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Do IFRS disclosure requirements reduce the cost of capital? Evidence from Australia

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  • Amitav Saha
  • Sudipta Bose

Abstract

We examine the association between the disclosure requirements of the International Financial Reporting Standards (IFRS) and the cost of capital for a sample of Australian firms. We find that these disclosure requirements have a negative association with the cost of capital. The interpretation is that firms with a higher level of IFRS disclosure have a lower cost of capital. Further analysis shows that IFRS disclosure requirements are negatively related to the cost of debt and equity capital. Our findings contribute to the debate on the relative costs and benefits of IFRS disclosure requirements and have important implications for standard setters, regulators and users of financial statements.

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  • Amitav Saha & Sudipta Bose, 2021. "Do IFRS disclosure requirements reduce the cost of capital? Evidence from Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(3), pages 4669-4701, September.
    • Handle: RePEc:bla:acctfi:v:61:y:2021:i:3:p:4669-4701
    DOI: 10.1111/acfi.12744
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    2. Cho, Meeok & Kim, Sehee & Kim, Yewon & Lee, Bryan Byung-Hee & Lee, Woo-Jong, 2021. "IFRS adoption and stock misvaluation: Implication to Korea discount," Research in International Business and Finance, Elsevier, vol. 58(C).
    3. Magdalena Janowicz, 2021. "Business Combination Under Common Control (BCUCC) - What Kind of Disclosure is Enough? The Polish Experience," European Research Studies Journal, European Research Studies Journal, vol. 0(2B), pages 1004-1013.
    4. 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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