Risk Disclosure and Cost of Equity: A Bayesian Approach
Journal Title: Revista CEA - Year 2020, Vol 6, Issue 11
Abstract
This paper aims to analyze the relationship between risk information disclosure and the cost of equity of companies in the Spanish capital market. This study uses a set of 71 firms listed on Madrid stock exchange between 2010 and 2015; all of them are non-financial listed companies for which profit forecasts existed. The problem was analyzed using a Bayesian linear regression approach. The results show that cost of equity and disclosed risk information are not related if a global view of the latter is adopted. However, a positive relationship between financial risks and the cost of equity occurs when risk information is divided into financial and non-financial risks.
Authors and Affiliations
Jose Miguel Tirado-Beltrán, José David Cabedo, Dennis Esther Muñoz-Ramírez
Keywords
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- EP ID EP697663
- DOI 10.22430/24223182.1497
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