Does financial statement comparability reduce cost of equity? Evidence in emerging market
Journal of Financial Reporting and Accounting
ISSN: 1985-2517
Article publication date: 23 September 2024
Abstract
Purpose
The research aims to provide empirical evidence on the relationship between financial statement comparability (FSC) and cost of equity (COE) in an emerging market.
Design/methodology/approach
Specifically, this study examines the relationship between FSC and COE of Vietnamese listed firms. The research uses the System Generalized Method of Moments regression techniques for a panel data set of 454 companies for the period 2015–2022.
Findings
The authors find that firms with high comparability of financial statements have lower COE. To confirm the research findings, the authors conduct the robustness test by using different proxies for the cost of equity. Consistent results are found.
Originality/value
The study contributes to the overall understanding of the relationship between FSC and COE, and suggests policy implications for relevant stakeholders such as managers, regulatory bodies and investors. Especially, regarding policymakers, this study could provide more insight into how the accounting convergence process impacts the effectiveness of a firm’s capital allocation.
Keywords
Acknowledgements
Funding: This work was supported by the University of Economics Ho Chi Minh City, Vietnam.
Data availability statement: Data of present study will be available on request from corresponding author.
Conflict of interest disclosure: The authors declare no conflict of interest.
Ethics approval statement: The author adheres to the ethical guidelines required by journal.
Citation
Thu, P.A. and Quang Huy, P. (2024), "Does financial statement comparability reduce cost of equity? Evidence in emerging market", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-02-2024-0099
Publisher
:Emerald Publishing Limited
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