Corporate disclosure, cost of capital and reputation: Evidence from finance directors

Seth Armitage, Claire Marston

    Research output: Contribution to journalArticle

    Abstract

    The majority view of the executives interviewed is that disclosure reduces the cost of equity up to the point at which a good-practice level of communication has been reached, after which there is little further effect. Greater disclosure to rating agencies and lenders reduces the cost of debt. Attitudes towards more mandatory disclosure are mostly negative. The main perceived cost of disclosure is creating the information. The main benefits are promotion of a reputation for openness and of shareholder confidence, not a lower cost of capital. We suggest that a reputation for openness is valued because it enhances the company's overall reputation, which brings commercial benefits. © 2008 Elsevier Ltd. All rights reserved.

    Original languageEnglish
    Pages (from-to)314-336
    Number of pages23
    JournalThe British Accounting Review
    Volume40
    Issue number4
    DOIs
    Publication statusPublished - Dec 2008

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