Research Article
The Effect Of Earnings Management And Corporate Governance On The Cost Of Equity Capital In Listed Manufacturing Industries In Indonesia
@INPROCEEDINGS{10.4108/eai.26-3-2019.2290921, author={Wiwik Utami and Rieke Pernamasari}, title={The Effect Of Earnings Management And Corporate Governance On The Cost Of Equity Capital In Listed Manufacturing Industries In Indonesia}, proceedings={Proceedings of the First Annual Conference of Economics, Business, and Social Science, ACEBISS 2019, 26 - 30 March, Jakarta, Indonesia}, publisher={EAI}, proceedings_a={ACEBISS}, year={2020}, month={2}, keywords={independent audit committee meeting frequency abnormal expense abnormal cfo cost of equity capital}, doi={10.4108/eai.26-3-2019.2290921} }- Wiwik Utami
Rieke Pernamasari
Year: 2020
The Effect Of Earnings Management And Corporate Governance On The Cost Of Equity Capital In Listed Manufacturing Industries In Indonesia
ACEBISS
EAI
DOI: 10.4108/eai.26-3-2019.2290921
Abstract
The population was manufacturing companies listed in Indonesia Stock Exchange, sample was selected by purposive method based on annual report 2011-2013. Earnings management was measured based on real earnings management approach, used abnormal cash flow and abnormal expense. As a proxy of corporate governance, we used the amount of independent audit committee and audit committee meeting frequency. Cost of equity capital was measured by modified Ohlson model. The results of the study showed that the amount of independent audit committee and audit committee meeting frequency has no influence on the cost of equity capital. Earnings management which was measured based on abnormal CFO has no influence to the cost of equity capital, whereas abnormal expense has an influence on the cost of equity capital. This reflects that investors consider abnormal expense in calculating the cost of equity capital expectations.