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Identifier to cite or link to this item: https://hdl.handle.net/10086/27921

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Title
Mandatory adoption of business risk disclosure: evidence from Japanese firms
Creator
Creator Name
KIM, Hyonok KIM, Hyonok
Affiliation
Affiliation Name
Tokyo Keizai University
Affiliation
Affiliation Name
University of California, Berkeley
Creator Name
YASUDA, Yukihiro YASUDA, Yukihiro
安田, 行宏 安田, 行宏
Affiliation
Affiliation Name
Hitotsubashi University
Key Word
Mandatory business risk disclosure
Total risk
Cost of capital
JEL
G14
M41
Abstract
We take advantage of institutional changes and its characteristics in Japan to empirically examine mandatory business risk disclosure. We find that there is a negative impact on total risk from the introduction of mandatory business risk disclosure. This suggests that an increase in business risk disclosure reduces a firm's cost of capital, which is contrary to the results of previous research. However, we also find that there is a positive relationship across firms and years after inception between the amount of business risk disclosure and total risk, indicating that mandatory business risk disclosure has a negative impact on investors' assessment of firms' risk. Although these two effects offset each other, the positive effects of enhanced disclosure of business risks on the cost of capital overcome the negative effects.
Publisher
Hitotsubashi University Center for Financial Research
Issued Date
2016-05
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
Working Paper Series ; No. G-1-14
Number of Pages
41
Appears in Collections
Working Paper Series / Hitotsubashi University Center for Financial Research
URL
https://hdl.handle.net/10086/27921