Cost of capital and earnings transparency

Mary E. Barth, Yaniv Konchitchki and Wayne R. Landsman

Journal of Accounting and Economics, 2013, vol. 55, issue 2, 206-224

Abstract: We provide evidence that firms with more transparent earnings enjoy a lower cost of capital. We base our earnings transparency measure on the extent to which earnings and change in earnings covary contemporaneously with returns. We find a significant negative relation between our transparency measure and subsequent excess and portfolio mean returns, and expected cost of capital, even after controlling for previously documented determinants of cost of capital.

Keywords: Cost of capital; Earnings transparency (search for similar items in EconPapers)
JEL-codes: D8 G12 M4 M41 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (91)

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Working Paper: Cost of Capital and Earnings Transparency (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:55:y:2013:i:2:p:206-224

DOI: 10.1016/j.jacceco.2013.01.004

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