Disclosure and the cost of capital: a discussion

Article Abstract:

There are compelling evidences that indicate more disclosure results in more liquid markets. The greatest disclosure usually leads to the lowest cost of capital. This is only true when public disclosure is governed by cost-of-capital considerations. The existence of information asymmetries in capital markets may ameliorate the cost of capital during disclosure, thereby providing an economic basis for evaluation of costs and benefits of accounting information.

Economic aspects, Capital market, Capital markets, Disclosure (Securities law)

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Essays on disclosure

Article Abstract:

A taxonomy of current accounting literature on disclosure is presented. Three wide categories of disclosure research in accounting are identified. It is suggested that disclosure can be linked to efficiency, incentives and the endogeneity of the market process by reducing the information asymmetry element of the cost of capital.

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An evaluation of "essays on disclosure" and the disclosure literature in accounting

Article Abstract:

An analysis of Robert Verrecchia's 'Essays on Disclosure' and the literature reviewed in this work is presented. It is argued that 'Essays on Disclosure' is deficient in its handling of disclosures in production economies and that it fails to make reference to large parts of the literature on trading volume.

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