Risk disclosure and cost of equity. The Spanish case

Resumen

In this paper we make an empirical study of the relationshipbetween risk disclosure and the cost of equity. In particular, theobjective being pursued is to contrast whether or not the cost ofequity for the company is related to its financial and non‑financialrisk disclosure. Our results show no statistically significantrelationship between the latter and the cost of equity; and astatistically significant relationship, with a positive sign, betweenthis cost and financial risk disclosure. This suggests thatcompany risk disclosures appear to introduce unknown contingenciesand risk factors rather than only update informationabout known risks.