GOVERNANCE THROUGH DISCLOSING RISK – IMPACT ON COST OF EQUITY
Abstract
This research work examines the literature on corporate risk disclosure and extends this further by undertaking an empirical investigation into the corporate risk disclosure practices of Indian companies and the economic benefits of risk disclosures. The content analysis was done on the annual reports (2014 – 2015) of all the companies with the help of a risk disclosure index developed, to measure the levels of risk disclosures. It is found that the Indian companies enjoy economic benefit in the form of reduced cost of equity, by reducing the information asymmetry. The firms which have higher levels of risk disclosures have lower cost of equity.
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