Risk Disclosure and Cost of Equity: A Bayesian Approach

Risk Disclosure and Cost of Equity: A Bayesian Approach

This paper aims to analyze the relationship between risk information disclosure and the cost of equity of companies in the Spanish capital market. This study uses a set of 71 firms listed on Madrid stock exchange between 2010 and 2015; all of them are non-financial listed companies for which profit...

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Main Authors: Jose Miguel Tirado-Beltrán, José David Cabedo, Dennis Esther Muñoz-Ramírez
Format: Article
Language:Spanish
Published: Instituto Tecnológico Metropolitano 2020-01-01
Series:Revista CEA
Subjects:
cost of equity
risk disclosure
bayesian approach
Online Access:https://revistas.itm.edu.co/index.php/revista-cea/article/view/1497
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spelling doaj-4c5c32e9b0a64a4a82b673e9a4bec03f2020-11-25T01:02:49ZspaInstituto Tecnológico MetropolitanoRevista CEA2390-07252422-31822020-01-01611254310.22430/24223182.14971497Risk Disclosure and Cost of Equity: A Bayesian ApproachJose Miguel Tirado-Beltrán0José David Cabedo1Dennis Esther Muñoz-Ramírez2Universitat Jaume IUniversitat Jaume IUniversitat Jaume IThis paper aims to analyze the relationship between risk information disclosure and the cost of equity of companies in the Spanish capital market. This study uses a set of 71 firms listed on Madrid stock exchange between 2010 and 2015; all of them are non-financial listed companies for which profit forecasts existed. The problem was analyzed using a Bayesian linear regression approach. The results show that cost of equity and disclosed risk information are not related if a global view of the latter is adopted. However, a positive relationship between financial risks and the cost of equity occurs when risk information is divided into financial and non-financial risks.https://revistas.itm.edu.co/index.php/revista-cea/article/view/1497cost of equityrisk disclosurebayesian approach
collection DOAJ
language Spanish
format Article
sources DOAJ
author Jose Miguel Tirado-Beltrán
José David Cabedo
Dennis Esther Muñoz-Ramírez
spellingShingle Jose Miguel Tirado-Beltrán
José David Cabedo
Dennis Esther Muñoz-Ramírez
Risk Disclosure and Cost of Equity: A Bayesian Approach
Revista CEA
cost of equity
risk disclosure
bayesian approach
author_facet Jose Miguel Tirado-Beltrán
José David Cabedo
Dennis Esther Muñoz-Ramírez
author_sort Jose Miguel Tirado-Beltrán
title Risk Disclosure and Cost of Equity: A Bayesian Approach
title_short Risk Disclosure and Cost of Equity: A Bayesian Approach
title_full Risk Disclosure and Cost of Equity: A Bayesian Approach
title_fullStr Risk Disclosure and Cost of Equity: A Bayesian Approach
title_full_unstemmed Risk Disclosure and Cost of Equity: A Bayesian Approach
title_sort risk disclosure and cost of equity: a bayesian approach
publisher Instituto Tecnológico Metropolitano
series Revista CEA
issn 2390-0725
2422-3182
publishDate 2020-01-01
description This paper aims to analyze the relationship between risk information disclosure and the cost of equity of companies in the Spanish capital market. This study uses a set of 71 firms listed on Madrid stock exchange between 2010 and 2015; all of them are non-financial listed companies for which profit forecasts existed. The problem was analyzed using a Bayesian linear regression approach. The results show that cost of equity and disclosed risk information are not related if a global view of the latter is adopted. However, a positive relationship between financial risks and the cost of equity occurs when risk information is divided into financial and non-financial risks.
topic cost of equity
risk disclosure
bayesian approach
url https://revistas.itm.edu.co/index.php/revista-cea/article/view/1497
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AT josedavidcabedo riskdisclosureandcostofequityabayesianapproach
AT dennisesthermunozramirez riskdisclosureandcostofequityabayesianapproach
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