Disclosure level and cost of equity capital: evidence from the banking industry

Sunil Poshakwale and John K. Courtis
Additional contact information
Sunil Poshakwale: Financial Management, Business School, The University of Hull, Hull HU6 7RX, UK, Postal: Financial Management, Business School, The University of Hull, Hull HU6 7RX, UK
John K. Courtis: Department of Accountancy City University of Hong Kong, Kowloon, Hong Kong, Postal: Department of Accountancy City University of Hong Kong, Kowloon, Hong Kong

Managerial and Decision Economics, 2005, vol. 26, issue 7, 431-444

Abstract: The impact of voluntary disclosures on cost of equity capital is of significant interest to investors and managers. Using a disclosure scoring model this association is examined for 135 banks from Europe, North America and Australia. After controlling for the cross-sectional variation in beta, firm size, price to book value and price to earnings ratios, the study found that higher disclosure levels are associated with a reduction in cost of equity capital. Disclosures about risk management practices seem to most influence the reduction in the cost of equity capital. European banks show greater reduction in the cost of equity capital from improved disclosures compared to their non-European counterparts. Copyright © 2005 John Wiley & Sons, Ltd.

Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
http://hdl.handle.net/10.1002/mde.1256 Link to full text; subscription required (text/html)

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:wly:mgtdec:v:26:y:2005:i:7:p:431-444

DOI: 10.1002/mde.1256

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().