Does financial fraud affect implied cost of equity?
研究美国上市公司财务欺诈与隐含权益成本的关系，发现欺诈会提高权益成本，且外部和内部监控越强，这种效应越明显，从而降低公司价值。
Abstract The paper examines the relationship between financial fraud and a firm's implied equity cost. Using a U.S. sample of 15,552 firm‐year observations, we find a positive relationship between a firm's financial fraud and implied equity cost. Consistent with the monitoring channel, financial fraud increases a firm's equity cost in the presence of higher external and internal monitoring in terms of higher analyst coverage and institutional ownership. Our results are robust to alternate specifications and tests, including alternate definitions of equity cost, financial fraud, and other endogeneity concerns. The findings negate the business case of financial fraud by showing that financial fraud tends to enhance equity cost, thereby lowering the firm's value.