Show simple item record

dc.contributor.authorImhof, Michael J.
dc.contributor.authorSeavey, Scott E.
dc.contributor.authorSmith, David B.
dc.identifier.citationMichael J Imhof, Scott E. Seavey, and David B. Smith. Comparability and Cost of Equity Capital. Accounting Horizons 2017 31:2, 125-138en_US
dc.descriptionClick on the DOI link to access the article (may not be free).en_US
dc.description.abstractWe investigate how the comparability of a company's financial statements is related to its cost of equity capital. The Financial Accounting Standards Board's (FASB 2010) Statement of Financial Accounting Concept No. 8 proposes that comparability is a key tenet of accounting because it allows users of financial statements to benchmark a firm against similar firms when distinguishing between alternative investment opportunities. We provide evidence that greater financial statement comparability is associated with lower cost of equity capital, and show that comparability's effect on cost of equity remains after controlling for within-firm accounting quality. Additionally, we find that investors derive greater benefits from financial statement comparability in firms whose information environments are less transparent (high information asymmetry) and whose equity shares trade in markets that are less competitive (imperfect markets). Our findings contribute to accounting research by providing evidence justifying comparability as a separate element of the FASB's conceptual framework.en_US
dc.publisherAmerican Accounting Associationen_US
dc.relation.ispartofseriesAccounting Horizons;v.31:no.2
dc.subjectFinancial statement comparabilityen_US
dc.subjectCost of equity capitalen_US
dc.subjectInformation risken_US
dc.subjectInformation asymmetryen_US
dc.subjectMarket imperfectionen_US
dc.titleComparability and cost of equity capitalen_US
dc.rights.holder© 2017 American Accounting Association. All rights reserved.en_US

Files in this item


There are no files associated with this item.

This item appears in the following Collection(s)

Show simple item record