英语论文网

.g., Clarkson et al., 1996). Recently, Jorgensen and Kirschenheiter (2003), Hughes, Liu, and Liu (2007), and Lambert, Leuz and Verrecchia (2007a) re-examine the issue of estimation risk and firms‟ cost of capital. Lambert et al. (2007b) model estimation risk using an information-economics approach where firms‟ disclosures are noisy signals of their future cash flows. They show that the assessed covariances of a firm‟s cash flow with the cash flows of other firms decrease as the quality (or precision) of firm-specific disclosures increases, and that this effect unambiguously moves a firm‟s cost of capital closer to the risk-free rate. This information effect is not diversifiable because it is present for all covariance terms. Only the firm-specific variance term is likely to be diversified in “large economies” where investors can form portfolios of many stocks. The information effects in Lambert et al. (2007a) are consistent with the CAPM and hence should affect firms‟ betas and the market risk premium.9 In addition to the direct effects on the assessed covariances, corporate disclosures have the potential to change firm value by affecting managers‟ decisions and hence altering the distribution of future cash flows. Many studies in agency theory suggest that more transparency and better Corporate Governance increases firm value by improving managers‟ decisions or by reducing the amount that managers appropriate for themselves (e.g., Shleifer and Wolfenzon, 2002).10 There can also be an indirect effect on the cost of capital (e.g., Lombardo and Pagano, 2002; Lambert et al., 2007a). For example, Lambert et al. (2007a) demonstrate that, if better

Hughes, Liu and Liu (2007) provide a similar model with a more restrictive information structure than Lambert et al. (2007a). As a result, disclosures merely affect the market risk premium but not firms‟ beta factors. See also Yee (2006). Jorgensen and Kirschenheiter (2003) analyze the question of firms‟ ex post incentives to disclose information about firm-specific variances. 10 See also the surveys by Shleifer and Vishny (1997) and Lambert (2001). There are also a number of legal studies that emphasize the role of disclosure in mitigating agency problems (see, for example, Mahoney, 1995 and Ferrell, 2004). As these studies typically discuss the role of regulation, they are reviewed in Section 2.6.

disclosure reduces the amount of managerial appropriation 11 , this effect generally reduces a firm‟s cost of capital. Moreover, better corporate disclosures can improve managers‟ production or investment decisions if investors and firms coordinate with respect to capital allocation via public disclosures and share prices.12 But the directional impact of these effects on the cost of capital is ambiguous (Lambert et al., 2007a). The reason is that the projects that are induced by better disclosures and more outside monitoring could have larger covariances with the cash flows of other firms in the economy and hence be riskier. This example illustrates that disclosure may have first-order effects on agency problems and investment efficiency. However, this line of research is still in its infancy and certainly warrants further investigation. 2.2. Firm-Specific Costs of Corporate Disclosures The direct costs of corporate disclosures, including the preparation, certificatio本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。