Journal Articles

Permanent URI for this collectionhttps://mro.massey.ac.nz/handle/10179/7915

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    Audit report lag and the cost of equity capital
    (Emerald Publishing Limited, 2024-10-21) Bhuiyan MBU; Man Y; Lont DH
    Purpose This research investigates the effect of audit report lag on the cost of equity capital. We argue that an extended audit report lag reduces the value of information and raises concerns for investors, resulting in an increased cost of equity capital. Design/methodology/approach We hypothesize that audit report lag increases the firm cost of equity capital. We conduct ordinary least squares (OLS) regression analyses to examine our hypothesis. Finally, we also perform a range of sensitivity tests to examine the hypothesis and robustness of findings. Findings Using a sample of the listed US firms from 2003 to 2018, we find that firms with higher audit report lag have a higher cost of equity capital. Our findings are economically significant as one standard deviation increase in audit report lag raises 3.82 basis points of cost of equity capital. Furthermore, our results remain robust to endogeneity concerns and alternative proxies for the cost of equity capital measures. Finally, we confirm that audit report lag increases the firm cost of equity capital through increasing information asymmetry and future financial restatement as a mediating channel. Originality/value We contribute to the theoretical discussion about the role of audit report lag and investors' perceptions. Overall, our results suggest that audit report lag affects a firm cost of equity capital.
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    Overlapping committee membership and cost of equity capital
    (Elsevier B V, 2024-04) Bhuiyan MBU; Cheema MA
    This study examines the association between overlapping committee membership and the cost of equity capital among listed companies in Australia. Overlapping committee membership occurs when a director serves on multiple supervisory committees concurrently. To the extent overlapping committee membership reduces information asymmetry, improves financial reporting quality, and consequently reduces the overall risk of the firms, we expect a negative relationship between overlapping membership and the cost of equity capital. Consistent with our argument, we find a positive impact of overlapping committee membership and provide evidence that firms with overlapping committee membership have a lower cost of equity capital. Furthermore, our results indicate that the positive impact of overlapping committee membership on the cost of equity capital is more evident when overlapping committee members are non-busy directors.