Disclosure Quality and the Cost of Capital: Evidence for Romania
Author:
Lucian MUNTEANU, Ph. D. Student, Lecturer Mihaela IONAŞCU, Ph. D., Prof. Ion IONAŞCU, Ph. D.
JEL:
G 32, M 41
DOI:
Keywords:
cost of capital, disclosure quality, IFRS adoption
Abstract:
The adoption of IFRS is expected to increase transparency, and consequently reduce the cost of capital. However, recent studies have shown that the magnitude of the cost of capital is affected by various factors (e.g. capital markets efficiency, the role played by capital markets in supplying financial resources to listed companies, corporate governance practices and means of protecting investors etc.) which can diminish the disclosure quality impact on the cost of capital. Accordingly, this paper attempted to isolate the effect of the IFRS adoption in investigating the relationship between disclosure quality and the cost of capital for Romanian companies. The results showed that listed Romanian companies disclosing more information did not benefit from a reduced cost of capital.\r\n\r\n\r\n