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The impact of financial instruments disclosures on the cost of equity capital

Author

Listed:
  • Amal Yamani
  • Khaled Hussainey
  • Khaldoon Albitar

Abstract

Purpose - This study aims to investigate the impact of financial instrument disclosures under the International Financial Reporting Standard (IFRS) 7 on the cost of equity capital (COEC). Design/methodology/approach - The sample consists of 56 banks listed in the Gulf cooperation council (GCC) stock markets over 7 years from 2011 to 2017. A self-constructed index is used to measure the compliance level in addition to quantitative methods and panel data regression adopted to test the research hypotheses. Findings - The authors find that the compliance level with IFRS 7 does not improve from 2011 until 2017 in the GCC banks. The authors also find that compliance with IFRS 7 disclosures reduces the COEC. Originality/value - The authors also provide new empirical evidence that the level of mandatory financial instruments disclosures under IFRS 7 reduces the COEC. The findings offer policy implications. It shows that compliance with IFRS 7 disclosure requirements leads to desirable economic consequences.

Suggested Citation

  • Amal Yamani & Khaled Hussainey & Khaldoon Albitar, 2021. "The impact of financial instruments disclosures on the cost of equity capital," International Journal of Accounting & Information Management, Emerald Group Publishing Limited, vol. 29(4), pages 528-551, August.
    • Handle: RePEc:eme:ijaimp:ijaim-02-2021-0052
    DOI: 10.1108/IJAIM-02-2021-0052
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    Citations

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    Cited by:

    1. Mies, Michael, 2024. "Empirical research on banks' risk disclosure: Systematic literature review, bibliometric analysis and future research agenda," International Review of Financial Analysis, Elsevier, vol. 95(PA).
    2. Ghouma Ghouma & Hamdi Becha & Maha Kalai & Kamel Helali & Myriam Ertz, 2023. "Do IFRS Disclosure Requirements Reduce the Cost of Equity Capital? Evidence from European Firms," JRFM, MDPI, vol. 16(8), pages 1-19, August.

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