Internal factors influencing the cost of equity capital

Natalia Mokhova (), Marek Zinecker () and Tomáš Meluzín ()
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Natalia Mokhova: Brno University of Technology, Czech Republic
Marek Zinecker: Brno University of Technology, Czech Republic
Tomáš Meluzín: Brno University of Technology, Czech Republic

Entrepreneurship and Sustainability Issues, 2018, vol. 5, issue 4, 827-845

Abstract: In this paper we compile and evaluate the research available on internal factors influencing the cost of equity capital. The topic has been extensively studied for the past few decades; however, the information is spread and is not accumulated. We begin by reiterating the reasons why information asymmetry drives financial decisions. Next, we review recent literature that focuses on financial disclosure and accounting information, i.e. internal factors that are directly connected with information asymmetry. In the remainder of our review we discuss a recent debate on the impact of corporate governance and social factors. Aside from theoretical contribution, the comprehensive literature review of existing studies results in formulation of a strategy how to decrease to cost of equity capital by means of internal factors adjustments. We believe that highlighting the key points in the debate will be beneficial for both academicians and practitioners who will be able to form an independent view of the approaches how to take influence on the cost of equity capital.

Keywords: cost of equity; costs reduction; information asymmetry; disclosure policy; social responsibility (search for similar items in EconPapers)
JEL-codes: D80 G30 M40 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ssi:jouesi:v:5:y:2018:i:4:p:827-845

DOI: 10.9770/jesi.2018.5.4(9)

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