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Voluntary and timely disclosure and the cost of debt: South African evidence

Voluntary and timely disclosure and the cost of debt: South African evidence Purpose– The aim of this study is to investigate the effect of voluntary and timely disclosure on the cost of debt for the South African setting. Design/methodology/approach– The sample of this paper consists of 20 South African listed non-financial companies for the period 2008-2011. A content analysis is used to measure the extent of voluntary disclosure. Timely disclosure is proxied by earnings reporting lag. Findings– Results show that the extent of voluntary disclosure is negatively and significantly associated with the cost of debt. In contrast, timely disclosure exerts a trivial effect on the cost of debt. When testing for the moderating effect of timely disclosure on the association between the extent of voluntary disclosure and the cost of debt, this paper documents that this association is only negative and significant for the shorter earnings announcement lag group. Originality/value– The findings of this paper have policy implications for managers in the South African setting and other developing economies similar to South Africa, given the crucial role played by debt as an important source of external financing for publicly traded companies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Meditari Accountancy Research Emerald Publishing

Voluntary and timely disclosure and the cost of debt: South African evidence

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References (29)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
2049-372X
DOI
10.1108/MEDAR-09-2013-0042
Publisher site
See Article on Publisher Site

Abstract

Purpose– The aim of this study is to investigate the effect of voluntary and timely disclosure on the cost of debt for the South African setting. Design/methodology/approach– The sample of this paper consists of 20 South African listed non-financial companies for the period 2008-2011. A content analysis is used to measure the extent of voluntary disclosure. Timely disclosure is proxied by earnings reporting lag. Findings– Results show that the extent of voluntary disclosure is negatively and significantly associated with the cost of debt. In contrast, timely disclosure exerts a trivial effect on the cost of debt. When testing for the moderating effect of timely disclosure on the association between the extent of voluntary disclosure and the cost of debt, this paper documents that this association is only negative and significant for the shorter earnings announcement lag group. Originality/value– The findings of this paper have policy implications for managers in the South African setting and other developing economies similar to South Africa, given the crucial role played by debt as an important source of external financing for publicly traded companies.

Journal

Meditari Accountancy ResearchEmerald Publishing

Published: Nov 11, 2014

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