Disclosure level × cost of debt of Brazilian companies

Abstract

This study aims to investigate the relation between the voluntary disclosure level and the cost of capital of third parties. Increased disclosure by companies is expected to result in decreased information asymmetry, reducing the risk offered to the company's financial backers, as well as a rise in visibility and liquidity of its bonds and in the information quantity disseminated to its stakeholders in general. Before analyzing the regression with panel data, the multivariate Correspondence Analysis (ANACOR) technique was used for an exploratory analysis of the study variables. We examined 23 publicly-traded companies between 2000 and 2004, looking at the disclosure level (ND), and between 2001 and 2005 to look at the cost of capital of third parties (Kd) and the control variables, in accordance with the following equation: (Kdt) = (NDt-1, control variablest -1). The empirical results demonstrated that, based on the use of the pooling effect and the generalized least squares method, whose R² was approximately 28.49%, the voluntary disclosure level is inversely related to the cost of capital of third parties, that is, the higher the disclosure level, the lower the cost of capital of third parties. Thus, the study hypothesis was not rejected.