SHS Web Conf.
Volume 34, 2017The 17th Annual Conference of the Asian Academic Accounting Association (2016 FourA Conference)
|Number of page(s)||5|
|Section||Financial Accounting and Reporting|
|Published online||14 February 2017|
Fair Value Accounting and the Cost of Equity Capital: The Moderating Effect of Risk Disclosure
1 School of Accounting, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia
2 School of Economics, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia
3 School of Management, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia
* Corresponding author: email@example.com
Evidence thus far suggests fair value accounting poses risk and affects firms’ returns in some ways. This research, on a sample of Asian banks, improves the understanding of the information risk effect of fair value accounting by examining the moderating role of risk disclosure in the relationship between fair value accounting and the cost of equity capital. The results from a generalised method of moments on dynamic panel data analysis, show that risk disclosure mitigates the asymmetric information problem. Thus the findings contribute towards the standard setters’ effort in improving the practice of fair value accounting, and suggest that there are benefits in mandating disclosure especially for banks.
© The Authors, published by EDP Sciences, 2017
This is an Open Access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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