Corporate governance attribute, blockholder ownership and accounting conservatism: Which aspects reduce the cost of equity?
2020
This study focuses on investigating the effect of block ownership, board of director diversification,
duality of the board of directors, independent level of board of commissionaire, audit committee
effectiveness, and accounting conservatism on the cost of equity. The study examines 121
manufacturing companies listed in Indonesia Stock Exchange. The panel regression indicates that
block ownership positively affects the cost of equity. Conversely, accounting conservatism has a
negative effect on the cost of equity. The company is expected to increase its accounting conservatism
practice as it can reduce the cost of equity. Furthermore, regulators especially Financial Services
Authority should protect investors’ rights from block holder expropriation in Indonesia. Companies
need to be encouraged to implement corporate governance not merely in compliance laws and
regulations but for sustainable business.
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