Segment disclosure and cost of capital

• Autores: Belen Blanco, Juan Manuel García Lara, Josep Antoni Tribó Giné
• Localización: Journal of Business Finance & Accounting, ISSN-e 1468-5957, Vol. 42, Nº. 3-4, 2015, págs. 367-411
• Idioma: inglés
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• Dialnet Métricas: 5 Citas
• Resumen

  • We investigate whether segment disclosure influences cost of capital. Improved segment reporting is expected to decrease cost of capital by reducing estimation risk. However, in a competitive environment segment disclosure may also generate uncertainties about future prospects and lead to a larger cost of capital. Asset-pricing tests confirm that segment disclosure is a priced risk factor. Also, segment disclosure reduces ex-ante estimates of cost of equity capital and other measures connected to risk. These results suggest a negative relation between segment disclosure and cost of capital. Our results also show that competition reduces, but does not eliminate, the previous relationship.