Abstract

http://ssrn.com/abstract=2370644
 


 



Property Crime, Earnings Variability, and the Cost of Capital


James Brushwood


University of Arizona

Dan S. Dhaliwal


University of Arizona - Department of Accounting

Douglas J. Fairhurst


Washington State University

Matthew A. Serfling


University of Tennessee- Department of Finance

May 27, 2015


Abstract:     
We show that firms located in states where property crime is more prevalent have more uncertain earnings and higher financing costs. Specifically, firms located in states with higher property crime rates have more volatile and less persistent earnings, and for these firms, analysts’ earnings forecasts are less predictable. Firms located in states with higher property crime rates also have a higher cost of equity and debt capital. These results are robust to controlling for the presence of other local economic conditions. Overall, our results suggest that a potentially large and overlooked cost of crime is a higher cost of capital.

Number of Pages in PDF File: 60

Keywords: Earnings variability, Cost of equity, Cost of debt, Property crime, Theft

JEL Classification: G12, G30, M41


Open PDF in Browser Download This Paper

Date posted: December 22, 2013 ; Last revised: May 28, 2015

Suggested Citation

Brushwood, James and Dhaliwal, Dan S. and Fairhurst, Douglas J. and Serfling, Matthew A., Property Crime, Earnings Variability, and the Cost of Capital (May 27, 2015). Available at SSRN: http://ssrn.com/abstract=2370644 or http://dx.doi.org/10.2139/ssrn.2370644

Contact Information

James Brushwood
University of Arizona ( email )
Tucson, AZ 85721
United States
Dan S. Dhaliwal
University of Arizona - Department of Accounting ( email )
McClelland Hall
PO Box 210108
Tucson, AZ 85721
United States
Douglas J. Fairhurst
Washington State University ( email )
Todd Hall
P.O. Box 644746
Pullman, WA WA 85721-0108
United States
Matthew A. Serfling (Contact Author)
University of Tennessee- Department of Finance ( email )
Haslam College of Bussiness
Knoxvillee, TN TN 37916
United States
8659741952 (Phone)
Feedback to SSRN


Paper statistics
Abstract Views: 679
Downloads: 77
Download Rank: 206,860

© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo2 in 1.203 seconds