The impact of voluntary corporate disclosures on the ex-ante cost of capital for Swiss firms

This paper studies the link between secondary market liquidity for a corporate bond and the bond’s yield spread at issuance. Using ex-ante measures of expected liquidity at the time of issuance, based on the characteristics of the underwriting syndicate, we find an economically large impact of liquidity on yield spreads. We estimate that a 10% increase in expected liquidity implies a decrease in the yield spread at issuance of between 8% and 14%. Our results suggest that liquidity has an important effect on firms’ cost of capital, and they contribute to the literature which examines the impact of liquidity on asset prices.

Download Full-text

Information and Heterogeneous Beliefs: Cost of Capital, Trading Volume, and Investor Welfare

The Accounting Review ◽

10.2308/accr-50605 ◽

2013 ◽

Vol 89 (1) ◽

pp. 209-242 ◽

Cited By ~ 9

Author(s):

Peter O. Christensen ◽

Zhenjiang Qin

Keyword(s):

Information System ◽

Risk Premium ◽

Trading Volume ◽

Cost Of Capital ◽

Public Information ◽

Exchange Economy ◽

Substantial Impact ◽

Certainty Equivalents ◽

Ex Ante ◽

The Impact

ABSTRACTIn an incomplete market with heterogeneous prior beliefs, we show that public information can have a substantial impact on the ex ante cost of capital, trading volume, and investor welfare. The Pareto efficient public information system is the system enjoying the maximum ex ante cost of capital and the maximum expected abnormal trading volume. Imperfect public information increases the gains-to-trade based on heterogeneously updated posterior beliefs. In an exchange economy, this leads to higher growth in the investors' certainty equivalents and, thus, a higher equilibrium interest rate, whereas the ex ante risk premium is unaffected by the informativeness of the public information system. Similar results are obtained in a production economy, but the impact on the ex ante cost of capital is dampened compared to the exchange economy due to welfare-improving reductions in real investments to smooth the investors' certainty equivalents over time.

Download Full-text

Information and the Cost of Capital: An Ex Ante Perspective

The Accounting Review ◽

10.2308/accr.2010.85.3.817 ◽

2010 ◽

Vol 85 (3) ◽

pp. 817-848 ◽

Cited By ~ 76

Author(s):

Peter O. Christensen ◽

Leonidas E. de la Rosa ◽

Gerald A. Feltham

Keyword(s):

Rational Expectations ◽

Cost Of Capital ◽

Public Disclosure ◽

Full Time ◽

Recent Discussion ◽

Equilibrium Prices ◽

Ex Post ◽

Ex Ante ◽

The Cost ◽

The Impact

ABSTRACT: Recent articles have demonstrated that increased public disclosure can decrease firms’ cost of capital. The focus has been on the impact of information on the cost of capital subsequent to the release of the information (the ex post cost of capital). We show that the reduction in the ex post cost of capital is offset by an equal increase in the cost of capital for the period leading up to the release of the information (the preposterior cost of capital). Thus, within the class of models framing the recent discussion, there is no impact on the ex ante cost of capital covering the full time span of the firm. The extent to which information is made publicly or privately available affects the timing of the resolution of uncertainty and when the information is reflected in equilibrium prices, but there is no impact on initial equilibrium prices. Within a noisy rational expectations equilibrium, rational investors may actually benefit from a higher ex post cost of capital.

Download Full-text

Overconfidence and Timing of Entry

Games ◽

10.3390/g11040044 ◽

2020 ◽

Vol 11 (4) ◽

pp. 44

Author(s):

Luis Santos-Pinto ◽

Tiago Pires

Keyword(s):

Private Information ◽

Welfare Effect ◽

The Other ◽

Ex Ante ◽

Rational Player ◽

Timing Of Entry ◽

Game Players ◽

The Impact ◽

Stackelberg Leader

We analyze the impact of overconfidence on the timing of entry in markets, profits, and welfare using an extension of the quantity commitment game. Players have private information about costs, one player is overconfident, and the other one rational. We find that for slight levels of overconfidence and intermediate cost asymmetries, there is a unique cost-dependent equilibrium where the overconfident player has a higher ex-ante probability of being the Stackelberg leader. Overconfidence lowers the profit of the rational player but can increase that of the overconfident player. Consumer rents increase with overconfidence while producer rents decrease which leads to an ambiguous welfare effect.

Download Full-text

When Machines Take the Beans: Ex-Ante Socioeconomic Impact Evaluation of Mechanized Harvesting of Mungbean in Bangladesh and Myanmar

Agronomy ◽

10.3390/agronomy11050925 ◽

2021 ◽

Vol 11 (5) ◽

pp. 925

Author(s):

Lutz Depenbusch ◽

Cathy Rozel Farnworth ◽

Pepijn Schreinemachers ◽

Thuzar Myint ◽

Md Monjurul Islam ◽

...

Keyword(s):

Well Being ◽

Careful Consideration ◽

Women Farmers ◽

Men And Women ◽

Farm Work ◽

Weather Shocks ◽

Budget Analysis ◽

Ex Ante ◽

The 1960S ◽

The Impact

Agricultural mechanization has spread across much of Asia since the 1960s. It has increased agricultural productivity and reduced arduous farm work. However, differing impacts for smallholders and hired laborers, and for men and women, require careful consideration. This study analyzed, ex-ante, the likely social and economic tradeoffs of mechanizing the mungbean harvest in Bangladesh and Myanmar. We used a mixed methods approach combining survey data from 852 farm households with in-depth interviews in four villages. Partial budget analysis shows that mechanical harvesting of mungbean is not yet profitable for most farms. There is nevertheless an incentive to mechanize as the associated timeliness of the harvest reduces the risk of harvest losses from weather shocks. Men and women farmers expect time savings and reduced drudgery. The results confirm that hired workers depend on manual harvesting for income and status in both countries. Most hired workers are landless married women with limited access to other sources of income. In the short term, farmers are likely to combine manual harvests and a final mechanized harvest of the indeterminate crop. This could mediate the impact on hired workers. However, in the long term, it will be necessary to facilitate income-generating opportunities for women in landless rural families to maintain their well-being and income.

Download Full-text

An Input–Output Ex Ante Regional Model to Assess the Short-Term Net Effects of the 16 April 2016 Earthquake in Ecuador

International Journal of Disaster Risk Science ◽

10.1007/s13753-021-00354-6 ◽

2021 ◽

Author(s):

Jorge Salgado ◽

José Ramírez-Álvarez ◽

Diego Mancheno

Keyword(s):

Natural Hazard ◽

National Accounts ◽

Input Output ◽

Short Term ◽

Ex Ante ◽

The Impact ◽

Consumption Demand ◽

Two Sectors ◽

Positive Effect

AbstractThe 16 April 2016 earthquake in Ecuador exposed the significant weaknesses concerning the methodological designs to compute—from an economic standpoint—the consequences of a natural hazard-related disaster for productive exchanges and the accumulation of capital in Ecuador. This study addressed one of these challenges with an innovative ex ante model to measure the partial and net short-term effects of a natural hazard-related catastrophe from an interregional perspective, with the 16 April 2016 earthquake serving as a case study. In general, the specified and estimated model follows the approach of the extended Miyazawa model, which endogenizes consumption demand in a standard input–output model with the subnational interrelations and resulting multipliers. Due to the country’s limitations in its regional account records the input–output matrices for each province of Ecuador had to be estimated, which then allowed transactions carried out between any two sectors within or outside a given province to be identified by means of the RAS method. The estimations provide evidence that the net short-term impact on the national accounts was not significant, and under some of the simulated scenarios, based on the official information with respect to earthquake management, the impact may even have had a positive effect on the growth of the national product during 2016.

Download Full-text

The Influence of E-disclosure on the Ex-Ante Cost of Capital of Listed Companies in Brazil

Journal of Emerging Market Finance ◽

10.1177/0972652714550928 ◽

2014 ◽

Vol 13 (3) ◽

pp. 335-365 ◽

Cited By ~ 4

Author(s):

Wesley Mendes-Da-Silva ◽

Luciana Massaro Onusic ◽

Daniel Reed Bergmann

Keyword(s):

Cost Of Capital ◽

Listed Companies ◽

Ex Ante

Download Full-text

Evaluación de dos perturbaciones simultáneas en bosques de Araucaria-Lenga, usando diferencias de índices espectrales

GeoFocus Revista Internacional de Ciencia y Tecnología de la Información Geográfica ◽

10.21138/gf.689 ◽

2021 ◽

Vol 27 ◽

pp. 5-18

Author(s):

Marco Antonio Peña ◽

Patricio Calderón

Keyword(s):

Spectral Index ◽

The State ◽

Landsat 8 ◽

Southern Andes ◽

Ex Post ◽

Composition And Structure ◽

Ex Ante ◽

Land Covers ◽

The Impact

This study assessed the impact produced by a wildfire and an infectious outbreak led by an oomycete pseudofungi, both occurred in 2015, on the state of Araucaria-Lenga forests of the China Muerta Reserve, placed in the southern Andes of Chile. To do this, a greenness vegetation spectral index was calculated over a multitemporal set of Landsat-8 images, acquired biannually on near-anniversary dates, which was subject to subtractions between ex-ante (2013) and ex-post dates (2015, 2017, 2019). Results show the magnitude and temporal progression of both disturbances, highlighting the celerity and aggressiveness of the wildfire. Although the affected vegetation land covers currently show values close to the recovery of the primal biomass, the inclusion of field-based data to deepen the possible composition and structure variations of these forests is needed.

Download Full-text