Disclosure regulation, cost of capital, and firm values

• 成果类型: Article
• 署名作者: Hao, Jinji
• 署名单位: Victoria University Wellington
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2023.101605
• 发表日期: 2024
• 关键词: sarbanes-oxley act; Regulation Fair Disclosure; economic consequences; voluntary disclosure; information asymmetry; stock returns; expected cost; equity; expectations; adoption

摘要

This paper shows that mandating some firms to disclose more while leaving other firms disclosing voluntarily is less effective in improving and may even harm the overall information environment when firms' disclosures are endogenous. Although the regulated firms' increased disclosure directly reduces all firms' cost of capital, it crowds out the unregulated firms' voluntary disclosure and thus increases all firms' cost of capital indirectly. Under certain circumstances, the negative indirect effect can outweigh the direct benefit. These results are consistent with the scant evidence on the cost-of-capital effect of mandatory disclosure. The model highlights the importance of the market-wide effects of disclosure regulation and facilitates quantitative cost-benefit analyses for specific regulatory proposals. (c) 2023 Elsevier B.V. All rights reserved.