| dc.description.abstract | Given the importance of the cost of capital influence on decision making of
management, it is believed that there should be an appropriate approach to help
companies lower this cost (Easley and O’Hara, 2004). In fact, there are empirical
evidences that accounting information has significant impact on cost of capital. To date,
however, this literature has provided relatively limited evidence concerning this
relationship in the emerging markets. This study provides an empirical examination of
whether there is a relationship between accounting information and the firm’s cost of
capital in Vietnamese stock market, Ho Chi Minh Stock Exchange specifically. The study
is motivateds by the relevance literature in previous research and by the recent
development of stock markets in Vietnam. In specific, 108 listed firms were taken as a
sample of panel regression model in order to analyze and discuss about the effects of
accounting information on the firm’s cost of capital throughout the 5-year period between
2008 and 2012.
Previous empirical literature suggests that better accounting information
would reduce the cost of capital by reducing estimation risk and investors’ asymmetric
information, which leads to reduced transaction costs. In this study, earnings per share,
financial leverage, interest coverage, price-earnings ratio are used as proxies for
accounting information. Controlling for firm size and capital expenditure, it is found that
there is a negative relationship between accounting information and cost of capital was
found. | en_US |
