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Marketing scholars have extensively studied marketing's effect on firm value and have developed metrics and dashboards to help establish marketing accountability. However, empirical evidence of marketing accountability's specific outcomes is scarce and mainly derived from surveys. It also lacks consideration of outcomes beyond the marketing function's standing in the firm, thus overlooking possible downsides and outcomes with regard to external stakeholders such as investors. Using a natural experiment—Australia's change from a nonrestrictive to a restrictive accounting regime—this study investigates how accountability for the financial value of marketing assets (marketing asset accountability) affects a firm's marketing management focus on short-term vis-à-vis long-term marketing efficiency, its cost of capital, and the degree to which its stock price reflects actual future performance (i.e., stock price informativeness). The results show that marketing asset accountability improves long-term marketing efficiency, reduces cost of equity, and improves stock price informativeness, but does not consistently affect short-term marketing efficiency and cost of debt. Moreover, although marketing-intensive firms are commonly assumed to benefit most from marketing asset accountability, this is not the case. These results have implications for researchers, managers, and public policy decision makers. [ABSTRACT FROM AUTHOR]

We examine the relation between environmental disclosure and the cost of capital by exploiting the Fukushima nuclear disaster as a source of variation in the relevance of environmental information for investors. Using a large hand-collected sample of Japanese firms, we find that firms disclosing carbon emissions experience a lower increase in the cost of capital than non-disclosing firms. Cross-sectional analyses suggest that the association between disclosure and the cost of capital is driven by the increase in investor uncertainty about the energy supply shortage that followed the disaster rather than future regulatory costs. Moreover, we find that after the disaster, non-disclosing firms in the pre-disaster period increase their environmental disclosures to a greater extent relative to disclosing firms. Taken together, our results provide insight into the link between non-financial, unregulated disclosures and the cost of capital. [ABSTRACT FROM AUTHOR]

This study had set out to evaluate if there are any positive or negative effects of voluntary disclosure on the financial performance of commercial banks in Kenya. Secondly, this study to establish whether voluntary disclosure has any effect on the value of the firm as well as on the cost of capital. Hence provide evidence on the effects of voluntary disclosure on the financial performance of commercial banks in Kenya. This study used a descriptive research design based on secondary data obtained from published statements of accounts of commercial banks in Kenya and CBK. The population of this study used 42 commercial banks registered by the Central Bank of Kenya and operating in Kenya. The study was based on secondary data collection since they provide a more realistic conclusion to meet the objectives of the study. Data was mainly collected from the publicly available information that was the published annual reports of a sample of 20 from 44 commercial banks in Kenya. The study was carried out for a period of 6 years from 2008 to 2013. The variables used in the study consisted of a dependent and four independent variables. The dependent variable was return on equity which is a proxy for measuring financial performance. The determinants of voluntary disclosure were used as a proxy to measure voluntary disclosure. The study developed a disclosure index based on the explanatory variables based on a multiple regression model. The study concludes that firms should lean towards disclosure of financial and social and board disclosure to increase their performance. The study conforms to the studies reviewed in terms of a positive relationship between financial disclosure and financial performance and a positive relationship between company size and financial performance. It can be concluded that over the years, corporate governance has been gaining awareness from the public and investors and there is a satisfactory level of voluntary disclosure practised by commercial banks in Kenya especially financial data disclosure and social and board disclosure. Therefore disclosure practises and requirements should apply across board no matter the size of the bank in order to provide as much information to all interested stakeholders. [ABSTRACT FROM AUTHOR]

The relationship between ESG and firm value has been a relevant subject of study in recent years. We conducted a hybrid literature review to understand the literature's findings on this relationship and its implications in terms of cost of capital. First, a keyword co‐occurrence analysis on a 122 ABS ranked journals articles selection from Scopus database was adopted to identify and investigate the main research fields of the current literature. Then a content analysis through the bibliographic coupling of the most globally cited contributions was made, defining a final sample of 50 articles obtained through a minimum threshold of at least 15 total global citations (TGCs). We found that studies on the cost of debt configuration are more aimed at determining the implications on firm value, while most contributions on the cost of equity focus on the assessment of the risk–return profile for the investor or the construction of an ESG portfolio. Furthermore, we found that most of the literature has a consensus view on the lack of transparency behind the ESG ratings and their construction methodology, stating that disagreement on ESG ratings not only limits the results of empirical analysis, but can also negatively affect firm value due to a higher level of uncertainty. [ABSTRACT FROM AUTHOR]

Japan has been at the forefront of global efforts to accelerate climate change mitigation. Japanese firms have led in the development of decarbonization technologies and have positively disclosed climate change‐related information based on the Task Force on Climate‐related Financial Disclosures recommendations to address climate change. We explore the relationship between corporate climate change mitigation actions and the cost of capital for 2100 Japanese listed companies from 2017 to 2021. The results reveal that a higher carbon intensity correlates with an increased cost of equity, debt, and weighted average cost of capital. Interestingly, although climate‐related information disclosure is associated with an increased cost of debt, it concurrently lowers the cost of equity and overall capital. This research recommends strategic approaches for firms to reduce their costs of capital while proactively combating climate change, highlighting the divergent responses of equity and bond markets to decarbonization initiatives. [ABSTRACT FROM AUTHOR]

This article develops a new measure of the cost of capital, the empirical average cost of capital (EACC), which is consistent with existing methods of calculating the weighted average cost of capital but uses information from the firm's financial statements and requires fewer and less subjective inputs. Our model combines the regression-based approach of asset pricing models such as the CAPM with the Implied Cost of Capital's reliance on accounting and market price data. The EACC model is very flexible and can identify the optimal balance between accounting- and market-based data that should be used when estimating the cost of capital for individual firms as well as for industries and larger economic sectors. We find the EACC yields forecasts of future net operating profit after taxes that compare favourably to five published measures of the weighted average cost of capital and is robust to several alternative tests. Overall, the results suggest the EACC can be an effective complementary method for corporate managers, investors, financial analysts, accountants, regulators, and academics in deriving estimates of a company's or industry's cost of capital. [ABSTRACT FROM AUTHOR]

Implementing corporate social responsibility (CSR) and enterprise risk management (ERM) is becoming more important, since it is an indication of a long-term sustainable business. Investigating the effects of ERM, CSR, cost of capital (CoC), and company size on the value of manufacturing sector enterprises in Indonesia is the aim of this study. 56 manufacturing companies that are listed on the Indonesia Stock Exchange and that provide annual reports and detailed financial statements for the fiscal years 2016 through 2019 make up the study’s sample. Firm value is proxied by the Tobins’q (TQ) value. CoC is determined using WACC, CSR is evaluated using each company’s disclosure index, and the firm’s size is indicated by LnTotal Assets. The data in Eviews 12 was analyzed using panel data regression. The study results show that CSR and ERM are essential to raising a company’s worth. The company value increases with the degree of ERM and CSR adoption. The study also found a significant negative correlation between company size and worth. However, this study is unable to show how capital expenses affect the value of a company. [ABSTRACT FROM AUTHOR]

This study analyzes and determines the impact of financial performance, audit quality, corporate social responsibility (CSR) on firm value through cost of capital as mediation. This type of quantitative research uses an explanatory approach and causality of as many as 565 samples for 5 years in the ASEAN banking industry. The results of this study show that financial performance, audit quality, and CSR affect the company value . Banks with good financial performance, quality audits, and good CSR distribution will be able to improve the company’s image. For this reason, banking companies must improve financial performance, audit quality, and properly carry out responsibilities. Cost of capital becomes a mediating variable that strengthens the relationship of financial performance, audit quality, and CSR to company value. For banks when their financial performance is good, checks are carried out with good audit quality, channeling social responsibility well will be a trigger for increasing company value and will indirectly reduce capital costs that must be incurred by the company. [ABSTRACT FROM AUTHOR]

The purpose of this study is to examine the effect of Environmental, Social, and Governance (ESG) disclosure and tax avoidance on the cost of capital, with firm size serving as a moderating variable. The population of this study consists of all companies listed on the Indonesia Stock Exchange (IDX) that have been included in the SRIKEHATI index at least once, focusing on the 2018-2021 period. The sample was obtained through a purposive sampling method, and a total of 121 companies were included in the analysis. The results of the study show that ESG disclosure has a negative effect on the cost of capital, indicating that companies with better ESG practices can reduce their cost of capital. Conversely, tax avoidance was found to have a positive effect on the cost of capital, suggesting that companies engaging in tax avoidance face higher costs of capital due to the perceived risks or uncertainties related to their tax practices. Additionally, firm size was found to strengthen the relationship between ESG disclosure and tax avoidance on the cost of capital, indicating that larger firms experience more pronounced effects of ESG practices and tax strategies on their capital costs. This research contributes to the understanding of how ESG disclosure and tax strategies influence financing costs, especially for larger firms in the Indonesian market. [ABSTRACT FROM AUTHOR]

This study aims to examine the direct and indirect impact of IFRS adoption on the financial performance of Moroccan companies listed on the Moroccan financial market. The analyses are based on data drawn from the financial statements of 21 Moroccan companies listed on the Casablanca Stock Exchange. By measuring financial performance using three stock market measures, namely the Mariss ratio, the Price Earnings Ratio, and the Tobin Q ratio, and using the structural equation method with SPSS AMOS software, the results indicate that before the introduction of the cost of capital variable, IFRS significantly affect financial performance, with an estimated coefficient of 0.395 significant at the 5% threshold. By introducing the cost of capital variable, the results show that the direct and significant relationship between IFRS and performance disappears, recording an estimated coefficient of 0.241 with a non-significant probability level of 0.243. On the other hand, the results show that the estimated coefficients for the indirect effect of IFRS on financial performance are negative, i.e., a coefficient of –0.099 estimating the direct effect of IFRS on the cost of capital and a coefficient of –2.621 estimating the direct effect of the cost of capital on financial performance, significant at the 1% and 5% thresholds, respectively. This confirms the hypothesis that the transition to IFRS indirectly and totally influences financial performance via the cost of capital variable.

Purpose: The primary aim of this study is to examine whether the Van Horne coefficient model impacts company growth, as indicated by the EPS indicator. Design/methodology/approach: The study was conducted on non-financial companies listed on the WIG, DAX, and OMX indices. The main tool of the analysis is the Van Horn sustainable growth model and its correlation with the EPS of the companies. Findings: The study found that the VSGR coefficient has a negative impact on the 3-year growth of companies listed on stock exchanges in Germany and Sweden. Similar results were obtained in the 5-year period study. For the Polish market, the VSGR coefficient is not statistically significant (OLS model). However, the study highlighted the significant role of the ROE coefficient and the level of company assets in shaping EPS. Research limitations/implications: At this stage, the study compares the Polish market to two other selected markets, which serve more as indicators of the future for us rather than as a comparative group. This perspective on the researched issue is significant but requires further investigation, taking into account other markets, including those similar to the Polish market. It is also important to extend the research to include longer time horizons in the models. Practical implications: The conducted study aligns with the current and important trend of research on sustainable development, which is a priority element in building company strategies within the European Union. Given the lower level of development of the Polish market compared to the German or Scandinavian markets, the findings for the comparative markets provide an insight into the situation we may encounter in Poland if we choose a similar pattern of actions and development. Originality/value: The conducted analyses are the first to use the Van Horne model on such a broad sample, indicating the potential for implementing sustainable development strategies in Polish companies with the aim of achieving development according to the model observed in Western European countries. [ABSTRACT FROM AUTHOR]

This research examines the effect of ESG disclosure on the cost of capital for non-financial firms in the UK, indexed by the FTSE All-Share Index, during the period from 2014 to 2018. Using multivariate analysis with ordinary least squares (OLS), fixed effects, robust regression, and Tobit models, this research assesses the effect of ESG reporting, governance, and the cost of capital, including robustness checks using an alternative ESG indicator, the environmental pillar score. Contrary to expectations, ESG reporting is positively associated with the cost of capital. However, corporate governance moderates this relationship, weakening the positive correlation and reversing it to a negative association for firms with strong governance practices, consistent with the hypotheses. This research also finds that firm size, liquidity, profitability, and leverage, positively affect the cost of capital, while board size, independent board composition, audit committee independence, and auditor type do not significantly influence it. Notably, non-executive directors on the audit committee have a significant negative effect on the cost of capital. These findings are valuable for investors, companies, regulators, auditors, policymakers, and the academic and research community. Specifically, for investors, this study provides insights into how ESG disclosures can influence investment risks and returns, highlighting the importance of robust corporate governance. Companies can leverage these insights to enhance their governance practices and optimize their capital costs. Regulators and policymakers can use the findings to develop guidelines that encourage transparent ESG reporting and strong governance frameworks, thereby improving market stability and investor confidence. Auditors can utilize the results to better understand the effect of non-financial reporting on financial metrics, helping to provide more accurate audits and assessments. These findings inform investors, companies, regulators, auditors, and academia, in fostering a more sustainable and transparent financial environment. [ABSTRACT FROM AUTHOR]

We investigate how negative news coverage of borrower's impacts on climate change affects bank loan contracting. Using a sample of publicly traded US firms for the period 2000–2016, we show that loans initiated following negative news coverage about firm's adverse climate-related incidents have significantly higher spreads, shorter maturities, more covenant restrictions, and a higher likelihood of collateral security requirements. We find no changes in client firm's credit fundamentals after such incidents, indicating that lender's reputational concerns rather than the longer-term environmental impacts of their borrower's actions are the primary drivers of these changes. This observation highlights the need for increased scrutiny of banks' lending practices to ensure that they are genuinely committed to sustainability rather than merely engaging in symbolic actions. [ABSTRACT FROM AUTHOR]

We study debt-contracting implications of uncertainty surrounding U.S. gubernatorial elections. In election years, loan contracts are more likely to include performance-pricing provisions, whereas loan spreads are mostly unaffected. Additionally, we find, only among those loans without performance-pricing provisions, a marginal increase in loan spreads in election years and a significant increase in loan-spread amendments postelection. The results suggest that under transitory uncertainty, performance pricing curbs an explicit rise in loan spreads and reduces ex-post renegotiations, yielding efficiency gains in contracting. Our further analysis uncovers a veiled pricing effect manifested through interest-rate contingencies: the likelihood of using rate-increasing pricing grids rises in election years for borrowers with a high exposure to uncertainty, thereby ensuring compensation to lenders for uncertainty. Overall, our findings suggest that loan contracting attempts to mitigate the problem of election uncertainty and renegotiation costs through state-contingent pricing, with which borrowers weigh initial loan spreads against the potential for loan-spread variability in the future. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The data is available at https://doi.org/10.1287/mnsc.2021.03106. [ABSTRACT FROM AUTHOR]

Since 2005, the International Financial Reporting Standards (IFRS) mandatory adoption in the European Union has played a pivotal role to reduce financing costs which has influenced positively economic growth across member states. Thus, this study examines the effect of Cost of Capital on Economic Growth under IFRS mandatory adoption in 17 European countries between 1994 and 2021 using Pooled Mean Group Autoregressive Distributed Lag (PMG-ARDL) and System Generalized Method of Moments (GMM-system) methods. The findings reveal a positive correlation between the Cost of Capital and Economic Growth under IFRS adoption. Specifically, the model estimates indicate that the Cost of Capital contributes to a 0.58% increase in Economic Growth in the PMG-ARDL framework. Moreover, the GMM-system model underscores the significance of IFRS adoption in reducing the Cost of Capital, leading to a 0.52% increase in Economic Growth. These results provide insights into the benefits of adopting international accounting standards and highlight the importance of institutional and financial factors in shaping the economic impact of adopting accounting standards.

Firms have to take responsibility with the increasing social concern about environmental, social and corporate governance issues. As a result of these responsibilities, firms' carbon emissions have become an important factor in gaining competitive advantage. In this context, the study examines the impact of firms' carbon emissions on their debt and equity costs. In the study, out of 476 firms in the BIST All Shares Index (XUTUM), 33 firms that have disclosed their carbon emission amounts between 2017-2021 are included in the scope of the analysis. After the pre-tests, the Driscoll-Kraay estimator was applied to the models. According to the findings of the study, firms' carbon emissions positively affect their debt costs. On the other hand, the effect of carbon emissions on equity costs is not statistically significant. According to the findings, firms with high carbon emissions are expected to incur high debt costs in their use of financial resources. [ABSTRACT FROM AUTHOR]

The value of the firm depends upon its expected Financial Forecasting. The rate used to discount earnings stream it's the firm's required rate of return or the cost of capital. Thus, the capital structure and Financial Forecasting decision can affect the value of the firm either by changing the expected earnings of the firm, but it can affect the reside earnings of the shareholders. The effect of leverage on the cost of capital is not very clear. Conflicting opinions have been expressed on this issue. In fact, this issue is one of the most continuous areas in the theory of finance, and perhaps more theoretical and empirical work has been done on this subject than any other. [ABSTRACT FROM AUTHOR]

The study explored the relationship between tax avoidance and the cost of capital among publicly listed firms in Nigeria from 2010 to 2022. Using a simple random sampling technique, the sample included 30 firms across five sectors. Secondary data were sourced from annual reports of the selected firms and fact books from the Nigerian Stock Exchange (NSE). The cost of capital, comprising cost of equity and cost of debt, was analyzed with tax avoidance measured by the firm's cash effective tax rate. Control variables included leverage, return on assets, return on equity, firm size, and board size. A panel fixed effects panel regression analysis, selected after a Hausman pre-test, was employed alongside "Driscoll-Kraay standard errors" to address heteroscedasticity and autocorrelation issues. Results from the panel fixed effects analysis indicated that tax avoidance significantly and positively affects both the cost of equity and the cost of debt, highlighting tax avoidance as a key factor in firms' financing decisions and investors' choices. Further analysis using system GMM two-step estimators confirmed the panel fixed effect results, underscoring their robustness and revealing a bidirectional relationship between tax avoidance and cost of debt, suggesting reverse causality. To address these implications, policymakers are urged to implement regulatory measures encouraging voluntary tax compliance and clear tax law interpretations to curb aggressive tax avoidance, thereby reducing firms' cost of capital. Additionally, firms should enhance transparency by disclosing operational details to shareholders, fostering investor confidence and influencing their perceptions of risk and the associated cost of capital. [ABSTRACT FROM AUTHOR]

In this paper, we design the Pareto-optimal reinsurance contract for both the insurer and the reinsurer by minimizing the convex combination of the risk-adjusted value of the insurer's liability and the reinsurer's liability, where capital at risk is calculated by the value at risk (VaR) or conditional value at risk (CVaR). In order to prevent the moral hazard, we assume that both ceded and retained loss functions are increasing functions. We analyze the optimal solutions for a wide class of reinsurance premium principles. When the reinsurance premium principles satisfy three axioms: law invariance, risk loading and preserving convex order, we find that layer reinsurance is always optimal over the assumed risk measures. Then we impose an additional weak constraint on the premium principle to simplify the form of layer reinsurance which is optimal. Finally, we illustrate the applicability of our results by deriving the parameters of the optimal layer reinsurance explicitly under the expected value principle and Wang's premium principle. [ABSTRACT FROM AUTHOR]

We investigate the impact of political uncertainty on the relationship between foreign equity portfolio flow and the cost of capital. Using panel data from 40 countries from 2001 to 2016, our results show that the year before a national election is associated with a higher cost of capital. Further analyses show that the relationship between international equity portfolio flow and the cost of capital is sensitive to political uncertainty. In line with the institutional quality channel, we find that checks and balances interact with political uncertainty to reduce the negative effects of political uncertainty on the cost of capital. The results are consistent with the hypothesis that foreign investors strategically reduce their equity portfolio investment to the recipient country before a national election which reduces risk-sharing between domestic and foreign investors. [ABSTRACT FROM AUTHOR]

In 2025, forecasts indicate that Asian companies, especially from China and India, will dominate the IPO market. Understanding global capital cost drivers is essential, particularly as energy sector costs increase. Research highlights that superior accounting information can narrow the investor-management gap, reducing equity and debt. This study investigates the impact of Other Comprehensive Income (OCI) volatility, Research and Development (R&D) investment, and earnings management on cost of capital, considering the potential moderating effect of agency costs. The analysis includes 1,565 observations across 313 firms from 2018 to 2022, focusing on the energy sector in China, India, the United States, and Indonesia. The study uses panel data regression to examine the relationships between OCI volatility, R&D investment, earnings management, and cost of capital, focusing on agency costs’ moderating role. Initial findings reveal that earnings management significantly and negatively influences cost of capital. Further, R&D investments in China and Indonesia show a negative and significant impact on cost of capital, contrary to positive and significant findings in India and the United States. Companies are advised to sustain efficient, future-oriented project selections. [ABSTRACT FROM AUTHOR]

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Climate risk represents an increasingly vital issue to countries, companies, and institutional investors, making it a reality but not a distant threat to humanity. Considering the effects of climate risks on firms’ financial indices and financing options, the study investigates whether climate risk is priced by the capital markets of South Africa. The study used reported carbon emissions as a measure of climate risk of 81 listed companies in the Johannesburg Stock Exchange from 2011 to 2020 to examine whether climate risk is considered and priced by the South Africa capital market. Data was sourced from DataStream database- a global financial and macroeconomic time-series database providing data on equities, stock market indices, currencies, company fundamentals, fixed income securities, and key economic indicators. We used the two-step system Generalized Method of Moments estimation technique that copes with endogeneity concerns to corroborate the effects of climate risk on cost of capital and capital structure. We find that climate risk is priced in both cost of debt capital and cost of equity capital. Specifically, we find that an increase in a firm’s exposure to climate risk increases the cost associated with issuing debt and equity capital. We also find that climate risk exposure decreases the debt-equity ratio. Additionally, the study showed that firm size, leverage ratio, capitalization, profitability, and turnover affect both cost of capital and capital structure of listed firms. The study concludes that climate risk is priced in cost of financing in the capital market of South Africa. The study recommends that firms should invest in installing ecofriendly machinery that aligns with changing market expectations in order to reduce their carbon emissions. The study therefore highlights the need for companies to proactively assess and manage climate risks, incorporate climate considerations into their strategic decision-making, and enhance their resilience to climate-related challenges. [ABSTRACT FROM AUTHOR]

Purpose: Businesses that rely on e-commerce for growth frequently find that their ability to obtain sufficient capital is critical to their success. Funding from venture capital firms is essential in this context. Due to insufficient capital, e-commerce-driven businesses in Kenya have continuously underperformed financially. Numerous of these businesses, such as Rupu, OLX Kenya, and ePay, encountered financial difficulties and eventually lost the ability to continue operating. This study's main objectives were to evaluate the impact of capital management support, financing options, and cost of capital on the financial performance of Kenyan e-commerce businesses. Additionally, the study sought to fully evaluate the moderating impact of regulatory structure on venture capital funding and the financial performance of Kenyan e-commerce-driven firms. The trade-off, stakeholder, financial liberalization, and agency theories all lend credence to this research. The research philosophy of positivism, which emphasizes the use of empirical data to evaluate theories and hypotheses, was applied to perform this study. Methodology: The study examined a population of 45 e-commercedriven businesses that obtained venture capital financing between 2017 and 2022 using a descriptive cross-sectional survey research approach. A stratified simple random sampling design technique was employed to choose 45 e-commerce-driven businesses as a sample. Surveys were distributed to collect primary data. Important stakeholders, including investors, executives, and founders, were among the participants in the study. Descriptive statistics were employed to summarize the data, such as measures of central tendency (particularly the mean), variability (expressed by the standard deviation), and frequency distributions. Regression analysis, an inferential statistic, was also employed in the study to investigate the relationship between venture capital funding and financial success. The gathered data were coded before entering into the Statistical Package for Social Science (SPSS) program to make the analysis process easier. The analysis's final results were provided as tables. Findings: The findings showed that the cost of capital, financing strategies, and capital management support significantly impact Kenyan e-commerce enterprises' financial performance. The aggregate score of 3.73 in cost of capital indicated consensus among participants on the impact of venture capital on e-commerce companies' financial performance. Participants perceived a significant correlation, with a standard deviation of 1.15 reflecting varying opinions. Most agree that lower venture capital costs lead to better financial success, influencing organizations' financial decisions significantly. The study concluded that venture capital funding has a considerable impact on the financial performance of e-commercedriven enterprises in Kenya. The report advised management to thoroughly understand the total cost of capital related to venture capital funding. Unique Contribution to Theory, Practice and Policy: The study on venture capital and financial performance of e-commerce-driven firms in Kenya has made significant contributions to theory, practice, and policy. It has enhanced theoretical understanding by examining the relationship between venture capital investments and the financial performance of e-commerce firms, providing insights into the dynamics of these markets. In practice, the study has offered valuable guidance to e-commerce entrepreneurs and investors by identifying factors that influence financial performance and informing strategic decision-making. Additionally, the findings have implications for policy formulation, as they highlight the importance of fostering an enabling environment for venture capital investments in the ecommerce sector to spur economic growth and innovation in Kenya. [ABSTRACT FROM AUTHOR]

In the context of improving the multi-level capital market structure and promoting common prosperity, we examine the impact of NEEQ’s (National Equities Exchange and Quotations) tiered system on corporate labour share. We find that the corporate labour share significantly increases when the firm enters the innovative layer from the common layer, which indicates that tiered system can optimise the structure of labour income distribution and facilitate employees to better share the enterprises’ achievements. Our further evidences indicate that (1) this positive relation is more pronounced for firms whose stock liquidity improves more; (2) reducing the cost of capital is an important channel through which the tiered system promotes corporate labour share; and (3) the tiered system visibly affects labour share for firms facing higher financing constraints, meeting lower information transparency, or with a higher complementary effect between labour and capital factors.

Sixty companies on the inaugural “Fortune 500” list still remained on this list in 2020 and they have monotonically increased their leverage (median debt to total assets ratio rose from 0.5% to 20.4%) over the past 70 years. This study applies factors from classic capital structure theories to this sample and explains the dynamic choice of debt usage. The methods employed include a Bayesian information criterion selection process of explanatory variables and a set of pooled cross section and panel tests with 3,536 firm-year observations. The tests use an array of factors extracted from several established theories on capital structure, including general economic growth, tax rate, interest rate and many company-specific variables proxying profitability and growth opportunities. The firm-level results first provide support to the free cash flow theory and confirm that company size and fixed assets proportion are the two factors associated with increased borrowing. Firms in the sample also actively respond to certain debt market and macroeconomic conditions, and their leverage ratio is significantly associated with credit spread and real interest rate. Further tests across subperiods and with risk measures illustrate the impact of expected inflation, investments activities, and stock volatility, providing supporting evidence to the organizational theory. The main research conclusion is that large US companies adopt a balance sheet-based approach to increase the use of debt, and they stay sensitive and versatile to market conditions and risk landscape. AcknowledgementsThe author declares no financial or personal relationships with other people or organizations that could inappropriately influence my work. The author thanks the journal editor and anonymous referees, Ahmad Etebari, Fred Kaen, discussants and participants at the Northeast Business and Economics Association 2022 annual meeting and the 2023 Global Finance Conference for their constructive critiques. All errors remain my responsibility.

We use the S&P 500 to investigate whether companies with a good ESG score benefit from a lower cost of capital. Using Bloomberg's financial data and MSCI's ESG score for 498 companies, we calculated the measures of descriptive statistics, finding that companies with better ESG ratings enjoy both a lower cost of equity and a lower cost of debt. However, their WACC shows no improvement with a higher ESG score. Companies with a poor ESG rating have a lower WACC due to the higher proportion of debt capital, coupled with a higher cost of debt, compared to the cost of equity capital. Calculating the Pearson correlation coefficient, we found a slightly negative linear relationship between the ESG score and the beta factor, and between the ESG score and the cost of debt. No linear relationship was found between the WACC and the ESG score. Finally, linear regression analysis shows a negative and significant effect of the ESG score on the root beta factor. This research indicates that companies with better ESG scores benefit from lower cost of equity and debt. Our results may encourage companies to operate more sustainably to reduce their cost of capital. [ABSTRACT FROM AUTHOR]

In the context of improving the multi-level capital market structure and promoting common prosperity, we examine the impact of NEEQ's (National Equities Exchange and Quotations) tiered system on corporate labour share. We find that the corporate labour share significantly increases when the firm enters the innovative layer from the common layer, which indicates that tiered system can optimise the structure of labour income distribution and facilitate employees to better share the enterprises' achievements. Our further evidences indicate that (1) this positive relation is more pronounced for firms whose stock liquidity improves more; (2) reducing the cost of capital is an important channel through which the tiered system promotes corporate labour share; and (3) the tiered system visibly affects labour share for firms facing higher financing constraints, meeting lower information transparency, or with a higher complementary effect between labour and capital factors. [ABSTRACT FROM AUTHOR]

Expected returns, variances, betas, and alphas are all non-linear functions of the investment horizon. This seems to be a fatal conceptual problem for the capital asset pricing model (CAPM), which assumes a unique common horizon for all investors. We show that under the standard assumptions, the theoretical CAPM equilibrium surprisingly holds with the 1-period parameters, even when investors have heterogeneous and possibly much longer horizons. This is true not only for risk-averse investors, but for any investors with non-decreasing preferences, including prospect theory investors. Thus, the widespread practice of using monthly betas to estimate the cost of capital is theoretically justified. [ABSTRACT FROM AUTHOR]

With the greater popularity and recognition of the environment, social, and governance concept, it has increasingly become the focus of investors and enterprises in corporate valuation, capital allocation, strategic planning, and investment decision‐making. The environment, social, and governance framework covers many factors that affect a company's long‐term financial performance and sustainable development, so the environment, social, and governance characteristics of the company will reflect the long‐term value it can create in the future. Previous studies have rarely confirmed a strong positive correlation between corporate environment, social and governance performance, and valuation, and even if confirmed, they have not explained how environment, social, and governance performance affect valuation. Therefore, the originality of this paper lies in explaining how environment, social, and governance affect valuation, as well as discovering which factors in environment, social, and governance affect valuation, and which characteristics of the company will strengthen or weaken this impact. This paper uses a two‐way fixed effect model to study the impact of environment, social, and governance performance on the valuation of listed companies in Shanghai and Shenzhen A‐share markets from 2014 to 2021. Research findings: Enterprise environment, social, and governance performance can significantly improve its valuation, and the impact of environmental and social performance is more significant. Mediating effect test found that enterprise environment, social, and governance performance improves enterprise valuation by reducing the cost of capital, increasing investor attention, and reducing corporate financial risk. The moderating effect found that compared to state‐owned enterprises, the valuation of non‐state enterprises is highly influenced by environment, social, and governance performance, and corporate information transparency can also promote the transformation of environment, social, and governance performance to valuation. After a series of robustness and endogeneity tests, the results can still support the conclusions of this article. The contribution of this study is to provide empirical evidence for the positive economic consequences of environment, social, and governance performance, which has certain implications for enterprises and investors to attach importance to environment, social, and governance performance, and for government departments to improve environment, social and governance incentive policies. Due to the limitations of selecting only A‐share listed companies for the sample, further research is needed on the applicability of the conclusions of this article to other countries or small and medium‐sized enterprises. In future research, we need to continue to investigate whether there are any other influencing mechanisms that have not been discovered by us. [ABSTRACT FROM AUTHOR]

The cost of capital is one of the most important concepts used in many financial and management decisions that are affected by several factors. Recent studies have shown that less readability of financial reports reduces the ability of investors to process and interpret annual reports, increases information risk and, as a result, the cost of capital. Furthermore, the relationship between the readability of financial reporting and the cost of capital depends on the tone of a company's published reports. Therefore, the purpose of this research is to investigate the moderating role of the tone of financial reporting on the relationship between the readability of financial reporting and the cost of capital of companies. In this regard, 105 companies admitted to the Tehran Stock Exchange were selected by systematic elimination method and examined in the period from 2016 to 2022. To evaluation and analyze the data, the EViews software was used, and to estimate the patterns, regression analysis with combined data was used. The results show that the lower the readability of financial reports, the higher the cost of capital for companies. In addition, the pessimistic tone of financial reports has an increasing moderating effect on the intensity of the relationship between less readability of financial reports and companies' cost of capital. By focusing on the textual features of company disclosure, the current research provides a good ground for research on the determinants of the cost of capital with new evidence and furthers researchers' understanding of how non-quantitative disclosure affects capital market participants. Furthermore, it provides empirical support for regulators' claims about the importance of companies providing clear and concise disclosure to their shareholders. [ABSTRACT FROM AUTHOR]

This study introduces a new version of the adjusted present value (APV) method and ensures its consistent valuation with the cost of capital (CoC) method at the highest level of generalization. The newly developed APV version and equivalent formulae consider stochastic debt and the trade-off between corporate income taxes (CIT) and personal income taxes (PIT), as well as tax benefits and financial distress costs. The value of expected bankruptcy costs aligns with the valuation aspect, enabling practical application of the formulae by valuers. The equivalence also reflects the differing perspectives of tax shields between stockholders and debt holders when PITs are introduced. Ultimately, the results demonstrate that the equivalence in this study aligns with, and can reduce to, previous standard formulae, under their stringent assumptions. [ABSTRACT FROM AUTHOR]

Objective Some major factors influencing investment include the investment risk and the consequent cost of capital imposed upon companies. Different studies demonstrated that intra-industry information transfer significantly influences the reporting environment and the quality of financial information. In case intra-industry information transfer within highly connected industries influences investor decisions and disclosure quality, it is expected to affect investor reactions to earnings, perceived risk, and the cost of capital. This study investigates the effect of intra-industry connectedness and diversification of major shareholders' portfolios on the corporate cost of capital, considering the moderating roles of ownership concentration and board gender diversity. Methods To achieve this goal, panel data from 144 companies listed on the Tehran Stock Exchange were collected from their annual financial reports from 2013 to 2020. A multivariate regression analysis was used. The diversification of major shareholders' portfolios was measured using the Rhoades (1993) method and the Herfindahl-Hirschman Index (HHI), while intra-industry connectedness was measured according to a model put forward by Chiu (2014). The diversification of major shareholders' portfolios was calculated by identifying the major shareholder's portfolio for each year, including listed and over-the- counter companies, and computing the Herfindahl-Hirschman Index (HHI) based on this data. Subsequently, the diversification index for each company-year was determined by computing the weighted average, considering the ownership percentage of major shareholders. Results The results indicate a significant negative impact of both the diversification of major shareholders' portfolios and intra-industry connectedness on corporate cost of capital. Additionally, the degree of ownership concentration and gender diversity on the board shapes the magnitude of these associations. Ownership concentration strengthens the relationship between portfolio diversification and the cost of capital, while it weakens the relationship between intra-industry connectedness and the cost of capital. However, the presence of women on the board attenuates both relationships, implying that in companies with female board members, these relationships are less pronounced. Conclusion The confirmed negative relationship between the diversification of major shareholders' portfolios and the cost of capital aligns with the informational perspective. According to this perspective, the increased number and diversity of major shareholders' portfolios lead to higher costs for obtaining insider information, prompting the major shareholders to focus on public information and demand the investee company to provide more transparent and higher-quality information. This, in turn, reduces information asymmetry and the cost of capital. Furthermore, the results indicate a significant negative relationship between intra-industry connectedness and corporate cost of capital. Finally, the findings confirm the moderating effects of ownership concentration and board gender diversity on these relationships. [ABSTRACT FROM AUTHOR]

We investigate whether the experience gap between signing auditors affects investors' and creditors' perceptions of risk assessment, as measured by the cost of capital. Our argument is that the experience gap between signing auditors could lower the information risk and improve audit quality, leading to a decreased cost of capital. Using unique data from China, where the information of the signing auditors can be obtained from audit reports, we find that a higher experience gap between signing auditors is linked to a lower cost of capital. Further analysis reveals that the effect is stronger for firms with higher information asymmetry, lower audit quality and weaker financial environments. Our results suggest that the higher experience gap between signing auditors can reduce information asymmetry by enhancing audit quality, and external investors incorporate this factor into pricing strategy, thereby, resulting in a lower cost of capital. [ABSTRACT FROM AUTHOR]

This paper studies the cost of capital effect of a major regulatory technology, or RegTech, event: the staggered implementation of the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system of the Securities and Exchange Commission in the period from 1993 to 1996. This event represents a largely exogenous shock to corporate information dissemination technologies, resulting in a considerable reduction in information acquisition costs for investors. Using a difference-in-differences research design, we show that the cost of equity capital declines substantially after a firm switches from paper filing to mandatory electronic filing in EDGAR. The effect is stronger for small firms and firms with low analyst coverage and low institutional ownership. We identify three channels through which EDGAR affects a firm's cost of capital: the liquidity, risk-taking, and corporate governance channels. EDGAR implementation also improves a firm's investment efficiency significantly. We find evidence that the marginal value of a firm's capital investment and cash is higher during the post-EDGAR period. This paper was accepted by Suraj Srinivasan, accounting. Funding: C. Lin acknowledges financial support from the National Science Foundation of China [Grant 72192841] and the Research Grants Council of the Hong Kong Special Administration Region, China [Project HKU R7054-18 and T35/710/20R]. S. Lai acknowledges financial support from the Ministry of Science and Technology, Taiwan [Grants 107-2410-H-002-038-MY3 and 110-2410-H-002-079-MY2] and the E. Sun Academic Award. X. Ma acknowledges research support from the University of Macau [Grants SRG2019-00158-FBA and MYRG2020-00259-FBA]. Supplemental Material: Data are available at https://doi.org/10.1287/mnsc.2022.4660. [ABSTRACT FROM AUTHOR]

The aim of this study is to identify the moderating effect of accounting conservatism on the relationship between information asymmetry and cost of capital. Since this issue is almost neglected in the emerging markets, especially in the Arab countries, the study uses data belongs to the industrial companies listed on the exchanges of the Gulf Cooperation Council (GCC) countries covering the 2015-2021 period. The results show that accounting conservatism moderates the positive effect of information asymmetry on the cost of capital. Therefore, companies may reduce cost of capital by decreasing information asymmetry and enhancing the use of conservative accounting practices. In particular, the level of disclosure and the efficiency of governance should be enhanced. Regulators can significantly contribute in this regard by issuing relevant regulations and improving the oversight over companies. Finally the study provides insights to be considered in the future research. [ABSTRACT FROM AUTHOR]