The worldwide trend toward fuller and more standardized disclosure rules should ________ the cost of equity capital.

Question

Quizplus · Accepted Answer

Standardized disclosure rules provide investors with more information, which leads to greater transparency and reduces uncertainty, making investment less risky. This increases investor confidence, which in turn reduces the cost of equity capital. Therefore, the worldwide trend toward fuller and more standardized disclosure rules should decrease the cost of equity capital.

The Worldwide Trend Toward Fuller and More Standardized Disclosure Rules