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August 26, 2026China Accounting and Finance ReviewOpen Access

Corporate integrity culture and the cost of equity capital

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Authors

DNDongfang NieSLShiang Liu

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Overview

Econometric analysis reveals a negative association between corporate integrity culture and the cost of equity capital, indicating that reduced accounting malfeasance risk lowers financing costs.

Key Points

  • To examine the relationship between corporate integrity culture and the implied cost of equity capital and identify the mediating risk mechanisms.
  • Utilized firm-level integrity culture data developed by Li et al. (2021).
  • Estimated an ordinary least squares (OLS) regression model to analyze the relationship between integrity culture and the implied cost of equity capital while addressing potential endogeneity.
  • Observed a statistically significant negative association between corporate integrity culture and the cost of equity capital.
  • Identified that corporate integrity culture lowers financing costs primarily by mitigating the risk of accounting malfeasance.

Cite This Study

Nie et al. (2026) studied this question.

synapsesocial.com/papers/6a8e9b33451774b83f3b3bcehttps://doi.org/10.1108/cafr-03-2026-0034
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