دانلود رایگان مقاله انگلیسی پیش بینی های مدیریت و هزینه سرمایه گذاری منصفانه: شواهد بین المللی - اشپرینگر 2018

Abstract

We examine international differences in the effect of management forecasts (which we use to proxy for voluntary disclosure) on the cost of equity capital (COC) across 31 countries. We find that the issuance of management forecasts is associated with a lower COC worldwide but that the effect of management forecasts on the COC depends on country-level institutional factors. Specifically, management forecasts have a stronger effect on the COC in countries with stronger investor protection and better information dissemination and a weaker effect in countries with higher mandatory disclosure requirements. Further analyses reveal that these relations are more pronounced when management forecasts are more frequent, more precise, and more disaggregated. Overall, our findings suggest that the ability of management forecasts to reduce firms’ COC derives not only from country-level factors that enhance the credibility of their forecasts but also from factors that reflect the quality of the information environment in terms of the distribution of news and the availability and quality of alternative information. Thus, investor protection, media penetration, and mandatory disclosure requirements have an important effect on the ability of management forecasts to lower the COC.

7 Conclusion

We examine whether voluntary disclosure, proxied for by management forecasts, is associated with the COC in an international setting and to what extent the relation varies with country-level institutional factors and management forecast characteristics. We find a negative and significant association between management forecasts and firms’ COC across countries. In addition, while higher mandatory disclosure requirements weaken the negative relation between management forecasts and the COC, stronger investor protection and better information dissemination strengthen the relation. We also find that management forecast characteristics impact the effect of management forecasts on the COC, in that the effectiveness of management forecasts increases with forecast quality and management’s commitment to making regular voluntary disclosures.

Taken together, our findings illuminate the roles that institutional factors and management forecast characteristics play on the relation between voluntary disclosure and the COC. Our study also responds to calls for research on the effects of management forecasts in international contexts (Bushman et al. 2004; Hirst et al. 2008; Francis et al. 2008) and on the interaction between voluntary and mandatory disclosures (Beyer et al. 2010). As such, the evidence provided here should matter to researchers, regulators, and managers when evaluating the possible effects of voluntary disclosures, and management forecasts in particular, in international capital markets.