Director Attention Lowers Cost of Equity Capital, Boosts Accounting Quality
Independent directors who focus more on a company can help lower its cost of equity capital. This is because these directors pay more attention to monitoring the company's financial information, leading to better quality accounting data. Specifically, directors on the audit committee play a crucial role in reducing the cost of equity capital. This means that when directors are more attentive and involved, the company's financial health improves, making it less risky for investors.