Open AccessThe Impact of Accounting Conservatism and Voluntary Disclosure on the Cost of Capital of Industrial Companies in Jordan
Author(s) -
Heba S Warad,
Mamoun M. Al-Debi’e
Publication year - 2017
Publication title -
accounting and finance research
Language(s) - English
Resource type - Journals
eISSN - 1927-5994
pISSN - 1927-5986
DOI - 10.5430/afr.v6n1p102
Subject(s) - leverage (statistics) , sample (material) , conservatism , voluntary disclosure , accounting , panel data , business , cost of capital , turnover , economics , econometrics , microeconomics , chemistry , management , chromatography , machine learning , politics , computer science , political science , law , profit (economics)
This study aims at examining the impact of accounting conservatism and voluntary disclosure on the cost of capital of industrial companies in Jordan during the period (2009-2013). Panel OLS regression analysis was employed to test the hypotheses of the study. The results of the full sample model revealed that accounting conservatism and voluntary disclosure have significant negative impacts on the firms’ cost of capital.Furthermore, the results of the sub-samples which distinguish between large and small, as well as between high and low leverage firms showed that the sub-sample of large and small firms conforms to the full sample results. Across the sub-sample of high leverage firms, the results showed that only voluntary disclosure has a significant negative impact on the firm’s cost of capital. On the other hand, only accounting conservatism has a significant negative impact on the firm’s cost of capital across the sub-sample of low leverage firms.