Reducing Cost of Capital. Do Voluntary Disclosure and Accounting Conservatism Contribute?

Abstract

Theoretically, accounting conservatism and voluntary disclosure may be used as means to reduce cost of equity. Supportive evidence has been provided by the majority of studies, especially in developed countries. We address this issue by focusing on an underdeveloped country with political instability. The impact of accounting conservatism and voluntary disclosure on cost of capital is estimated using the data belongs to all companies listed on the Palestine Exchange during the period from 2015 to 2019. The results confirm the negative influence of voluntary disclosure and accounting conservatism on cost of capital.