The Financial Structure of Small and Medium Firms and the Impact on the Cost of Capital

2014 ◽  
Keyword(s):  
Cost Of Capital ◽  
Financial Structure ◽  
The Cost ◽  
The Impact ◽  
Medium Firms

Does environmental information disclosure affect the performance of energy-intensive firms’ borrowing ability? Evidence from China

2018 ◽  
Vol 29 (5) ◽  
pp. 685-705 ◽  
Author(s):  
Haiqing Hu ◽  
Chun-Ping Chang ◽  
Minyi Dong ◽  
Wei-Na Meng ◽  
Yu Hao
Keyword(s):  
Capital Market ◽  
Information Disclosure ◽  
Cost Of Capital ◽  
Environmental Information ◽  
Influential Factors ◽  
Environmental Information Disclosure ◽  
Loan Size ◽  
The Cost ◽  
The Impact ◽  
Positive Effect

In recent years, a growing strand of China’s listed companies chose to disclose environmental information, which may potentially affect their financial performance then further influence its performance of financial supports. To quantitatively investigate the impact of enterprise’s environmental information disclosure on the ability of firms’ borrowing in China, this paper divides the measurements of information disclosure into five categories and evaluates firms’ performance in capital market through its availability of a loan and the cost of capital. In total, 97 listed energy-intensive companies in China are selected and their data covering the period of 2000–2014 are utilized for empirical study. The empirical results indicate that enterprise’s environmental information disclosure appears to have a significantly positive effect on the loan size available, while the cost of capital is less sensitive to environmental information disclosure. The empirical evidence also suggests that, among the five aspects of information disclosure measurements, the future plan and monetary information are the most influential factors of the cost of capital.

The Impact of Price Regulation on the Cost of Capital

2013 ◽  
Vol 84 (2) ◽  
pp. 139-158 ◽  
Author(s):  
Fernando T. Camacho ◽  
Flavio M. Menezes
Keyword(s):  
Cost Of Capital ◽  
Price Regulation ◽  
The Cost ◽  
The Impact

Information risk, cost of equity and stock returns: evidence from Iranian firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmad Abdollahi ◽  
Mehdi Safari Gerayli ◽  
Yasser Rezaei Pitenoei ◽  
Davood Hassanpour ◽  
Fatemeh Riahi
Keyword(s):  
Stock Returns ◽  
Capital Market ◽  
Cost Of Capital ◽  
Positive Impact ◽  
Stock Exchange ◽  
Cost Of Equity ◽  
Content Type ◽  
Information Risk ◽  
The Cost ◽  
The Impact

Purpose A long history of literature has considered the role of information risk in determining the cost of equity. The question that has remained unanswered is whether information risk plays any systematic role in determining the cost of equity. One of the fundamental decisions that every business needs to make is to assess where to invest its funds and to re-evaluate, at regular intervals, the quality of its existing investments. The cost of capital is the most important yardstick to evaluate such decisions. Greater information is associated with the lower cost of capital via mitigating transaction costs and/or reducing estimation risk and stock returns. This study aims to investigate the impact of information risk on the cost of equity and corporate stock returns. Design/methodology/approach The research sample consists of 960 firm-year observations for companies listed on the Tehran Stock Exchange from 2009 to 2018. The research hypotheses were tested using multivariate regression models based on panel data. Findings The results reveal that information risk has a significant positive impact on the firm’s cost of equity. However, the impact of information risk on stock returns is not statistically significant. Originality/value To the best of the knowledge, the current study is almost the first of its kind in the Iranian literature which investigates the subject matter; therefore, the findings of the study not only extend the extant theoretical literature concerning the information risk in developing countries including the emerging capital market of Iran but also help investors, capital market regulators and accounting standard setters to make timely decisions.

Accounting for Software Development Costs and Information Asymmetry

2005 ◽  
Vol 80 (4) ◽  
pp. 1211-1231 ◽  
Author(s):  
Emad Mohd
Keyword(s):  
Software Development ◽  
Information Asymmetry ◽  
Cost Of Capital ◽  
Software Industry ◽  
High Tech ◽  
Bid Ask Spread ◽  
Development Costs ◽  
Software Firms ◽  
The Cost ◽  
The Impact

I investigate the impact of implementing SFAS No. 86, which provides an exception to the GAAP requirement of the immediate expensing of research and development (R&D), on information asymmetry. Using bid-ask spread and share turnover as proxies for information asymmetry, I find that after the introduction of SFAS No. 86, information asymmetry decreases for software firms relative to that of other high-tech firms. Within the software industry, I find that information asymmetry is significantly lower for firms that capitalize (capitalizers) than for those who expense (expensers) software development costs. Thus, accounting for software development costs per SFAS No. 86 reduces information asymmetry and, consequently, the cost of capital. As well, investors' uncertainty about the future benefits of software development costs is reduced when firms capitalize these costs.

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