Regulation fair disclosure and the cost of equity capital

• 成果类型: Article
• 署名作者: Chen, Zhihong; Dhaliwal, Dan S.; Xie, Hong
• 署名单位: University of Arizona; City University of Hong Kong; Korea University; University of Kentucky
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-009-9115-6
• 发表日期: 2010
• 页码: 106-144
• 关键词: ANALYSTS EARNINGS FORECASTS; REGULATION FD; institutional investors; information asymmetry; Trading behavior; expected rate; IMPLIED COST; return; determinants; managerial

摘要

We examine the effect of Regulation Fair Disclosure (Reg FD) on the cost of equity capital. We find some evidence that (1) the cost of capital declines in the post-Reg FD period relative to the pre-Reg FD period, on average, for a broad cross-section of US firms, (2) the decrease in the cost of capital post Reg FD is mainly for medium and large firms but is insignificant for small firms, and (3) the decrease in the cost of capital post Reg FD is systematically related to firm characteristics indicative of selective disclosure before Reg FD. In contrast, we find little evidence of a decrease in the cost of capital for American Depositary Receipts and US-listed foreign firms, which are legally exempt from Reg FD. Overall, our findings do not support a conclusion in recent studies that the cost of capital has increased post Reg FD and, if anything, suggest the opposite.