Financial Reporting Transparency and the Cost of Equity: Evidence From Newly Listed Firms

Authors

  • Yang Cheng University of Minnesota Duluth
  • Pervaiz Alam Kent State University
  • Liya Hou St. Cloud State University

DOI:

https://doi.org/10.33423/jabe.v26i1.6827

Keywords:

business, economics, financial reporting transparency, business risk, perceived business risk, implied cost of equity

Abstract

This paper explores the economic effects of financial reporting transparency of newly listed firms and outcomes associated with enhanced disclosure and financial reporting activities. We find a negative correlation between financial reporting transparency and information asymmetry in newly listed firms during their first five years of public trading. Further, we find a significant positive link between perceived business risk and implied cost of equity for these new public companies. Furthermore, we find a positive association between financial reporting transparency and the cost of equity. Our study helps to extend the research on the consequences of increased disclosures of newly listed firms.

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Published

2024-02-25

How to Cite

Cheng, Y., Alam, P., & Hou, L. (2024). Financial Reporting Transparency and the Cost of Equity: Evidence From Newly Listed Firms. Journal of Applied Business and Economics, 26(1). https://doi.org/10.33423/jabe.v26i1.6827

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Section

Articles