir literatür taraması sermaye piyasalarının, genel bilgi kalitesini arttıracağı gerekçesiyle muhasebedeki ihtiyatlılıktan fayda sağlayacağını ortaya koymuştur. İyi ve kötü haberlerin kazançlar üzerindeki asimetrik etkisi ile ölçülen koşula bağlı ihtiyatlı-lığın, isteğe bağlı açıklamaların yerine kullanılabildiği düşünülmektedir. Dolayısıyla, firmalar isteğe bağlı açıklamalarının miktarını arttırdıkça, sermaye bulma maliyetleri azalmaktadır; çünkü bu maliyet firmanın potansiyel yatırımcıları tarafından ne kadar bilgi edinildiğine bağlıdır. Bu çalışma, 2005-2014 yıllarını kapsayan bir gözlem süreci boyunca Borsa İstanbul' da yer alan reel sektör firmalarına ilişkin bir veri grubu üzerinde iki aşamalı bir analiz yapmaktadır. Bu doğrultuda, koşula bağlı ihtiyatlılığın varlığı kesitsel regresyon yöntemi kullanılarak Basu (1977) tarafından geliştirilen ve sonra Khan and Watts (2009) tarafından genişletilen kazancın asimetrik zamanlılığı modeli ile test edilmiş-tir. Buna bağlı olarak, bahsedilen regresyon analizi sonucunda ortaya çıkan firma-yıl bazındaki koşula bağlı ihtiyatlılık ölçüsü panel veri analizinde açıklayıcı değişken olarak kullanılmıştır. Çalışmanın öz-günlüğü, hisse senedi yatırımcılarının talep ettiği getiriye ilişkin bu spesifik literatür başlığında, Tür-kiye' deki esnek muhasebe uygulamalarının ekonomik sonuçları ile ilgili kanıt sunmaya çalışmasından ileri gelmektedir.

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“…The endogenous voluntary disclosure investigated by Gietzmann and Trombetta (2003). They found that firms communicate information about their condition voluntarily by disclosing high quality information and selection of accounting policies.…”

Section: Literature and Conceptual Frameworkmentioning

confidence: 99%

The Relation between Disclosure Quality and Information Asymmetry: Empirical Evidence from Iran

Bahmani¹

2014

International Journal of Financial Research

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Information asymmetry and management incentive make important problem in the efficient allocation of resources in a capital market. Improving disclosure quality have crucial role in mitigating these problems. This study examines the relationship between disclosure quality and information asymmetry in TSE. To examine this hypothesis, 125 companies listed in TSE, during 2008 up to 2012 have been studied. The first hypothesis suggests that there is a negative relationship between the quality of corporate disclosure and earnings quality. This result shows that disclose financial information in reliable and timeliness manner decrease information asymmetry in form of earning quality.

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Disclosure interactions: accounting policy choice and voluntary disclosure effects on the cost of raising outside capital

Cited by 69 publications

References 31 publications

The Impact of Accounting Conservatism and Voluntary Disclosure on the Cost of Capital of Industrial Companies in Jordan

The Impact of Accounting Conservatism and Voluntary Disclosure on the Cost of Capital of Industrial Companies in Jordan

An Empirical Analysis On How Conservatism Influences Cost Of Equity Capital: Evidence From Turkey

The Relation between Disclosure Quality and Information Asymmetry: Empirical Evidence from Iran

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