Title: Customer value disclosure and cost of equity capital
Authors: Orens, Raf ×
Aerts, Walter
Lybaert, Nadine #
Issue Date: 2013
Publisher: Emerald Group Publishing Ltd.
Series Title: Review of Accounting and Finance vol:12 issue:2 pages:130-147
Abstract: Purpose: This paper examines the association between a firm’s extent and precision of customer value disclosure and its implied cost of equity capital. In addition, we investigate whether industry competition intensity attenuates this association. Design/methodology/approach: We analyze the content of corporate websites from four continental European countries on the presence and precision of customer value information and empirically test whether content and precision are associated with the firm’s implied cost of equity capital measurement. Findings: The results show a negative association between cross-sectional differences in the extent of customer value disclosure and cross-sectional differences in a firm’s cost of equity capital. In addition, the precision of the customer value information disclosed affects this association. We observe a negative relationship between quantitative (or hard) customer value disclosure and a firm’s cost of equity capital, but not for qualitative (or soft) customer value disclosure. As expected, industry competition intensity attenuates the association between quantitative customer value disclosures and a firm’s cost of equity capital. Research limitations/implications: We consider web placement of customer value disclosure although a firm might disclose such information through other information channels as well. Practical implications: A firm tends to benefit economically from more precise customer value disclosure. Originality/value: We extend existing evidence by considering the capital market implications of disclosing customer value information. In addition, we examine whether industry competition affects the association between customer value disclosure and the firm’s cost of equity capital.
ISSN: 1475-7702
VABB publication type: VABB-1
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Research Center Accountancy, Leuven
Faculty of Economics and Business (FEB) - miscellaneous
Department of Accountancy and Taxation, Campus Carolus Antwerp
× corresponding author
# (joint) last author

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