Ambiguous Customer Identity Disclosure and the Cost of Equity Capital

Hsin-Yi Yu and Li-Wen Chen ()
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Hsin-Yi Yu: Department of Finance, National University of Kaohsiung, Taiwan
Li-Wen Chen: Department of Finance, National Chung Cheng University, Taiwan

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2017, vol. 20, issue 03, 1-29

Abstract: In deciding how much customer information to disclose, managers face a tradeoff between the benefits of reducing information asymmetry and the losses of revealing proprietary information. This paper investigates which factors affect the level of ambiguous customer identity disclosure and whether such ambiguous disclosure affects the cost of equity capital. The empirical evidence shows that the proprietary cost is a crucial factor in ambiguous customer identity disclosure. Firms with a higher level of ambiguous customer identity disclosure generate a higher cost of equity capital. Moreover, the higher cost of equity capital is concentrated among firms under imperfect market competition.

Keywords: Disclosure; customer identity; cost of equity capital; stock return; market competition (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (3)

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DOI: 10.1142/S0219091517500217

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