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Strategic information disclosure and the cost of equity capital: Evidence from China

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  • Yang, Mo
  • Li, Yan
  • Dong, Dayong

Abstract

Based on SWOT theory with respect to firm's strength, weakness, opportunity, and threat, we construct a corporate strategic dictionary to quantify strategic information disclosure (SID). We then explore the association between SID and the cost of equity capital. Our evidence in China shows that SID is negatively associated with the cost of equity capital. Further, analysts’ forecasts and stock liquidity have a mediating effect on strategic disclosure toward the cost of equity capital, respectively. Our findings support the channel of reducing information asymmetry for the impact of SID on the cost of equity capital.

Suggested Citation

  • Yang, Mo & Li, Yan & Dong, Dayong, 2023. "Strategic information disclosure and the cost of equity capital: Evidence from China," Finance Research Letters, Elsevier, vol. 51(C).
    • Handle: RePEc:eee:finlet:v:51:y:2023:i:c:s1544612322005955
    DOI: 10.1016/j.frl.2022.103418
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    2. Guo, Borui & Huang, Xiaoxia, 2024. "Digital transformation tone signal and the cost of equity: Evidence from Chinese listed companies," Finance Research Letters, Elsevier, vol. 59(C).

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    More about this item

    Keywords

    Strategic information disclosure; Cost of equity capital; Analyst forecast; Stock liquidity;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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