The Impact of Regulatory Changes on Stock Market Volatility and The Cost of Equity Capital: Evidence From An Emerging Market


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Ergül N., Antoniou A., Priestley R., Holmes P.

South Western Finance Association, San Antonio, Texas, US., Texas, Amerika Birleşik Devletleri, 9 - 12 Mayıs 1996, ss.1-22

  • Yayın Türü: Bildiri / Özet Bildiri
  • Basıldığı Şehir: Texas
  • Basıldığı Ülke: Amerika Birleşik Devletleri
  • Sayfa Sayıları: ss.1-22
  • Marmara Üniversitesi Adresli: Evet

Özet

Abstract

This paper investigates the impact of regulatory change on stock price volatility, the impounding of information and the cost of equity capital.  Contrary to the traditional view, it is shown that increased volatility is not necessarily undesirable since it may reflect the more rapid impounding of information.  Regulatory change which leads to information being more reliable leads investors to reassess the riskiness of individual firms, reduces the cost of equity capital and improves the allocation of resources in the economy by providing a set of market prices which more accurately reflects fundamental values.

 Keywords: Stock Market Volatility, Cost of Equity Capital, Information, Regulation

JEL Classification G1 G12 G14 G18