Elshandidy, T. and Acheampong, A. (2021) Does hedge disclosure influence cost of capital for European banks? International Review of Financial Analysis. 78 1057-5219.
Elshandidy_Acheampong_IRFA_2021_Does_hedge_disclosure_influence_cost_of_capital_for_European_banks (1MB) |
| Item Type: | Article |
|---|---|
| Abstract: | Upon extracting and quantifying relevant hedge information from the narrative section of European banks annual reports, this paper examines the impact of such information on cost of capital [as measured by weighted average cost of capital (WACC), cost of equity (COE) and cost of debt (COD)]. Using a sample of 1885 bank-year observations from 19 countries, we find that textual hedge disclosure leads to a significant reduction in WACC, COE, and COD; thus explains a substantial portion of variation in cost of capital. Further, we find that these results are stronger in countries with high corruption and financial openness. Our results are robust to several controls and model specification. Collectively, our findings enrich prior evidence which examines the economic consequences of hedge disclosure. |
| Uncontrolled Keywords: | Hedging, Cost of capital, cost of equity, cost of debt, Textual Analysis, Annual Reports |
| Creators: | Elshandidy, Tamer and Acheampong, Albert |
| Faculties, Divisions and Institutes: | Faculties > Faculty of Business & Law > Accounting & Finance |
| Date: | 1 November 2021 |
| Date Type: | Publication |
| Journal or Publication Title: | International Review of Financial Analysis |
| Volume: | 78 |
| Language: | English |
| DOI: | https://doi.org/10.1016/j.irfa.2021.101942 |
| ISSN: | 1057-5219 |
| Status: | Published / Disseminated |
| Refereed: | Yes |
| Related URLs: | |
| URI: | http://nectar.northampton.ac.uk/id/eprint/16948 |
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