The analysis is based on 36 companies from the Copenhagen Stock Exchange's industrial index in the period from 1997-2000. The conclusion of the analysis is, among other things, that relatively few aspects are published in addition to the compulsory requirements to annual reports. Hence, a positive (negative) and statistically significant correlation was established between the information index and the bid-ask spread (the turnover rate of the company's shares).
Against the established correlation between the information index and the cost of capital, the authors state that it is in the companies' interest to carefully consider the available possibilities of intensifying the communication with investors and analysts. The authors indicate that other things being equal the results of the survey also support the new Financial Statements Act, which calls for greater openness.
Read the article "The correlation between non-compulsory information in the annual report and the company's cost of capital", in Focus no. 58 at the Copenhagen Stock Exchange's website www.cse.dk.
