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Voluntary and timely disclosure and the cost of debt: South African evidence

Achraf Guidara (Faculty of Economic Sciences and Management of Sfax, University of Sfax, Sfax, Tunisia)
Hichem Khlif (Faculty of Economics and Management of Mahdia, University of Monastir, Monastir, Tunisia)
Anis Jarboui (Higher Institute of Business Administration (ISAAS), University of Sfax, Sfax, Tunisia)

Meditari Accountancy Research

ISSN: 2049-372X

Article publication date: 11 November 2014

Abstract

Purpose

The aim of this study is to investigate the effect of voluntary and timely disclosure on the cost of debt for the South African setting.

Design/methodology/approach

The sample of this paper consists of 20 South African listed non-financial companies for the period 2008-2011. A content analysis is used to measure the extent of voluntary disclosure. Timely disclosure is proxied by earnings reporting lag.

Findings

Results show that the extent of voluntary disclosure is negatively and significantly associated with the cost of debt. In contrast, timely disclosure exerts a trivial effect on the cost of debt. When testing for the moderating effect of timely disclosure on the association between the extent of voluntary disclosure and the cost of debt, this paper documents that this association is only negative and significant for the shorter earnings announcement lag group.

Originality/value

The findings of this paper have policy implications for managers in the South African setting and other developing economies similar to South Africa, given the crucial role played by debt as an important source of external financing for publicly traded companies.

Keywords

Acknowledgements

The authors gratefully acknowledge the helpful comments and suggestions from the Editor-in-Chief Charl de Villiers, the Editor Elmar Venter and the two anonymous reviewers of Meditari Accountancy Research.

Citation

Guidara, A., Khlif, H. and Jarboui, A. (2014), "Voluntary and timely disclosure and the cost of debt: South African evidence", Meditari Accountancy Research, Vol. 22 No. 2, pp. 149-164. https://doi.org/10.1108/MEDAR-09-2013-0042

Publisher

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Emerald Group Publishing Limited

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