Raf Orens, Walter Aerts and Nadine Lybaert
This paper seeks to examine the association between a firm's extent and precision of customer value disclosure and its implied cost of equity capital. In addition, it aims to…
Abstract
Purpose
This paper seeks to examine the association between a firm's extent and precision of customer value disclosure and its implied cost of equity capital. In addition, it aims to investigate whether industry competition intensity attenuates this association.
Design/methodology/approach
The content of corporate websites from four continental European countries is analysed 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. It is observed that 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
The paper considers 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
The paper extends existing evidence by considering the capital market implications of disclosing customer value information. In addition, it examines whether industry competition affects the association between customer value disclosure and the firm's cost of equity capital.
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Raf Orens, Walter Aerts and Nadine Lybaert
The purpose of this paper is to examine empirically the impact of web‐based intellectual capital (IC) reporting on firm's value and its cost of finance.
Abstract
Purpose
The purpose of this paper is to examine empirically the impact of web‐based intellectual capital (IC) reporting on firm's value and its cost of finance.
Design/methodology/approach
A content‐analysis of corporate web sites is conducted from four continental European countries (Belgium, France, Germany and The Netherlands) on the presence of IC information. Simultaneous regression modelling is used to control for endogeneity within a firm's disclosure strategy.
Findings
The data show that cross‐sectional differences in the extent of IC disclosure are positively associated with firm value. Greater IC disclosure in continental Europe is associated with lower information asymmetry, lower implied cost of equity capital and lower rate of interest paid.
Research limitations/implications
The study is restricted to an analysis of firm's benefits of increased web‐based disclosure without considering related costs.
Practical implications
The results of the study show that firms tend to benefit economically from better IC disclosure.
Originality/value
Existing evidence is extended by considering the capital market implications of IC related disclosure and web‐based related disclosure.
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This paper provides a quantitative review of the literature on the repercussions of idiosyncratic information on firms’ cost of equity (CoE) capital. In total, I review the…
Abstract
This paper provides a quantitative review of the literature on the repercussions of idiosyncratic information on firms’ cost of equity (CoE) capital. In total, I review the results of 113 unique studies examining the CoE effects of information Quantity, Precision and Asymmetry. My results suggest that the association between firm-specific information and CoE is subject to moderate effects. First, the link between Quantity and CoE is moderated by disclosure types and country-level factors in that firms in comparatively weakly regulated countries tend to enjoy up to four times greater CoE benefits from more expansive disclosure—depending on the type of disclosure—than firms in strongly regulated markets. Second, a negative relationship between Precision and CoE is only significant in studies using non-accrual quality proxies for Precision and risk factor-based (RFB)/valuation model-based (VMB) proxies for CoE. Third, almost all VMB studies confirm the positive association between Asymmetry and CoE, but there is notable variation in the conclusions reached when ex post CoE measurers are used.
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Stefano Amato, Laura Broccardo and Andrea Tenucci
This study investigates the association between family firm status and the maturity level of management control systems (MCSs) by considering the moderating effect of process…
Abstract
Purpose
This study investigates the association between family firm status and the maturity level of management control systems (MCSs) by considering the moderating effect of process digitalization.
Design/methodology/approach
The authors conducted an empirical analysis on a sample of 106 Italian firms, utilizing both ordinary least squares and ordered logistic regression in this study.
Findings
By resorting to the MCS maturity model proposed by Marx et al. (2012), the empirical findings reveal that family firms do not differ from their nonfamily counterparts regarding MCS maturity. Furthermore, the degree of process digitalization is positively associated with the probability of adopting IT-related technologies in MCSs. Digitalization negatively moderates the relationship between family firm status and MCS maturity, resulting in family firms exhibiting a lower MCS maturity level than their nonfamily counterparts.
Research limitations/implications
Despite similar efforts in the digitalization process, family firms lag behind in the adoption of IT-enabled MCSs, which suggests that reduced agency issues in family firms constrain the MCS maturity level.
Practical implications
This study can assist practitioners in implementing a more mature MCS by considering the interplay between internal digitalization processes and family status of the firm, thereby enhancing the decision-making process.
Originality/value
This study adds novelty to an underexplored area at the intersection of MCSs, family firms and digitalization.