Fair Value Accounting and the Cost of Equity Capital: The Moderating Effect of Risk Disclosure

Dignah, Ashwag; Latiff, Radziah Abdul; Karim, Zulkefly Abdul; Rahman, Abdul Malek Abdul

doi:10.1051/shsconf/20173407005

Cited by 6 publications

(6 citation statements)

References 40 publications

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“…Particularly, better boards promote the disclosure of more information on risks. In line with the recent literature (Dignah et al, 2017), RDs are documented as having an important impact on the mitigation of information asymmetries, thereby leading to a reduction in the CC. Indeed, hypothesis H2 is supported.…”

Section: Data Analysis and Resultssupporting

confidence: 69%

“…Furthermore, a large stream of research suggests that a decrease in information asymmetries can lead to a reduction in the CC (Botosan, 2006;Diamond and Verrecchia, 1991;Lamber et al, 2012). Although the effect on information disclosure may depend on the context and the type of information (Dutta and Nezlobin, 2017;Gao, 2010;Orens et al, 2009), the previous literature suggests that RDs have a strong ability to reduce the CC (Dignah et al, 2017). Specifically, information on risks allows outsiders to better assess a company's future economic performance and reduce the information gap between managers and outsiders (Dobler, 2008;Linsley and Shrives, 2006).…”

Section: The Mediated Effect Of Rdsmentioning

confidence: 99%

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The role of directors: unravelling the effects of boards on corporate outcomes

Bravo

Alvarado

Pérez

2018

IJMF

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Purpose The purpose of this paper is to analyse whether the theoretical relationship between the board composition and the cost of capital (CC) is mediated by risk disclosure (RD) practices. Design/methodology/approach Partial least squares techniques are used, and a sample of all the companies belonging to manufacturing industry listed on Standard and Poor’s 500 for the year 2009 is studied. In relation to board composition, several recommendations issued by US governance codes are considered: board independence, board size, CEO duality, gender diversity, ethnic diversity, and financial expertise. Content analysis techniques are employed to measure RDs. Findings The results show that boards that follow governance codes recommendations lead to a reduction in the CC through the disclosure of information on risks. Research limitations/implications These results provide encouraging opportunities for future research about the real role of the board of directors and suggest the need for the analysis of the participation of directors in firm strategy to better understand the effect of boards on the corporate outcome. Practical implications This evidence must help regulators and owners to set up adequate corporate governance mechanisms regarding the composition of boards. This evidence also presents direct implications for managers, who can better understand the value-relevance of RDs. Originality/value This paper provides new insight into the literature, which highlights that the effect of boards of directors on firm outcomes must be mediated by the involvement of boards in specific strategies.

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Section: Data Analysis and Resultssupporting

confidence: 69%

Section: The Mediated Effect Of Rdsmentioning

confidence: 99%

The role of directors: unravelling the effects of boards on corporate outcomes

Bravo

Alvarado

Pérez

2018

IJMF

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“…It demonstrates the information gap between borrowers and lenders in these markets (Baele et al, 2014), and this theory is significant in imperfect knowledge. Asymmetry information is studied by (Dignah et al, 2017) to examine information among people in economic decision-making. The participants showed that information sharing lowers adverse selection by enhancing bank-related information on credit claimants.…”

Section: Materials and Methodologymentioning

confidence: 99%

Determinants of Non-Performing Loans Between Islamic And Conventional Banks: A Systematic Literature Review

Almuraikhi¹

2022

jeb

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This article conducts a systematic literature review of 52 papers on the determinants of non-performing loans (NPL) published for 2006-2022 in peer-reviewed journals. This paper adds to the development of this emerging field of systematic review in non-medical field settings by mapping existing research to inform future research exploits. This study synthesizes NPL studies by applying the systematic review methodology. The data synthesis is done through first and second-level codes. The first level codes group studies according to bank-specific, borrower-specific and comparative (Islamic vs conventional bank types). The literature is conscientiously analyzed through 13 subcategories using an open coding process. The literature synthesis shows that borrower-specific factors that may determine NPL include borrower profile, internal factors, external factors, and social issues. Also, the bank-specific factors that may influence NPL growth include economic conditions, management competence, profit maximization, and information economics. The findings highlight that the way borrower profiles, banks-specific factors and macroeconomic factors interact to influence NPL still needs more understanding. Further, Islamic banks and conventional banks seem to behave similarly regarding many bank-specific and macroeconomic factors even though the profit and loss sharing contract used in Islamic banks was deemed to moderate NPL positively. But the borrower-specific factors' interaction with bank-specific and macroeconomic factors of Islamic banks clients remains unclear. This highlights an important research gap in understanding the behavior of Islamic bank borrowers towards NPL prediction.

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“…As opinioned by Dignah et al (2017), the fair value accounting procedure plays a major role in the accounting standards since 1980. The initial involvement of the IAS 16 was to set accounting standards for the plant, pieces of equipment and property (Haswell, 2015).…”

Section: Fair Value Accounting Adaption and Financial Reporting Qualitymentioning

confidence: 99%

Relationship between Fair Value Accounting Adoption and Financial Reporting Quality

Ali¹

2020

PSSR

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Fair Value Accounting and the Cost of Equity Capital: The Moderating Effect of Risk Disclosure

Cited by 6 publications

References 40 publications

The role of directors: unravelling the effects of boards on corporate outcomes

The role of directors: unravelling the effects of boards on corporate outcomes

Determinants of Non-Performing Loans Between Islamic And Conventional Banks: A Systematic Literature Review

Relationship between Fair Value Accounting Adoption and Financial Reporting Quality

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