The association between disclosure level and cost of capital in an emerging market: evidence from Egypt

This paper aims to empirically investigate whether the cost of equity and debt capital is related to the extent of voluntary disclosure in the Egyptian stock market. Following the previous research, a disclosure index relevant to the Egyptian environment was developed and applied in OLS regressions, using information provided in the annual reports of 73 Egyptian listed companies. The results, however, indicate that there is no significant association between the level of voluntary disclosure, on the one hand, and the cost of equity capital and debt capital, on the other. This implies that Egyptian companies do not benefit from extensive voluntary disclosure in reducing the cost of equity or debt capital. Hence, the findings of this paper may be of interest to those academic researchers, practitioners and regulators who are interested in discovering the implications of extensive voluntary disclosure in the annual reports of an emerging market such as Egypt.