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The effect of ex ante and ex post conservatism on the cost of equity capital: A quantile regression approach for MENA countries

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  • Khalifa, Maha
  • Othman, Hakim Ben
  • Hussainey, Khaled

Abstract

This paper aims to provide a deeper understanding of the relationship between accounting conservatism and the cost of equity capital (COEC). For this purpose, we use the quantile regression (QR) framework and examine the effect of two dimensions of conservatism (ex ante and ex post) on the COEC. This methodological contribution allows us to test whether the effect of the two forms of conservatism vary across the full distribution, especially at the extreme quantiles of the COEC. Empirical results from the QR reveal that the effect of the two dimensions of conservatism considerably differs across COEC quantiles.

Suggested Citation

  • Khalifa, Maha & Othman, Hakim Ben & Hussainey, Khaled, 2018. "The effect of ex ante and ex post conservatism on the cost of equity capital: A quantile regression approach for MENA countries," Research in International Business and Finance, Elsevier, vol. 44(C), pages 239-255.
    • Handle: RePEc:eee:riibaf:v:44:y:2018:i:c:p:239-255
    DOI: 10.1016/j.ribaf.2017.07.093
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    1. Khalifa, Maha & Zouaoui, Haykel & Ben Othman, Hakim & Hussainey, Khaled, 2019. "Exploring the nonlinear effect of conditional conservatism on the cost of equity capital: Evidence from emerging markets," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 36(C), pages 1-1.
    2. Ratna Puji Astuti KRISMIAJI, 2021. "Accounting Conservatism and Cost of Equity Capital – Evidence from Indonesia," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 2(2), pages 64-72, February.

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    More about this item

    Keywords

    Accounting conservatism; Cost of equity capital; Ex ante conservatism; Ex post conservatism; Quantile regression; MENA countries;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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