The interrelationships between corporations' dependence on external financing, information disclosure and cost of capital

The paper tests the relationship between corporations' dependence on external financing and their level of corporate information disclosure, and the relationship between the cost of capital and the level of corporate information disclosure in the Integrated Circuit (IC) industry in Taiwan. Using a sample of 108 companies, it is found that firms with greater external financing have more incentives to provide higher information disclosure levels. Further, an active disclosure policy would lead to a lower cost of both debt and equity capital.