Do Temporary Increases in Information Asymmetry Affect the Cost of Equity?

Our study aims to investigate how information asymmetry and ownership structure affect cost of equity capital. For that purpose, we collected 246 issuers over 4 years for a total of 984 observations. By using panel data processing, we found that the information asymmetry we proxied through Price non-Synchronization and trading volume had an effect on the cost of equity capital. Our results also confirmed both Agency Theory and Pecking Order Theory. Both theories are in line with the conditions of the stock market in Indonesia. In addition, we found that institutional and foreign ownership structures also had an effect on the cost of equity capital. Furthermore, our results also confirmed Interest Alignment Theory and Entrenchment Theory. Our research is expected to contribute to the debate on the existence of information asymmetry and ownership structures in relation to the cost of equity capital. We also hope that it will be a valuable input for investors in considering their investment. Moreover, from the results of this study, investors can also consider foreign ownership or institutional ownership in determining their investment. In addition, stock market regulators in Indonesia can develop approaches to minimize information asymmetry and encourage foreign investors to invest in Indonesia.

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Ambiguous Customer Identity Disclosure and the Cost of Equity Capital

Review of Pacific Basin Financial Markets and Policies ◽

10.1142/s0219091517500217 ◽

2017 ◽

Vol 20 (03) ◽

pp. 1750021 ◽

Cited By ~ 3

Author(s):

Hsin-Yi Yu ◽

Li-Wen Chen

Keyword(s):

Information Asymmetry ◽

Market Competition ◽

Equity Capital ◽

Cost Of Equity Capital ◽

Cost Of Equity ◽

Proprietary Information ◽

Customer Information ◽

Identity Disclosure ◽

The Cost ◽

Proprietary Cost

In deciding how much customer information to disclose, managers face a tradeoff between the benefits of reducing information asymmetry and the losses of revealing proprietary information. This paper investigates which factors affect the level of ambiguous customer identity disclosure and whether such ambiguous disclosure affects the cost of equity capital. The empirical evidence shows that the proprietary cost is a crucial factor in ambiguous customer identity disclosure. Firms with a higher level of ambiguous customer identity disclosure generate a higher cost of equity capital. Moreover, the higher cost of equity capital is concentrated among firms under imperfect market competition.

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The Effect of Information Asymmetry and Business Diversification on Cost of Equity Capital

JASa (Jurnal Akuntansi, Audit dan Sistem Informasi Akuntansi) ◽

10.36555/jasa.v5i1.1486 ◽

2021 ◽

Vol 5 (1) ◽

pp. 104-112

Author(s):

Nurul Intan Okci Pratiwi

Keyword(s):

Information Asymmetry ◽

Positive Impact ◽

Stock Exchange ◽

Linear Regression Analysis ◽

Secondary Data ◽

Equity Capital ◽

Cost Of Equity Capital ◽

Cost Of Equity ◽

Quantitative Research Methods ◽

The Cost

This study aims to examine the effect of information asymmetry and business diversification on the cost of equity capital in mining companies listed in the Indonesia Stock Exchange with a sample of 14 companies for the 2017-2019 period. Data analysis used descriptive research with quantitative research methods in the form of secondary data. Information asymmetry is measured using the bid-ask spread and diversification is measured using the Herfindahl Index proxy while the cost of equity capital is measured using the Ohlson model. Hypothesis testing is carried out using multiple linear regression analysis to see how much influence information asymmetry and diversification have on the cost of equity capital. The result indicated that information asymmetry had a positive impact on the cost of equity capital and business diversification had a positive impact on the cost of equity capital.

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PENGARUH ASIMETRI INFORMASI DAN MANAJEMEN LABATERHADAP BIAYA MODAL EKUITAS PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA (BEI) TAHUN 2013-2015

EKOMBIS REVIEW: Jurnal Ilmiah Ekonomi dan Bisnis ◽

10.37676/ekombis.v6i1.431 ◽

2018 ◽

Vol 6 (1) ◽

Author(s):

Yudi Partama Putra

Keyword(s):

Earnings Management ◽

Information Asymmetry ◽

Stock Exchange ◽

Equity Capital ◽

Manufacturing Companies ◽

Cost Of Equity Capital ◽

Cost Of Equity ◽

Capital Costs ◽

The Cost ◽

Variable Information

Yudi Partama Putra; This study aims to (1) determine the effect of asymmetry of information on costs of equity at manufacturing companies listed in Indonesia Stock Exchange period 2013-2015, (2) know the effect of earnings management on equity capital costs at manufacturing companies listed on the Stock Exchange in 2013- 2015, (3) determine the effect of information asymmetry and earnings management simultaneously on the cost of equity capital in manufacturing companies listed on the Indonesian Stock Exchange 2013-2015. The population in this study is manufacturing company listed on the Indonesia Stock Exchange. While the sample selection is taken by using purposive sampling method. The classical assumption test used in this research is using normality test, multicollinearity test, heteroscedasticity test, and autocorrelation test. Analysis of data used to test the hypothesis is multiple linear regression analysis techniques. Based on the results of the research indicate that (1) information asymmetry has positive and significant effect to cost of equity (2) earnings management has no significant effect on Cost of equity. F test results show that the variable information asymmetry and earnings management simultaneously affect the cost of equity capital. The result of determination coefficient test with R square shows that variable information asymmetry and earnings management influence cost equity capital equal 10,7%, while the rest 89,3% influenced by other variables.Key Words: Information Asymetry, Earnings Management, and Cost Of Equity.

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Do Temporary Increases in Information Asymmetry Affect the Cost of Equity?

Management Science ◽

10.1287/mnsc.2013.1887 ◽

2015 ◽

Vol 61 (2) ◽

pp. 354-371 ◽

Cited By ~ 16

Author(s):

Shai Levi ◽

Xiao-Jun Zhang

Keyword(s):

Information Asymmetry ◽

Cost Of Equity ◽

The Cost

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Financial Reporting Frequency, Information Asymmetry, and the Cost of Equity

SSRN Electronic Journal ◽

10.2139/ssrn.1927696 ◽

2011 ◽

Cited By ~ 1

Author(s):

Renhui Fu ◽

Arthur G. Kraft ◽

Huai Zhang

Keyword(s):

Information Asymmetry ◽

Financial Reporting ◽

Cost Of Equity ◽

Frequency Information ◽

Reporting Frequency ◽

The Cost

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PENGARUH MANAJEMEN LABA, ASIMETRI INFORMASI, DAN PENGUNGKAPAN SUKARELA TERHADAP BIAYA MODAL EKUITAS

Paradigma ◽

10.33558/paradigma.v17i2.2316 ◽

2020 ◽

Vol 17 (2) ◽

pp. 69-88

Author(s):

Dian Desty Widyowati

Keyword(s):

Earnings Management ◽

Information Asymmetry ◽

Voluntary Disclosure ◽

Sampling Technique ◽

Equity Capital ◽

Cost Of Equity Capital ◽

Cost Of Equity ◽

Independent Variables ◽

The Cost ◽

Positive Effect

The research method used multiple regression analysis. The data used are the annual financial statements of property companies listed on the Indonesia Stock Exchange 2014-2016. The sample is 87 companies with purposive sampling technique. The data is processed using SPSS (Statistical Product and Service Solution) Version 22. The results of this study indicate that earnings management has a positive effect on the cost of equity capital with a significant level of 0.000 and beta 0.712, information asymmetry has a significant effect on the cost of equity capital with a significant level of 0.087 and beta 0.139. , then voluntary disclosure has no significant effect on the cost of equity capital with a significant level of 0.955 and beta 0.004. In general, it can be concluded that earnings management has a positive effect on the cost of equity capital, while information asymmetry and voluntary disclosure have no significant effect on the cost of equity capital. Future studies consider adding other independent variables that can affect the cost of equity capital so that it can show a better correlation between the dependent and independent variables.

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PENGARUH OPASITAS LABA, ASIMETRI INFORMASI, DAN KEINFORMATIFAN LABA TERHADAP BIAYA EKUITAS DI PERUSAHAAN MANUFAKTUR

Jurnal Akuntansi Trisakti ◽

10.25105/jat.v6i1.4918 ◽

2019 ◽

Vol 6 (1) ◽

pp. 43

Author(s):

Melinda Malau ◽

Etty Murwaningsari ◽

Sekar Mayangsari ◽

Titik Aryati

Keyword(s):

Information Asymmetry ◽

Factor Model ◽

The Philippines ◽

Income Smoothing ◽

Significant Positive Effect ◽

Manufacturing Companies ◽

Cost Of Equity ◽

Negative Effect ◽

The Cost ◽

Positive Effect

This study aims to examine and analyze whether earnings opacity, information asymmetry, earnings informativeness have effect to the cost of equity. The method used in this study is panel regression analysis. The sample used in the study was 900 observations consisting of 500 observations in Indonesia and 400 observations in the Philippines using data from manufacturing companies for the period 2013-2017. Cost of equity is measured by a three-factor model. Earnings aggressiveness, loss avoidance, and income smoothing as a proxy for earnings opacity. Information asymmetry is measured by the bid-ask spread. Earnings informativeness are measured by discretionary accruals. The result shows that earnings opacity has a significant positive effect on the cost of equity. Information asymmetry has a significant positive effect on the cost of equity. Earnings informativeness have a significant negative effect on cost of equity.

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Does Mandatory Ifrs Adoption and Macroeconomic Factors Affect Cost of Equity Capital? Empirical Evidence From South African Listed Firms

Journal of Accounting and Finance in Emerging Economies ◽

10.26710/jafee.v5i1.725 ◽

2019 ◽

Vol 5 (1) ◽

pp. 57-70

Author(s):

Michael Yeboah ◽

Andrast Akacs

Keyword(s):

Information Asymmetry ◽

South African ◽

Equity Capital ◽

Reporting Standards ◽

Cost Of Equity Capital ◽

Cost Of Equity ◽

Data Set ◽

Managerial Opportunism ◽

Ifrs Adoption ◽

The Cost

Purpose: This paper investigates the collaboration of International Financial Reporting Standards (IFRS) adopted and macroeconomic variables interaction with information asymmetry, analysts following and managerial opportunism affecting the cost of equity capital, and also influence investor’s decision taking on companies in South Africa. Design/Approach: A sample of 49 listed Johannesburg mining and manufacturing firms was extracted from archival database of INET BFA/IRESS SA, Morningstar, and Anupedia. A leverage fixed effects panel data set of firms from 2001 to 2014 was examined, which shows that Breusch-Lagrange Multiplier tests and the test of over-identifying restrictions used, form the basis of the content analysis of the most recent IFRS effect after mandatory adoption. We used a hand-collected dataset between 2000 and 2015. Findings: Our findings suggest that a signiﬁcant association is found between IFRS and its interactions with managerial opportunism and integrity but with a reasonable statistical effect. However, the IFRS adoption effect on the cost of equity capital of South African firms’ has no significant effect. Practical implications: This study reveals that most firms report more, the credibility of annual financial statements which may not be sufﬁcient because of the qualitative data for an assessment of managerial opportunism, information asymmetry and analysts following. Of such myopia of company managers, their reputation causes agency problems and as a result, shareholders interest is mainly focused on improving reporting standards Originality: The research considers dual harmonizing facets: ﬁrst, that the interaction with IFRS adoption and economic factors impact on the cost of equity capital may be so pathetic and obvious; and second, that IFRS moderation impacts on the cost of equity capital in Sub- Saharan African. This finding should be meaningful to managers, analysts, policymakers, and supervisory bodies in nations with similar capital structure decisions and socioeconomic systems.

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Effect of Frequency of Interim Financial Reporting on Information Asymmetry and Cost of Equity in Companies Listed in Jakarta Islamic Index 2012-2018

FINANSIA: Jurnal Akuntansi dan Perbankan Syariah ◽

10.32332/finansia.v3i2.2289 ◽

2020 ◽

Vol 3 (2) ◽

pp. 97

Author(s):

Ahmad Rosyid ◽

Alvita Tyas Dwi Aryani

Keyword(s):

Information Asymmetry ◽

Financial Reporting ◽

Frequency Data ◽

Cost Of Equity ◽

Research Findings ◽

Reporting Frequency ◽

The Cost ◽

The Relationship

The purpose of this research is to find out the relationship between the frequency of interim financial reporting with information asymmetry and cost of equity for issuers in the Jakarta Islamic Index for the period 2012 to 2018. Research findings on 84 companies, namely (1) there is no relationship between the frequency of interim financial reporting with information asymmetry (2 ) there is no relationship between the frequency of interim financial reporting with the cost of equity. The absence of this relationship is caused by (1) interim financial reporting frequency data that are not different between issuers (2) research settings.

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