Does Corporate Environmental Disclosure Affect the Cost of Capital? Evidence from Tunisian Companies
We examine the effect of corporate environmental disclosure on the cost of equity capital for a sample of Tunis-ian firms over the period 2003-2011. Using an approach based on increasing dividends to estimate firms’ cost of equity, we find that firms with better environmental disclosure scores exhibit cheaper equity financing. In particular, our findings suggest that investment in practices corporate environmental disclosure contributes substantially to reducing firms’ cost of equity. Our paper contributes to the literature by adding evidence on effects of corporate environmental discl-osure voluntary on long term economic forecasts of the cost of equity and on the financial value of firms.
