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Cited by 2,377

The DOI matches its Crossref record; 52 of the 52 references it cites were found in a registry or an index.

Costs of Equity and Earnings Attributes

Francis, Jennifer, LaFond, Ryan, Olsson, Per M., Schipper, Katherine·2004·The Accounting Review
DOI 10.2308/accr.2004.79.4.967
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Abstract

We examine the relation between the cost of equity capital and seven attributes of earnings: accrual quality, persistence, predictability, smoothness, value relevance, timeliness, and conservatism. We characterize the first four attributes as accounting-based because they are typically measured using accounting information only. We characterize the last three attributes as market-based because proxies for these constructs are typically based on relations between market data and accounting data. Based on theoretical models predicting a positive association between information quality and cost of equity, we test for and find that firms with the least favorable values of each attribute, considered individually, generally experience larger costs of equity than firms with the most favorable values. The largest cost of equity effects are observed for the accounting-based attributes, in particular, accrual quality. These findings are robust to controls for innate determinants of the earnings attributes (firm size, cash flow and sales volatility, incidence of loss, operating cycle, intangibles use/intensity, and capital intensity), as well as to alternative proxies for the cost of equity capital.

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Metadata

Authors
Francis, J., LaFond, R., Olsson, P. M., & Schipper, K.
Venue
The Accounting Review
Publisher
American Accounting Association
Published
2004-10-01
Volume
79
Issue
4
Pages
967-1010
ISSN
  • 0001-4826 (ISSN-L)
  • 1558-7967
DOI
10.2308/accr.2004.79.4.967
OpenAlex
W2071892020
Cited by
2,377
References
52
FWCI
190.71
Type
journal article
Language
en
Open access
closed

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CoChat. (2026). Citation check: Costs of Equity and Earnings Attributes. https://app.cochat.ai/papers/10.2308/accr.2004.79.4.967
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Francis, J., LaFond, R., Olsson, P. M., & Schipper, K. (2004). Costs of Equity and Earnings Attributes. The Accounting Review. https://doi.org/10.2308/accr.2004.79.4.967

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