Cookies?
Library Header Image
LSE Research Online LSE Library Services

Information disclosure, firm growth, and the cost of capital

Dutta, Sunil and Nezlobin, Alexander (2017) Information disclosure, firm growth, and the cost of capital. Journal of Financial Economics, 123 (2). 415 - 431. ISSN 0304-405X

Full text not available from this repository.

Identification Number: 10.1016/j.jfineco.2016.04.001

Abstract

We study how information disclosure affects the cost of equity capital and investor welfare in a dynamic setting. We show that a firm's cost of capital decreases (increases) in the precision of public disclosure if the firm's growth rate is below (above) a certain threshold. The threshold growth rate is higher when the firm's cash flows are more persistent, or when other firms in the economy are growing at low rates. While current shareholders always prefer maximum public disclosure, future shareholders’ welfare decreases (increases) in the precision of public disclosure if the firm's growth rate is below (above) the threshold.

Item Type: Article
Official URL: https://www.sciencedirect.com/journal/journal-of-f...
Additional Information: © 2016 Elsevier B.V.
Divisions: Accounting
Subjects: H Social Sciences > HG Finance
H Social Sciences > HF Commerce > HF5601 Accounting
H Social Sciences > HB Economic Theory
JEL classification: D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D53 - Financial Markets
G - Financial Economics > G1 - General Financial Markets > G12 - Asset Pricing; Trading volume; Bond Interest Rates
M - Business Administration and Business Economics; Marketing; Accounting > M4 - Accounting and Auditing > M41 - Accounting
Date Deposited: 04 Nov 2019 11:30
Last Modified: 20 May 2020 04:08
URI: http://eprints.lse.ac.uk/id/eprint/102343

Actions (login required)

View Item View Item