When Does Information Asymmetry Affect the Cost of Capital?
نویسندگان
چکیده
منابع مشابه
When Does Information Asymmetry Affect the Cost of Capital?
This paper examines when information asymmetry among investors affects the cost of capital in excess of standard risk factors. When equity markets are perfectly competitive, information asymmetry has no separate effect on the cost of capital. When markets are imperfect, information asymmetry can have a separate effect on firms’ cost of capital. Consistent with our prediction, we find that infor...
متن کاملInformation Asymmetry , Diversification , and Cost of Capital ∗ †
Recently, there has been considerable interest among accounting researchers in the relation between asymmetric information and cost of capital. A number of empirical studies document associations between proxies for asymmetric information such as earnings quality and risk premiums. However, the theoretical foundation for these studies has yet to be fully established. In this study, we consider ...
متن کاملAsymmetry and the Cost of Capital
The expected cost of capital is a crucial component for most of the topics in corporate finance. Unfortunately in the presence of risky debt, it is systematically overestimated. This bias is increasing in leverage and the volatility of cash flows. We show the existence of the bias and assess its size. We finally propose a novel methodology to obtain a direct unbiased estimation of the expected ...
متن کاملInformation asymmetry, information dissemination and the effect of regulation FD on the cost of capital
This paper considers the impact of Regulation Fair Disclosure (FD) on firms’ information environments and costs of capital. For NYSE/Amex firms we find little evidence of a change in the cost of capital attributable to Regulation FD. For Nasdaq firms we find that Regulation FD increased firms’ costs of capital by 10–19 basis points per annum though the statistical significance of this change is...
متن کاملDoes Earnings Quality Affect Information Asymmetry? Evidence from Trading Costs*
A fundamental role of accounting information in financial markets is to serve as a basis for capital allocation. An important attribute of the quality of accounting information is the extent to which earnings (accruals) map into cash flows. A poor mapping of accruals into cash flows reduces the information content of reported earnings and results in lower-quality earnings. If investors differ i...
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ژورنال
عنوان ژورنال: Journal of Accounting Research
سال: 2010
ISSN: 0021-8456
DOI: 10.1111/j.1475-679x.2010.00391.x