Effect of Environmental Penalties on the Cost of Equity – The Role of Corporate Environmental Disclosures

This research aims to investigate the role of carbon emission disclosure as a mechanism to improve the investors' reaction in the form of abnormal stock returns mediated by cost of equity. The sample used in this study were non-financial companies listed on the Indonesia Stock Exchange from 2013 to 2017 and 122 firms were selected using purposive sampling method. By using path analysis method, the results shows, that the carbon emission disclosure has negative relationship to the cost of equity, carbon emission disclosure has positive relationship to the abnormal stock return and cost of equity has negative and significant relationship to the abnormal stock return. In addition, using Sobel test, the results shows that cost of equity plays a role in mediating carbon emission disclosure to the abnormal stock returns.

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Ownership structure and the cost of equity in the European context

Meditari Accountancy Research ◽

10.1108/medar-12-2018-0421 ◽

2020 ◽

Vol 28 (3) ◽

pp. 485-514 ◽

Cited By ~ 1

Author(s):

Fabio La Rosa ◽

Francesca Bernini ◽

Roberto Verona

Keyword(s):

Ownership Structure ◽

Value Relevance ◽

Equity Capital ◽

Mediating Effect ◽

Cost Of Equity ◽

Anglo Saxon ◽

Content Type ◽

The Cost ◽

Positive Effect

Purpose Based on the institutionalized agency theory, this paper aims to analyses the role of earnings management (EM) in mediating the relationship between ownership structure (OS) and the cost of equity capital (COE). Design/methodology/approach The authors test the above relationship by investigating a sample of 249 European non-financial listed companies during 2005-2012. The authors adopt different measures for both EM and COE and identify three main types of ownership by the majority share of the ultimate owners. Path analysis is used to explore the role of direct, mediated (i.e. EM) and total effects of OS on COE. Findings While OS directly affects COE, the results support the idea that an EM-mediating effect contributes to further explain this relationship in some ownership structures. Particularly European listed family-owned firms experience lower COE owing to the prevailing direct and negative effect of OS, despite the fact that both accrual and real EM mediate and have a positive effect on COE. In financial institutions-owned firms, only a direct and positive effect can be observed on COE while state-owned firms do not have a direct influence on the COE, although they do reduce real EM, which, in turn, decreases the COE in a mediated effect. Further analysis comparing the Anglo-Saxon context with Continental Europe shows more detailed results. Practical implications The study marks its entry into the international debate on the evolution in the value relevance of accounting information by arguing that the COE implications of EM depend on institutional factors such as OS and the context investigated. Originality/value The paper contributes to extant finance, accounting and corporate governance literature by providing new, robust evidence on the mediating role of EM in defining COE for different ownership types and their diverse risk-taking propensities in Continental Europe, which differs from the Anglo-Saxon context both institutionally and legally.

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Sustainability in the food and beverage sector and its impact on the cost of equity

British Food Journal ◽

10.1108/bfj-05-2021-0572 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Renato Garzón- Jiménez ◽

Ana Zorio-Grima

Keyword(s):

Developing Countries ◽

Gender Equality ◽

Cost Of Equity ◽

Content Type ◽

Beverage Industry ◽

Food And Beverage Industry ◽

Food And Beverage ◽

Environmental Disclosures ◽

And Gender ◽

The Cost

PurposeThe objective of this paper is to analyze in an international setting the relationship between environmental disclosures, carbon emissions and gender equality on the board of directors with the cost of equity (CoE) in the food and beverage sector.Design/methodology/approachThe study sample includes 142 listed firms and 1,562 firm-observations from 35 developed and developing countries between 2009 and 2019. The authors implement a fixed-effects regression model to contrast the impact of the three sustainable variables of interest on the CoE.FindingsThe results of this study indicate that firms in the food and beverage industry benefit from a lower CoE due to better environmental disclosures and gender equality. On the other hand, carbon intensive firms are penalized with higher equity costs.Originality/valueThis study expands prior research on the effects of sustainable behavior on the CoE in the food and beverage industry by taking into account additional sustainability variables and a greater number of observations, both from developed and from developing countries.

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The signalling role of audit committee characteristics and the cost of equity capital

Pacific Accounting Review ◽

10.1108/par-12-2016-0120 ◽

2018 ◽

Vol 30 (3) ◽

pp. 387-406 ◽

Cited By ~ 1

Author(s):

Ranjith Appuhami

Keyword(s):

Audit Committee ◽

Equity Capital ◽

Cost Of Equity Capital ◽

Cost Of Equity ◽

Content Type ◽

Listed Firms ◽

Monitoring Process ◽

Signalling Theory ◽

The Cost

Purpose The purpose of this study is to examine whether audit committee characteristics influence the cost of equity capital. Design/methodology/approach Drawing on signalling theory, this study hypothesises that the presence of an AC with adequate characteristics serves as a market “signal” of the credibility of the effective monitoring process and hence affects the perception of capital providers on the cost of equity capital. The study uses a multiple regression analysis on data collected from a sample of top Australian listed firms. Findings The study finds that audit committee characteristics such as size, meeting frequency and independence are significantly and negatively associated with the cost of equity capital. However, there is no significant evidence that the financial qualifications of audit committee directors are associated with the cost of equity capital. Originality/value While there have been several studies examining the cost of equity capital, there is very limited research on the cost of capital in Australian firms. The study aims to fill this gap, in part, and contribute to the literature on corporate governance and signalling theory.

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REDUCTION THE COSTS OF FORMATION OF ENTERPRISE’S EQUITY

SCIENTIFIC BULLETIN OF POLISSIA ◽

10.25140/2410-9576-2018-2-2(14)-114-120 ◽

2018 ◽

Vol 1 (2(14)) ◽

pp. 114-120

Author(s):

Tetiana Anatoliyivna Konieva

Keyword(s):

Limited Liability ◽

Financial Resources ◽

Cost Of Equity ◽

Private Placement ◽

Corporate Rights ◽

Net Assets ◽

The Stability ◽

Investment Object ◽

The Cost

Urgency of the research. Decreasing the cost of equity, which is an important source of financial provision of enterprise’s activity, in particular newly created, is a topical issue in a market economy. Target setting. Domestic enterprises are characterized by the growing share of current liabilities at this stage. It threatens the stability of their financial state and causes the need to increase the role of internal financial resources. Actual scientific researches and issues analysis. In accordance with modern approaches the basis for calculating the cost of equity is the premium for the country’s risk in which the investment object is located; the access to the capital market; the risk of default of the company in emerging markets. Uninvestigated parts of general matters defining. There is a need to study the role of the net assets components in the formation of enterprise’s equity, which will identify additional ways to reduce the cost of its involvement. The research objective. The article provides:  analysis of the influence of factors on the cost of net assets;  identification of the role of components in the formation of domestic enterprises’ equity. The statement of basic materials. The research has revealed that the share of equity in financial resources of Ukrainian enterprises as of 01.01.2017 is 24,5%. Nowadays the prevailing form of business organization is limited liability companies, which testifies to the favourable legislation of their registration and functioning. Formation of registered capital exclusively from the monetary contributions, cooperation with underwriters, potential investors significantly reduces the costs of such procedure. Domestic legislation provides an opportunity to optimize the amount, form of payment and taxation of dividends, which deceases the cost of equity. Conclusions. The ways of reduction the costs of equity formation were revealed, in particular: association of enterprises; private placement of corporate rights; cooperation with intermediaries; decreasing the level of dividend taxation.

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The impact of ownership structure on the cost of equity in emerging markets

Management Research Review ◽

10.1108/mrr-11-2019-0475 ◽

2020 ◽

Vol 43 (10) ◽

pp. 1221-1239

Author(s):

Saad Faysal ◽

Mahdi Salehi ◽

Mahdi Moradi

Keyword(s):

Corporate Governance ◽

Ownership Structure ◽

Institutional Ownership ◽

Managerial Ownership ◽

Cost Of Equity ◽

Asian Countries ◽

Content Type ◽

The Cost ◽

The Impact

Purpose The purpose of this study is to cover the ownership structure as (institutional ownership and managerial ownership) influencing the cost of equity in emerging markets. Design/methodology/approach The authors applied the regression model with the fixed-effect model in the data. Data collected from listed companies in the Iraq-Iran Stock Exchange during 2012-2017. Findings The authors found a significant positive associated between institutional ownership and the cost of equity in the Iranian and Iraqi contexts. The results also reveal a significant negative associated between managerial ownership with the cost of equity in the Iranian and Iraqi contexts. This means that when managerial ownership is increased, the cost of equity will be reduced. These results support the role of inside ownership to enhance fixed performance by reducing the cost of equity. So, managerial ownership can be a substitute for all shareholders. Moreover, the results indicate a similarity in the impact of the ownership structure on the cost of equity in the Iraqi and Iranian context, this means the similar elements among west Asian countries. Research limitations/implications Financial companies such as banks and investment companies were not listed due to the difference in the nature of their work with the other sectors in the Iranian and Iraqi stock exchanges. Moreover, the authors are heavily constrained as listed companies must continue during the study period to calculate the cost of equity. Therefore, the results are difficult to generalize widely. Practical implications This international study will enable investors in, as well as local and international investors to take the appropriate investment decision-making in the capital markets in these countries (Iraq and Iran). Moreover, it contributes significantly to helping corporate governance bloggers in Iraq and Iran understand the role of the ownership structure in corporate governance. Originality/value This is the first study of the interaction between institutional ownership, managerial ownership with the cost of equity in Iraq, the study will help complete the knowledge gap with developed markets. The results are important in future research because the authors believe that it is very important for the future to look at better for percentage levels of institutional and managerial ownership in the company ownership. Although the contribution is limited, it will provide a useful guide for more papers in other west Asian countries.

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Pengaruh Konservatisme Akuntansi Terhadap Biaya Ekuitas Dan Peran Komite Audit Sebagai Moderasi

JURNAL EKSPLORASI AKUNTANSI ◽

10.24036/jea.v2i2.237 ◽

2020 ◽

Vol 2 (2) ◽

pp. 2659-2672

Author(s):

Olvie Andellsi ◽

Mayar Afriyenty

Keyword(s):

Audit Committee ◽

Stock Exchange ◽

Total Sample ◽

Equity Capital ◽

Accounting Conservatism ◽

Manufacturing Companies ◽

Cost Of Equity Capital ◽

Cost Of Equity ◽

The Cost

This study was conducted to examine the effect of accounting conservatism on cost of equity capital and the role of the audit committee as moderation. This research is a type of causal associative research with quantitative approach. The population in this study are manufacturing companies listed on the Indonesia Stock Exchange (IDX) in 2014-2018. Samples were selected using a purposive sampling method with a total sample of 280 samples. Cost of equity capital is measured using the Ohlson (1995) model. Accounting conservatism is measured by the Givoly and Hayn (2000) model. The role of the audit committee is measured through the experience and capabilities possessed in the field of accounting and finance. The results showed that accounting conservatism had a significant negative effect on the cost of equity capital. In addition, the role of the audit committee is able to moderate the relationship between accounting conservatism and the cost of equity capital. For further research is expected to expand the object and year of research because in this study only examined manufacturing companies for the 2014-2018 observation year. In addition, further research can look for other independent variables if you want to do the same research.

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Hostile Takeovers and Anti-takeover Defenses in the Russian Corporate Market

Voprosy Ekonomiki ◽

10.32609/0042-8736-2007-4-70-84 ◽

2007 ◽

pp. 70-84 ◽

Cited By ~ 3

Author(s):

E. Demidova

Keyword(s):

Cost Benefit Analysis ◽

Cost Benefit ◽

Benefit Analysis ◽

Costs And Benefits ◽

Hostile Takeovers ◽

Russian Market ◽

Takeover Defenses ◽

The Cost ◽

European Markets

This article analyzes definitions and the role of hostile takeovers at the Russian and European markets for corporate control. It develops the methodology of assessing the efficiency of anti-takeover defenses adapted to the conditions of the Russian market. The paper uses the cost-benefit analysis, where the costs and benefits of the pre-bid and post-bid defenses are compared.

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