Do IFRS Disclosure Requirements Reduce the Cost of Capital? Evidence from Australia

Accounting & Finance, https://doi.org/10.1111/acfi.12744

43 Pages Posted: 9 Mar 2021 Last revised: 20 Jul 2021

See all articles by Amitav Saha

Amitav Saha

School of Business, The University of Notre Dame Australia

Sudipta Bose

Discipline of Accounting and Finance, Newcastle Business School, The University of Newcastle, Sydney, Australia

Date Written: February 13, 2021

Abstract

We examine the association between the disclosure requirements of the International Financial Reporting Standards (IFRS) and the cost of capital for a sample of Australian firms. We find that these disclosure requirements have a negative association with the cost of capital. The interpretation is that firms with a higher level of IFRS disclosure have a lower cost of capital. Further analysis shows that IFRS disclosure requirements are negatively related to the cost of debt and equity capital. Our findings contribute to the debate on the relative costs and benefits of IFRS disclosure requirements and have important implications for standard setters, regulators, and users of financial statements.

Keywords: IFRS; Disclosure; Weighted average cost of capital; Cost of equity; Cost of debt; Australia

JEL Classification: M40, M41

Suggested Citation

Saha, Amitav and Bose, Sudipta, Do IFRS Disclosure Requirements Reduce the Cost of Capital? Evidence from Australia (February 13, 2021). Accounting & Finance, https://doi.org/10.1111/acfi.12744, Available at SSRN: https://ssrn.com/abstract=3785206

Amitav Saha

School of Business, The University of Notre Dame Australia ( email )

Sydney
Sydney, NSW 2000
Australia

Sudipta Bose (Contact Author)

Discipline of Accounting and Finance, Newcastle Business School, The University of Newcastle, Sydney, Australia ( email )

Sydney
Australia

HOME PAGE: http://www.newcastle.edu.au/profile/sudipta-bose

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