HOW DOES INFORMATION ASYMMETRY MANIFEST IN THE COST OF CAPITAL?

ABSTRACT. Our analysis complements the growing literature on the cost of capital effects of asymmetric information risk, the role of information asymmetry on the cost of capital, and the relevance of the cost of capital. The paper generates insights about the association between information risk and the cost of capital, the determination of the cost of capital, and the effect of changes in the cost of capital. pp. 154–159
JEL Classification: O16, R53, D24

Keywords: cost of capital effects, information asymmetry, equity