Does Disclosure Quality through Investor Relations Lower the Cost of Equity Capital? Evidence from the Mediating Role of Information Asymmetry in Egypt
DOI:
https://doi.org/10.56830/IJAMS07202601Keywords:
Investor relations disclosure quality, cost of equity capital, information asymmetry, disclosure quality, emerging marketsAbstract
This study examines whether investor relations disclosure quality reduces the cost of equity capital directly and indirectly through information asymmetry in Egyptian listed non-financial firms. Using panel data for 50 firms over the period 2018–2024, the study measures investor relations disclosure quality through a content-analysis-based index that captures the accessibility, timeliness, usability and investor relevance of disclosed information. The cost of equity capital is estimated using a CAPM-based measure, while information asymmetry is proxied by the relative bid–ask spread. The hypotheses are tested using panel regression models with industry and year fixed effects, firm-clustered robust standard errors and regression-based mediation analysis with bootstrapped indirect effects. The findings show that higher investor relations disclosure quality is significantly associated with a lower cost of equity capital and lower information asymmetry. The mediation results further indicate that information asymmetry partially transmits the effect of investor relations disclosure quality on the cost of equity capital. These findings suggest that accessible, timely and useful investor-oriented disclosure improves the public information environment and reduces equity financing costs. The study contributes to investor relations and disclosure research by focusing on disclosure quality rather than the mere existence of investor relations channels and provides emerging-market evidence from Egypt.
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