Internal Control Quality Disclosure And Cost Of Equity Capital

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Internal Control Quality, Disclosure and Cost of Equity Capital

Author : Hichem Khlif
Publisher :
ISBN 13 :
Total Pages : 28 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Internal Control Quality, Disclosure and Cost of Equity Capital by : Hichem Khlif

Download or read book Internal Control Quality, Disclosure and Cost of Equity Capital written by Hichem Khlif and published by . This book was released on 2017 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the direct effect of internal control quality (ICQ) on cost of equity capital and whether the former has a moderating effect on the association between voluntary disclosure and cost of equity capital in an emerging market (Egypt). ICQ is measured using a survey of external auditors. A content analysis approach is used to proxy for the level of voluntary disclosure in annual. Finally, the Capital Asset Pricing Model (CAPM) framework is used to estimate cost of equity capital. Based on a sample of 256 firm-year observations over the period of 2007-2010, we find that ICQ is negatively and significantly associated with cost of equity capital indicating that better controls reduce cost of capital. In addition, ICQ moderates the association between voluntary disclosure and cost of equity capital since this association is only negative and significant for companies characterized by high ICQ. Our study contributes to the internal control literature by focusing on an emergent unregulated market with respect to internal control disclosure and documents that ICQ plays an important role in reducing cost of equity capital (either directly or indirectly) by increasing the value relevance of voluntary disclosure among investors on the Egyptian stock exchange.

The impact of improved financial disclosure on the cost of equity capital

Author : Dan S. Dhaliwal
Publisher :
ISBN 13 :
Total Pages : 118 pages
Book Rating : 4.:/5 (45 download)

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Book Synopsis The impact of improved financial disclosure on the cost of equity capital by : Dan S. Dhaliwal

Download or read book The impact of improved financial disclosure on the cost of equity capital written by Dan S. Dhaliwal and published by . This book was released on 1978 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Effect of Accounting Disclosure on Cost of Equity Capital in Emerging Capital Markets

Author : Sameh Othman Mohamed Yassen
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (125 download)

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Book Synopsis The Effect of Accounting Disclosure on Cost of Equity Capital in Emerging Capital Markets by : Sameh Othman Mohamed Yassen

Download or read book The Effect of Accounting Disclosure on Cost of Equity Capital in Emerging Capital Markets written by Sameh Othman Mohamed Yassen and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The study analysed the relationship between accounting disclosure, both mandatory and voluntary, on the cost of equity capital for listed companies in the Egyptian exchange. The focus is on analysing this relationship in one of the emerging capital markets where there is a paucity of research analysing this issue. To achieve this aim, two self-constructed disclosure indices for mandatory and voluntary disclosure were used to measure the level of disclosure in Egypt. The cost of equity capital was measured based on three methods identified in the literature, namely the capital asset pricing model (CAPM), the Fama-French three factor model, and the industrial earnings-price ratio. To analyse the effect of accounting disclosure on the cost of equity capital, each of the cost of equity measurement methods was regressed on mandatory and voluntary disclosure scores, alternatively, and some controls that are identified in the literature to affect the association between the two variables. The control variables used were firm size, leverage, book-to-market ratio, profitability, liquidity, and sales growth. As a robustness check, a composite measure of the three cost of equity methods was used and the effect of the control variables was excluded from the analyses. To control for the existent endogeneity in the explanatory variable, accounting disclosure, a dynamic panel system of the generalized method of moments (SGMM) was used in the regression analyses. Using a sample of 657 firm year observations for 73 firms across 11 industries for nine years from 2008 to 2016, the study found a significant negative association between voluntary disclosure level and cost of equity capital, however, the study found a significant positive association between mandatory disclosure level and cost of equity capital. The results of the study could benefit various parties including researchers, regulators, and investors. It provides a motivation to researchers interested in analysing this association in Egypt and other emerging markets besides providing these researchers with a suitable data set to measure disclosure and cost of equity capital in Egypt. Regulators could benefit from the results of the study through identifying the shortcomings that need to be overcome to improve the disclosure environment in Egypt. Investors could use the results of the study as a data source in making investment decisions in Egypt.

The world price of earnings opacity

Author : Uptal Bhattacharya
Publisher :
ISBN 13 : 9789616430258
Total Pages : 27 pages
Book Rating : 4.4/5 (32 download)

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Book Synopsis The world price of earnings opacity by : Uptal Bhattacharya

Download or read book The world price of earnings opacity written by Uptal Bhattacharya and published by . This book was released on 2002 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Corporate Governance and the Cost of Equity Capital

Author : Hollis Ashbaugh Skaife
Publisher :
ISBN 13 :
Total Pages : 54 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Corporate Governance and the Cost of Equity Capital by : Hollis Ashbaugh Skaife

Download or read book Corporate Governance and the Cost of Equity Capital written by Hollis Ashbaugh Skaife and published by . This book was released on 2005 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: Separation of ownership and control in firms creates information asymmetry problems between shareholders and managers that expose shareholders to a variety of agency risks. This paper investigates the extent to which governance attributes that are intended to mitigate agency risk affect firms' cost of equity capital. We examine governance attributes along four dimensions: (1) financial information quality, (2) ownership structure, (3) shareholder rights, and (4) board structure. We find that firms reporting larger abnormal accruals and less transparent earnings have a higher cost of equity, whereas firms with more independent audit committees have a lower cost of equity. We also find that firms with a greater proportion of their shares held by activist institutions receive a lower cost of equity, whereas firms with more blockholders have a higher cost of equity. Moreover, we find a negative relation between the cost of equity and the independence of the board and the percentage of the board that owns stock. Collectively, the governance attributes we examine explain roughly 8% of the cross-sectional variation in firms' cost of capital and 14 % of the variation in firms' beta. The results support the general hypothesis that firms with better governance present less agency risk to shareholders resulting in lower cost of equity capital.

Internal Control Weaknesses and Information Uncertainty

Author : Messod D. Beneish
Publisher :
ISBN 13 :
Total Pages : 62 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Internal Control Weaknesses and Information Uncertainty by : Messod D. Beneish

Download or read book Internal Control Weaknesses and Information Uncertainty written by Messod D. Beneish and published by . This book was released on 2014 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze a sample of 330 firms making unaudited disclosures required by Section 302 and 383 firms making audited disclosures required by Section 404 of the Sarbanes-Oxley Act. We find that Section 302 disclosures are associated with negative announcement abnormal returns of -1.8 percent, and that firms experience an abnormal increase in equity cost of capital of 68 basis points. We conclude that Section 302 disclosures are informative and point to lower credibility of disclosing firms' financial reporting. In contrast, we find that Section 404 disclosures have no noticeable impact on stock prices or firms' cost of capital. Further, we find that auditor quality attenuates the negative response to Section 302 disclosures and that accelerated filers - larger firms required to file under Section 404 - have significantly less negative returns (-1.10 percent) than non-accelerated filers (-4.22 percent). The findings have implications for the debate about whether to implement a scaled securities regulation system for smaller public companies: material weakness disclosures are more informative for smaller firms that likely have higher pre-disclosure information uncertainty.

Beyond Internal Control over Financial Reporting

Author : Daoguang Yang
Publisher : Taylor & Francis
ISBN 13 : 1003848559
Total Pages : 178 pages
Book Rating : 4.0/5 (38 download)

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Book Synopsis Beyond Internal Control over Financial Reporting by : Daoguang Yang

Download or read book Beyond Internal Control over Financial Reporting written by Daoguang Yang and published by Taylor & Francis. This book was released on 2024-02-06 with total page 178 pages. Available in PDF, EPUB and Kindle. Book excerpt: By examining two different modes of internal control and the fundamentals of risk management, this book analyses the role of internal control in financing, investment, profit distribution, and corporate strategies through China's experience. In doing so, it confirms the effectiveness and superiority of internal control over operation and management. The book compares the various internal control methods used in China and the USA, namely, operation and management-oriented versus financial reporting-oriented approaches. It also discusses the differences in corporate risk attitudes and behaviours under the two approaches. The author then proposes the hyper-correction hypothesis and the trimming hypothesis. Empirical findings regarding corporate cash policy, mergers and acquisitions, tax avoidance, and diversification strategy reveal that internal control in China does not result in undue risk aversion but instead manages enterprise risk within a reasonable capacity. These results support the trimming hypothesis and demonstrate that internal control is a useful risk management tool. The title will appeal to students, academics, and accounting professionals interested in internal control (risk management), accounting, auditing and corporate finance, regulation and governance.

International Convergence of Capital Measurement and Capital Standards

Author :
Publisher : Lulu.com
ISBN 13 : 9291316695
Total Pages : 294 pages
Book Rating : 4.2/5 (913 download)

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Book Synopsis International Convergence of Capital Measurement and Capital Standards by :

Download or read book International Convergence of Capital Measurement and Capital Standards written by and published by Lulu.com. This book was released on 2004 with total page 294 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Earnings Quality

Author : Jennifer Francis
Publisher : Now Publishers Inc
ISBN 13 : 1601981147
Total Pages : 97 pages
Book Rating : 4.6/5 (19 download)

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Book Synopsis Earnings Quality by : Jennifer Francis

Download or read book Earnings Quality written by Jennifer Francis and published by Now Publishers Inc. This book was released on 2008 with total page 97 pages. Available in PDF, EPUB and Kindle. Book excerpt: This review lays out a research perspective on earnings quality. We provide an overview of alternative definitions and measures of earnings quality and a discussion of research design choices encountered in earnings quality research. Throughout, we focus on a capital markets setting, as opposed, for example, to a contracting or stewardship setting. Our reason for this choice stems from the view that the capital market uses of accounting information are fundamental, in the sense of providing a basis for other uses, such as stewardship. Because resource allocations are ex ante decisions while contracting/stewardship assessments are ex post evaluations of outcomes, evidence on whether, how and to what degree earnings quality influences capital market resource allocation decisions is fundamental to understanding why and how accounting matters to investors and others, including those charged with stewardship responsibilities. Demonstrating a link between earnings quality and, for example, the costs of equity and debt capital implies a basic economic role in capital allocation decisions for accounting information; this role has only recently been documented in the accounting literature. We focus on how the precision of financial information in capturing one or more underlying valuation-relevant constructs affects the assessment and use of that information by capital market participants. We emphasize that the choice of constructs to be measured is typically contextual. Our main focus is on the precision of earnings, which we view as a summary indicator of the overall quality of financial reporting. Our intent in discussing research that evaluates the capital market effects of earnings quality is both to stimulate further research in this area and to encourage research on related topics, including, for example, the role of earnings quality in contracting and stewardship.

Comparability and Cost of Equity Capital

Author : Michael Imhof
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Comparability and Cost of Equity Capital by : Michael Imhof

Download or read book Comparability and Cost of Equity Capital written by Michael Imhof and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate how the comparability of a company's financial statements is related to its cost of equity capital. Financial Accounting Standards Board's (FASB) Concept Statement No. 8 proposes that comparability is a key tenet of accounting because it allows users of financial statements to benchmark a firm against similar firms when distinguishing between alternative investment opportunities. We provide evidence that greater financial statement comparability is associated with lower cost of equity capital, and show that comparability's effect on cost of equity remains after controlling for within-firm accounting quality. Additionally, we find that investors derive greater benefits from financial statement comparability in firms whose information environments are less transparent (high information asymmetry) and whose equity shares trade in markets that are less competitive (imperfect markets). Our findings contribute to accounting research by providing evidence justifying comparability as a separate element of the FASB's conceptual framework.

The Impact of Intellectual Capital Disclosure on Cost of Equity Capital

Author : Mohamed Ali Boujelbene
Publisher :
ISBN 13 :
Total Pages : 9 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis The Impact of Intellectual Capital Disclosure on Cost of Equity Capital by : Mohamed Ali Boujelbene

Download or read book The Impact of Intellectual Capital Disclosure on Cost of Equity Capital written by Mohamed Ali Boujelbene and published by . This book was released on 2013 with total page 9 pages. Available in PDF, EPUB and Kindle. Book excerpt: The purpose of this paper is to examine empirically the impact of intellectual capital disclosure (IC) on cost of Equity capital. The empirical research is based on companies listed in the French SBF 120 stock market index. The findings confirm our hypotheses that stipulate the existence of a significant and negative association between intellectual capital disclosure with its two components (human capital, structural) and the cost of equity. However, the negative impact of the relational capital disclosure is not validated. The results in this paper are of considerable importance to both policy makers and firms. In fact, the understanding of the impact of Intellectual capital disclosure on cost of equity capital helps policy makers in the evaluation of the costs and benefits of disclosure. Moreover, with regard to managers of firms, the results show the benefit of enhanced IC disclosure regarding the reduction in their cost of capital. This study is one of the very first to provide empirical evidence of the association between Cost of equity capital and the level of disclosure in the three individual intellectual capital categories (human; structural and relational capital).

Estimating the Cost of Capital Implied by Market Prices and Accounting Data

Author : Peter Easton
Publisher : Now Publishers Inc
ISBN 13 : 1601981945
Total Pages : 148 pages
Book Rating : 4.6/5 (19 download)

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Book Synopsis Estimating the Cost of Capital Implied by Market Prices and Accounting Data by : Peter Easton

Download or read book Estimating the Cost of Capital Implied by Market Prices and Accounting Data written by Peter Easton and published by Now Publishers Inc. This book was released on 2009 with total page 148 pages. Available in PDF, EPUB and Kindle. Book excerpt: Estimating the Cost of Capital Implied by Market Prices and Accounting Data focuses on estimating the expected rate of return implied by market prices, summary accounting numbers, and forecasts of earnings and dividends. Estimates of the expected rate of return, often used as proxies for the cost of capital, are obtained by inverting accounting-based valuation models. The author describes accounting-based valuation models and discusses how these models have been used, and how they may be used, to obtain estimates of the cost of capital. The practical appeal of accounting-based valuation models is that they focus on the two variables that are commonly at the heart of valuations carried out by equity analysts -- forecasts of earnings and forecasts of earnings growth. The question at the core of this monograph is -- How can these forecasts be used to obtain an estimate of the cost of capital? The author examines the empirical validity of the estimates based on these forecasts and explores ways to improve these estimates. In addition, this monograph details a method for isolating the effect of any factor of interest (such as cross-listing, fraud, disclosure quality, taxes, analyst following, accounting standards, etc.) on the cost of capital. If you are interested in understanding the academic literature on accounting-based estimates of expected rate of return this monograph is for you. Estimating the Cost of Capital Implied by Market Prices and Accounting Data provides a foundation for a deeper comprehension of this literature and will give a jump start to those who have an interest in these topics. The key ideas are introduced via examples based on actual forecasts, accounting information, and market prices for listed firms, and the numerical examples are based on sound algebraic relations.

Law and Finance

Author : Thorsten Beck
Publisher : World Bank Publications
ISBN 13 :
Total Pages : 52 pages
Book Rating : 4./5 ( download)

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Book Synopsis Law and Finance by : Thorsten Beck

Download or read book Law and Finance written by Thorsten Beck and published by World Bank Publications. This book was released on 2002 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: New research suggests that cross-country differences in legal origin help explain differences in financial development. This paper empirically assesses two theories of why legal origin influences financial development. First, the political' channel stresses that (i) legal traditions differ in the priority they give to the rights of individual investors vis- ...-vis the state and (ii) this has repercussions for the development of property rights and financial markets. Second, the adaptability' channel holds that (i) legal traditions differ in their ability to adjust to changing commercial circumstances and (ii) legal systems that adapt quickly to minimize the gap between the contracting needs of the economy and the legal system's capabilities will foster financial development more effectively than would more rigid legal traditions. We use historical comparisons and cross-country regressions to assess the validity of these two channels. We find that legal origin matters for financial development because legal traditions differ in their ability to adapt efficiently to evolving economic conditions.

Proceedings of the 2022 International Conference on Bigdata Blockchain and Economy Management (ICBBEM 2022)

Author : Daowen Qiu
Publisher : Springer Nature
ISBN 13 : 9464630302
Total Pages : 1730 pages
Book Rating : 4.4/5 (646 download)

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Book Synopsis Proceedings of the 2022 International Conference on Bigdata Blockchain and Economy Management (ICBBEM 2022) by : Daowen Qiu

Download or read book Proceedings of the 2022 International Conference on Bigdata Blockchain and Economy Management (ICBBEM 2022) written by Daowen Qiu and published by Springer Nature. This book was released on 2022-12-28 with total page 1730 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is an open access book. As a leading role in the global megatrend of scientific innovation, China has been creating a more and more open environment for scientific innovation, increasing the depth and breadth of academic cooperation, and building a community of innovation that benefits all. These endeavors have made new contribution to globalization and creating a community of shared future. With the rapid development of modern economic society, in the process of economic management, informatization has become the mainstream of economic development in the future. At the same time, with the emergence of advanced management technologies such as blockchain technology and big data technology, real market information can be quickly obtained in the process of economic management, which greatly reduces the operating costs of the market economy and effectively enhances the management level of operators, thus contributing to the sustained, rapid and healthy development of the market economy. Under the new situation, the innovative application of economic management research is of great practical significance. 2022 International Conference on Bigdata, Blockchain and Economic Management (ICBBEM 2022) will be held on March 25–27, 2022 in Wuhan, China. ICBBEM 2022 will focus on the latest fields of Bigdata, Blockchain and Economic Management to provide an international platform for experts, professors, scholars and engineers from universities, scientific institutes, enterprises and government-affiliated institutions at home and abroad to share experiences, to expand professional fields, to exchange new ideas face to face, to present research results, and to discuss the key challenging issues and research directions facing the development of this field, with a view to promoting the development and application of theories and technologies in universities and enterprises.

Value-at-Risk Disclosure, Cost of Equity Capital, and Investor Reaction

Author : Hanmei Chen
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Value-at-Risk Disclosure, Cost of Equity Capital, and Investor Reaction by : Hanmei Chen

Download or read book Value-at-Risk Disclosure, Cost of Equity Capital, and Investor Reaction written by Hanmei Chen and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a sample of 24 US banks from 1997 to 2004, we examine the relationship between value-at-risk (VAR) for trading activities and banks' cost of equity capital. We show that the implied cost of equity capital and the bid-ask spread, both proxying for the cost of equity capital, is positively related to VAR, as well as a quality indicator based on bank technical sophistication. The results are consistent with the claims that VAR effectively captures bank trading risk, and that investors care about banks' risk-taking activities. We next examine whether investors fully understand the implication of VAR to future volatility in trading revenues and utilize it in the pricing process. Our test cannot reject the null that bank stock price has fully incorporated the predictability of VAR.

Internal Control

Author : Olof Arwinge
Publisher : Springer Science & Business Media
ISBN 13 : 3790828823
Total Pages : 205 pages
Book Rating : 4.7/5 (98 download)

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Book Synopsis Internal Control by : Olof Arwinge

Download or read book Internal Control written by Olof Arwinge and published by Springer Science & Business Media. This book was released on 2012-11-07 with total page 205 pages. Available in PDF, EPUB and Kindle. Book excerpt: The concept of internal control has developed along with audit practice. As demands have been made for greater accountability in corporate governance, the significance of internal control systems in companies has increased. Traditionally internal control has had a fairly direct relationship to financial reporting quality but wider approaches to internal control have expanded those boundaries much further. Stakeholders are increasingly concerned with the effectiveness of internal controls, and disclosure requirements are making firms to go public with regard to their internal control systems. From a design perspective, current research suggests that internal control designs are contingent upon variables such as company strategies, risk appetite, regulatory characteristics, and organizational size. Also there is much to learn about internal control quality, and the way internal control quality is associated with overall corporate governance quality. This book fills that gap.

Research in Accounting Regulation

Author : Gary Previts
Publisher : Elsevier
ISBN 13 : 0080546242
Total Pages : 305 pages
Book Rating : 4.0/5 (85 download)

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Book Synopsis Research in Accounting Regulation by : Gary Previts

Download or read book Research in Accounting Regulation written by Gary Previts and published by Elsevier. This book was released on 2000-12-20 with total page 305 pages. Available in PDF, EPUB and Kindle. Book excerpt: The scope of service provided by professional accountants is influenced by legislation and case law as well as the dictates of a variety of government and private sector agencies; including State Boards of Accountancy, Academic Accreditation Bodies, the United States Securities and Exchange Commission, independent standard setting bodies such as the Federal Accounting Standards Advisory Board [US], the Financial Accounting Standards Board [US], and self-regulatory organizations such as State Societies of CPAs and the American Institute of Certified Public Accountants. There are equivalent and emerging national bodies that exist in most developed and developing countries, and further there are emerging global coordinating entities as well, which attempt to coordinate the activities among nations. It is important for academics, students, practitioners, regulators and researchers to consider, study and understand the role and relationship of such bodies with the practice and content of our discipline. Research in Accounting Regulation is a refereed annual serial that seeks to publish high quality manuscripts, which address regulatory issues and policy affecting the practice of accountancy, broadly defined. Topics of interest include research based upon: self-regulatory activities, case law and litigation, government and quasi-governmental regulation, and the economics of regulation, including modeling. The serial aims to encourage the submission of original empirical, behavioral or applied research manuscripts that consider strategic and policy implications for regulation, regulatory models and markets.