An Investigation of the Causal Effect of Voluntary Disclosure Quality on Cost of Equity Capital

Inhaltsverzeichnis (Table of Contents)

• I. Problem
• II. Purpose of the study
• III. Methods
• A. Voluntary Disclosure Quality
• B. Cost of Equity Capital
• C. Sample and Variables
• D. Empirical Disclosure Model
• E. Model Specification Tests
• IV. Results

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This study aims to investigate the relationship between voluntary disclosure quality and cost of equity capital in a cross-sectional setting. It addresses the potential endogeneity bias by employing a two-stage least squares (2SLS) approach and explores the impact of analyst following and analysts' familiarity with firms having a long stock listing history on this association.

• Examining the causal effect of voluntary disclosure quality on cost of equity capital.
• Investigating the moderating effect of a firm's stock listing history on the relationship between disclosure quality and cost of equity.
• Identifying potential instrumental variables to control for endogeneity bias.
• Exploring the role of analysts' information processing activities in the relationship between voluntary disclosure quality and cost of equity.
• Testing the consistency of the 2SLS model in mitigating endogeneity problems.

Zusammenfassung der Kapitel (Chapter Summaries)

The study begins by outlining the problem of information asymmetry between firms and investors, highlighting how voluntary disclosure quality can mitigate this issue. It then details the purpose of the study, which aims to investigate the relationship between disclosure quality and cost of equity capital while addressing endogeneity concerns. The "Methods" section describes the measures used for voluntary disclosure quality and cost of equity, the sample selection, and the empirical model developed for testing the hypothesis. Finally, the "Results" section presents the findings of the multivariate regression analysis, highlighting the significant relationship between disclosure quality and cost of equity capital, particularly influenced by a firm's stock listing history. The study concludes by discussing the implications of the findings and the need for further research.

Schlüsselwörter (Keywords)

The study focuses on the relationship between voluntary disclosure quality and cost of equity capital, addressing the endogeneity bias through a two-stage least squares approach. The study employs various keywords such as information asymmetry, voluntary disclosure, cost of equity, endogeneity, instrumental variables, stock listing history, analyst following, and information processing activities. The research also emphasizes the importance of firm characteristics such as size, financial leverage, profitability, and growth opportunities.