Accounting Conservatism and Cost of Equity Capital – Evidence from Indonesia
This paper describes the results of the research that investigates the association between ex-post conservatism or conditional conservatism and cost of equity capital in Indonesian manufacturing companies using data from 2015 to 2019. Conservatism is measured using accrual methods while equity capit...
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The Body of Expert and Licensed Accountants of Romania
2021-03-01
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doaj-73d000de1f69461eb7f14864f7f119d72021-03-30T22:09:17ZengThe Body of Expert and Licensed Accountants of Romania CECCAR Business Review2668-89212668-89212021-03-0122647210.37945/cbr.2021.02.0726688921Accounting Conservatism and Cost of Equity Capital – Evidence from IndonesiaRatna Puji Astuti KRISMIAJI0Akademi Akuntansi YKPN, Yogyakarta, IndonesiaThis paper describes the results of the research that investigates the association between ex-post conservatism or conditional conservatism and cost of equity capital in Indonesian manufacturing companies using data from 2015 to 2019. Conservatism is measured using accrual methods while equity capital costs are measured using a price/earnings growth (PEG) model. Using data from 142 companies or 710 observations, selected using purposive sampling methods, the study concludes that ex-post accounting conservatism lowered the company’s cost of equity capital. These results not only confirm previous research conducted in other countries, but also the agency theory which predicts that accounting conservatism lowers the asymmetry of information between the company’s management and shareholders, thereby affecting the decrease in equity capital costs. https://www.ceccarbusinessreview.ro/accounting-conservatism-and-cost-of-equity-capital-evidence-from-indonesia-a108d/download-PDF/ conservatismequity capital costsaccrual methodspeg model |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Ratna Puji Astuti KRISMIAJI |
spellingShingle |
Ratna Puji Astuti KRISMIAJI Accounting Conservatism and Cost of Equity Capital – Evidence from Indonesia CECCAR Business Review conservatism equity capital costs accrual methods peg model |
author_facet |
Ratna Puji Astuti KRISMIAJI |
author_sort |
Ratna Puji Astuti KRISMIAJI |
title |
Accounting Conservatism and Cost of Equity Capital – Evidence from Indonesia |
title_short |
Accounting Conservatism and Cost of Equity Capital – Evidence from Indonesia |
title_full |
Accounting Conservatism and Cost of Equity Capital – Evidence from Indonesia |
title_fullStr |
Accounting Conservatism and Cost of Equity Capital – Evidence from Indonesia |
title_full_unstemmed |
Accounting Conservatism and Cost of Equity Capital – Evidence from Indonesia |
title_sort |
accounting conservatism and cost of equity capital – evidence from indonesia |
publisher |
The Body of Expert and Licensed Accountants of Romania |
series |
CECCAR Business Review |
issn |
2668-8921 2668-8921 |
publishDate |
2021-03-01 |
description |
This paper describes the results of the research that investigates the association between ex-post conservatism or conditional conservatism and cost of equity capital in Indonesian manufacturing companies using data from 2015 to 2019. Conservatism is measured using accrual methods while equity capital costs are measured using a price/earnings growth (PEG) model. Using data from 142 companies or 710 observations, selected using purposive sampling methods, the study concludes that ex-post accounting conservatism lowered the company’s cost of equity capital. These results not only confirm previous research conducted in other countries, but also the agency theory which predicts that accounting conservatism lowers the asymmetry of information between the company’s management and shareholders, thereby affecting the decrease in equity capital costs. |
topic |
conservatism equity capital costs accrual methods peg model |
url |
https://www.ceccarbusinessreview.ro/accounting-conservatism-and-cost-of-equity-capital-evidence-from-indonesia-a108d/download-PDF/
|
work_keys_str_mv |
AT ratnapujiastutikrismiaji accountingconservatismandcostofequitycapitalevidencefromindonesia |
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1724179071101829120 |