Journal Articles

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

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Subject: search.filters.subject.Information asymmetry

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    Stock price crashes and systematic risk
    (Elsevier Ltd, 2025-12-01) Roy S; Marshall BR; Nguyen HT; Visaltanachoti N
    We show that firm systematic risk increases following stock price crashes. This occurs in both low- and high-beta companies and is robust to alternate proxies of systematic risk. Crashed firms face difficulty raising capital or obtaining loans, exacerbating default risk. Our results indicate that the increased systematic risk is due to increased default risk. There is no evidence to support information asymmetry as a channel for higher beta following crashes. We show that the increase in systematic risk results in higher costs for equity financing.
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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.