The Role of Firms’ Life Cycle Stages on Voluntary Disclosure and Cost of Equity Capital in Brazilian Public Companies

Almeida, J.E.F.; Novaes, P. V. G. (2020) The Role of Firms’ Life Cycle Stages on Voluntary Disclosure and Cost of Equity Capital in Brazilian Public Companies. BBR. Brazilian Business Review (BBR-2019-0444.R2)

29 Pages Posted: 1 Jul 2020

See all articles by Jose Elias Feres de Almeida

Jose Elias Feres de Almeida

Federal University of Espirito Santo (UFES)

Paulo Victor Gomes Novaes

Federal University of Minas Gerais (UFMG)

Date Written: Forthcoming 2020

Abstract

We examine the effects of firms’ life cycle stages on voluntary disclosure and the cost of equity capital and also the relationship between the interaction of life cycle stages and voluntary disclosures measures on the cost of equity capital. Our sample consists of non-financial Brazilian public companies covered by analysts between 2008 and 2014 collected from I/B/E/S and Comdinheiro databases. We find that voluntary disclosure level is higher for firms in maturity and growth stages. We also find that introduction and decline firms show the higher implied cost of capital, however, decline firms that increase voluntary disclosure reduce their cost of capital. Moreover, mature firms significantly reduce such inherent risk by reporting social and environmental voluntary information. Our results are useful for investors, practitioners, and regulators to the understanding of the incentives of voluntary disclosure practices.

Keywords: Voluntary disclosure, Cost of equity capital, Implied cost of capital, Life cycle stages, Emerging market

JEL Classification: M40, M41

Suggested Citation

Almeida, Jose Elias Feres de and Gomes Novaes, Paulo Victor, The Role of Firms’ Life Cycle Stages on Voluntary Disclosure and Cost of Equity Capital in Brazilian Public Companies (Forthcoming 2020). Almeida, J.E.F.; Novaes, P. V. G. (2020) The Role of Firms’ Life Cycle Stages on Voluntary Disclosure and Cost of Equity Capital in Brazilian Public Companies. BBR. Brazilian Business Review (BBR-2019-0444.R2), Available at SSRN: https://ssrn.com/abstract=3622437

Jose Elias Feres de Almeida

Federal University of Espirito Santo (UFES) ( email )

Av. Fernando Ferrari, n. 514, Goiabeiras
Centro de Ciências Jurídicas e Econômicas
Vitoria, Espírito Santo 29075-910
Brazil
+5527992248737 (Phone)

Paulo Victor Gomes Novaes (Contact Author)

Federal University of Minas Gerais (UFMG) ( email )

Av. Antonio Carlos, 6627
Belo Horizonte, Minas Gerais 31270-901
Brazil

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
43
Abstract Views
208
PlumX Metrics