Social disclosure and cost of equity in public companies in Brazil

Authors

  • Rodrigo de Souza Gonçalves Universidade de Brasília; Departamento de Ciências Contábeis e Atuariais
  • Otávio Ribeiro de Medeiros Universidade de Brasília; Departamento de Ciências Contábeis e Atuariais
  • Jorge Katsumi Niyama Universidade de Brasília; Departamento de Ciências Contábeis e Atuariais
  • Elionor Farah Jreige Weffort Fundação Escola do Comércio Álvares Penteado; Departamento de Ciências Contábeis

DOI:

https://doi.org/10.1590/S1519-70772013000200003

Abstract

This study aims to analyze the relationship between the level of social disclosure and the cost of equity in public companies in Brazil. The hypothesis is that external social programs promoted or supported by a company increase the organization's reputation, compensate for externalities and bring economic benefits through the negative relationship with the cost of equity. To test this hypothesis, social responsibility reports of 83 companies listed on the São Paulo Stock, Mercantile and Futures Exchanges (Bolsa de Valores, Mercadorias e Futuros de São Paulo - BM) from the period 2005-2009 were collected and analyzed. A composite index of 13 indicators was used to evaluate the social disclosure level of the companies analyzed. The cost of equity was risk-adjusted using the capital asset-pricing model (CAPM) and regression tested using panel data with cross-sectional fixed effects. The results show a negative relationship between the cost of equity and level of social disclosure, indicating that the Brazilian stock market has a semi-strong form of market efficiency.

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Published

2013-08-01

Issue

Vol. 24 No. 62 (2013)

Section

Articles

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How to Cite

Gonçalves, R. de S., Medeiros, O. R. de, Niyama, J. K., & Weffort, E. F. J. (2013). Social disclosure and cost of equity in public companies in Brazil . Revista Contabilidade & Finanças, 24(62), 113-124. https://doi.org/10.1590/S1519-70772013000200003