Financial Disclosure and the Cost of Equity Capital: The Empirical Test of the Largest Listed Companies of Kazakhstan

Baimukhamedova, Aizhan; Baimukhamedova, Gulzada; Luchaninova, lbina

doi:10.13106/jafeb.2017.vol4.no3.5

Cited by 20 publications

(20 citation statements)

References 47 publications

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“…Besides, the authors did not see any relationship between firm size, liquidity, capital structure, ownership type and the disclosure of sustainable development information. Baimukhamedova, Baimukhamedova and Luchaninova (2017) investigated the relationship between disclosures of corporate financial information in the annual reports with firms' costs of equity capital. The research sample consists of 37 largest and most liquid firms listed on Kazakhstan Stock Exchange (KASE) and the results showed that the higher the level of financial information disclosure, the lower the costs of equity capital of firms.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Determinants of Sustainability Disclosure: Empirical Evidence from Vietnam

Nguyen¹,

Nguyen²

2020

JAFEB

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The paper investigates the effect of the factors on the disclosure of sustainable development information of enterprises. The research sample includes 120 manufacturing companies listed on Vietnam stock market in 2019. This research uses ordinary least squares (OLS) to address econometric issues and to improve the accuracy of the regression coefficients. The empirical results show that five variables have a statistically significant positive effect on disclosure of sustainable development information of manufacturing companies, including firm size (SIZE), independence of board of directors (BOD), foreign ownership (FRO), return on equity (ROE), and financial leverage (LEV). The results indicate that state ownership (STO) has a statistically significant negative effect on disclosure of sustainable development information of manufacturing companies listed on Vietnam stock market. Besides, the research results also show there is a large difference in the disclosure of sustainable development information between listed companies in Vietnam, those of other emerging economies in the region, and the companies in developed markets. Therefore, this paper provides a new insight to managers and related parties on how to improve the firm's sustainability disclosure to bring benefit for the firm itself and the stakeholders by reasonable decisions about the factors that affect disclosure of sustainable development information.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Determinants of Sustainability Disclosure: Empirical Evidence from Vietnam

Nguyen¹,

Nguyen²

2020

JAFEB

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“…Improving information transparency can help alleviate the information asymmetry between managers and shareholders, enhance the supervision on managers, reduce the likelihood of moral hazard of the management, and reduce agency costs (Baimukhamedova, Baimukhamedova, & Luchaninova, 2017). The principal-agent problem of firms with poor information transparency is always more serious.…”

Section: Regression Resultsmentioning

confidence: 99%

The Effect of Maturity Mismatch between Investing and Financing on Audit Pricing

Yin¹,

ZHANG²

2020

JAFEB

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This research investigates the consequences of the increase in corporate use of short-term debt in China over the past decades. Using a sample of Chinese firms from 2007 to 2018, we empirically explore the effect of corporate use of short-term debt for long-term investment (SFLI) on audit pricing. We first examine the relationship between SFLI and audit pricing for different groups of firms. Then, we investigate the role of the increase in short-term debt in alleviating principal-agent conflicts and reducing agency costs. We have four primary empirical findings. First, auditors tend to charge SFLI clients higher fees. Second, the negative relationship between SFLI and audit fee is found in private firms, firms audited by Chinese domestic auditors, and firms with higher information asymmetry. Third, the time auditors spent on SFLI clients is significantly more than that spent on non-SFLI clients, suggesting that the decrease in audit fee is not due to the decrease in cost. Fourth, SFLI significantly reduces the agency costs of the firm, which auditors regard as a low risk signal and grant an audit fee discount. Our findings suggest that the decrease in debt maturity, not only influences managerial behaviors, but also influences auditors' risk assessment and pricing decisions.

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“…Cash holdings reduce dependence on external financing and thus decrease a firm's association with the external market. Therefore, systematic risks from capital market decrease as cash holdings decrease, which leads to the reduction of required returns (Baimukhamedova, Baimukhamedova & Luchaninova, 2017).…”

Section: Hypothesis Developmentmentioning

confidence: 99%

Financial Flexibility on Required Returns: Vector Autoregression Return Decomposition Approach

Yim¹

2020

JIDB

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Purpose: Prior studies empirically examine how financial flexibility is related to required returns by using realized returns and considering cash holdings as net debts, but they fail to find consistent results. Conjecturing that inappropriate proxy of required returns and aggregation of cash and debts caused the inconsistent results, this study revisits this topic by using a refined proxy of required returns and separating cash holdings from debts. Research design, data and methodology: This study uses a multivariate regression model to investigate the relationship between required returns on cash holdings and financial leverage. The required returns are estimated using the return decomposition method by vector autoregression model. Empirical tests use US stock market data from1968 to 2011. Results: Empirical results reveal that both cash holdings and leverage are positively related to required returns. The positive relation is stronger in economic downturns than in economic upturns. Conclusions: Three major findings are drawn. First, risky firms prefer large cash balance. Second, information shocks in the realized returns caused failure of prior studies to find consistent positive relationship between leverage and realized returns. Third, cash and leverage are related to required returns in the same direction; therefore, cash cannot be considered as negative debts.

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Financial Disclosure and the Cost of Equity Capital: The Empirical Test of the Largest Listed Companies of Kazakhstan

Cited by 20 publications

References 47 publications

Determinants of Sustainability Disclosure: Empirical Evidence from Vietnam

Determinants of Sustainability Disclosure: Empirical Evidence from Vietnam

The Effect of Maturity Mismatch between Investing and Financing on Audit Pricing

Financial Flexibility on Required Returns: Vector Autoregression Return Decomposition Approach

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