Cost of Equity Capital and Annual Report Tone Manipulation

Jianhui Jian, Fan Yang, Minglang Liu and Yi Liu

Emerging Markets Finance and Trade, 2024, vol. 60, issue 3, 519-540

Abstract: This paper empirically studies the relationship between the cost of equity capital and annual report tone of listed firms’ annual reports from 2007 to 2019 in China. It is discovered that the greater the firm’s cost of equity capital, the more positive the tone of the manipulated annual report. In addition, in firms with lower quality of accounting information and higher degree of industry competition, the impact of cost of equity capital on the degree of tone manipulation is more significant, indicating that the impact of cost of equity capital on the positive tone disclosure of annual report is a deliberate manipulation behavior. The heterogeneity analysis shows that the cost of equity capital has a more significant impact on the tone manipulation of corporate annual reports in non-state-owned corporates than in state-owned corporates. Further analysis shows that the increase of the cost of equity capital will lead to the decline of investor’s confidence and corporate value and is also the mechanism of the cost of equity capital affecting the annual report note manipulation. Further analysis shows that the increase of the cost of equity capital will lead to the decline of investor’s confidence and corporate value, which is also the mechanism of the cost of equity capital affecting the annual report note manipulation.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2023.2226320 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:60:y:2024:i:3:p:519-540

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

DOI: 10.1080/1540496X.2023.2226320

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().