Effect of Discretionary Accruals in the Cost of Capital: An application in a Sample of Registered Business Organizations in | ||
| TANMIYAT AL-RAFIDAIN | ||
| Article 8, Volume 34, Issue 109, September 2012, Pages 148-167 PDF (1.68 M) | ||
| Document Type: Research Paper | ||
| DOI: 10.33899/tanra.2012.161992 | ||
| Authors | ||
| Dr.Duaa Al-Hussaini; Harith Al-Dabbag | ||
| Abstract | ||
| Abstract The research involved a sample of (19) business organizations that are registered in Qatar Financial Markets. Healy model was employed to measure the discretionary accruals. Cost of capital was measured by the cost of equity and cost of debt. Capital Asset Pricing Model (CAPM) was used to measure the cost of equity and the ratio of the average interest to the average loans. These interests are paid in measuring the cost of the debt. Multiple regression analysis was used to identify the direct and indirect effects amongst the variables of the research. The research concluded that the discretionary accruals have a significant effect on the cost of capital of the sample, and that the investor takes the risk that is reflected on the average return that he endeavors to obtain into consideration. The discretionary accruals are directly related to the cost of equity and the cost of debt. Therefore, the recommendations are that the discretionary accruals are of a great importance for earnings management process approach. The research recommends that there must be new accounting standards that increase the disclosure of the financial reports and reduces cheating and manipulation with the accounting numbers and that consequently will results in achieving economic benefits represented by reducing the cost of capital. . | ||
| Keywords | ||
| Discretionary Accruals; cost of Equity; Cost of Debt | ||
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