Disentangling the effects of corporate disclosure on the cost of equity capital: a study of the role of intellectual capital disclosure [forthcoming]

Mangena, M. ORCID: 0000-0002-3005-8110, Li, J. and Tauringana, V., 2016. Disentangling the effects of corporate disclosure on the cost of equity capital: a study of the role of intellectual capital disclosure [forthcoming]. Journal of Accounting, Auditing & Finance, 31 (1), pp. 3-27. ISSN 0148-558X

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Abstract

In this paper, we investigate whether intellectual capital (IC) and financial disclosures jointly affect the firm’s cost of equity capital. In contrast to prior research, we disaggregate disclosures into IC and financial disclosures and examine whether the two disclosure types are jointly related to the cost of equity capital. We also investigate whether IC and financial disclosures have an interaction effect on the cost of equity capital. Using data for a sample of 125 UK firms, we find a negative relationship between the cost of equity capital and IC disclosure. We find that the relationship between financial disclosure and the cost of equity capital is magnified when combined with IC disclosure. Additionally, we find that IC and financial disclosures interact in shaping their effects on the cost of equity capital. Further analyses suggest that the effect of financial disclosure on the cost of equity capital is augmented for firms characterised by a medium level of IC disclosure. These results provide important insights into the relationship between disclosures and cost of equity capital and have policy and practical implications.

Item Type: Journal article
Publication Title: Journal of Accounting, Auditing & Finance
Creators: Mangena, M., Li, J. and Tauringana, V.
Publisher: Sage
Date: 2016
Volume: 31
Number: 1
ISSN: 0148-558X
Identifiers:
NumberType
10.1177/0148558X14541443DOI
Divisions: Schools > Nottingham Business School
Depositing User: EPrints Services
Date Added: 09 Oct 2015 11:12
Last Modified: 09 Jun 2017 13:52
URI: http://irep.ntu.ac.uk/id/eprint/24203

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