Are Information Attributes Priced?

42 Pages Posted: 6 Dec 2003

See all articles by Marlene Plumlee

Marlene Plumlee

University of Utah - School of Accounting

Christine Botosan

Financial Accounting Standards Board

Multiple version iconThere are 2 versions of this paper

Date Written: January 2007


Easley and O'Hara 2004 (EO) and Lambert, Leuz, and Verrecchia 2006 (LLV) model the links between information attributes and cost of capital. We explore how differences in the authors' interpretations of their models and their assumptions lead to different predictions, and we examine the relation between cost of equity capital and the information attributes posited by EO. We find that cost of equity capital is increasing in composition, and decreasing in precision and dissemination as predicted by EO. Our results suggest that managers might realize cost of equity capital benefits by providing greater public disclosure, taking actions to encourage greater dissemination of information, and selecting accounting and disclosure practices that increase the precision of their information set.

Keywords: Cost of equity capital, disclosure, information asymmetry, information precision

JEL Classification: D82, G12, M41

Suggested Citation

Plumlee, Marlene A. and Botosan, Christine, Are Information Attributes Priced? (January 2007). AAA 2007 Financial Accounting & Reporting Section (FARS) Meeting Papers, Available at SSRN: or

Marlene A. Plumlee (Contact Author)

University of Utah - School of Accounting ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

Christine Botosan

Financial Accounting Standards Board ( email )

401 Merritt 7
PO Box 5116
Norwalk, CT 06856
United States

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