scholarly journals Information Asymmetry, Ownership Structure and Cost of Equity Capital: The Formation for Open Innovation

2021 ◽  
Vol 7 (1) ◽  
pp. 48
Author(s):  
Ade Imam Muslim ◽  
Doddy Setiawan
Keyword(s):  
Stock Market ◽  
Information Asymmetry ◽  
Ownership Structure ◽  
Trading Volume ◽  
Foreign Ownership ◽  
Equity Capital ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Ownership Structures ◽  
The Cost

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.

Ambiguous Customer Identity Disclosure and the Cost of Equity Capital

2017 ◽  
Vol 20 (03) ◽  
pp. 1750021 ◽  
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.

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

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.

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

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.

Disclosure, ownership structure, earnings announcement lag and cost of equity capital in emerging markets

2015 ◽  
Vol 16 (1) ◽  
pp. 28-57 ◽  
Author(s):  
Hichem Khlif ◽  
Khaled Samaha ◽  
Islam Azzam
Keyword(s):  
Ownership Structure ◽  
Voluntary Disclosure ◽  
Equity Capital ◽  
Annual Reports ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Government Ownership ◽  
Earnings Announcement ◽  
Content Type ◽  
The Cost

Purpose – The purpose of this paper is to examine the effect of voluntary disclosure, ownership structure attributes and timely disclosure on cost of equity capital in the emerging Egyptian capital market. Design/methodology/approach – A content analysis of annual reports is used to measure the extent of voluntary disclosure. Earnings announcement lag (EAL) is used to measure the quality of voluntary disclosure (i.e. timely disclosure). Finally, the Capital Asset Pricing Model (CAPM) framework is used to estimate cost of equity capital. Findings – The authors find a negative relationship between the level of voluntary disclosure and cost of equity capital. More specifically, the authors document that this association is strongly significant under high ownership dispersion, low government ownership and shorter EAL. Finally, EAL is positively associated with cost of equity capital. Research limitations/implications – The authors use the CAPM framework as a proxy for the cost of equity since forecasted earnings per share are not communicated by financial analysts in the Egyptian Stock Exchange. Practical implications – The findings demonstrate for managers that the increased levels of voluntary and timely disclosure reduce the cost of external finance and improve the marketability of firms’ equities, which may directly impact growth opportunities especially when information is communicated to investors in a timely fashion. For regulators, it provides evidence that high government ownership reduces the value relevance of voluntary disclosure among investors, while free float as a proxy for high ownership dispersion improves it. Originality/value – The findings show that corporate disclosure policy depends more on the managers’ incentives to provide informative annual reports than on standards and regulations. The study also represents a first attempt that demonstrates how ownership structure and timely disclosure influence the relationship between disclosure and cost of equity capital.

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

Paradigma ◽  
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.

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

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.

Index Revisions, Stock Liquidity and the Cost of Equity Capital

2018 ◽  
Vol 19 (4) ◽  
pp. 1072-1089
Author(s):  
Abdul Rahman ◽  
Prabina Rajib
Keyword(s):  
Firm Size ◽  
Trading Volume ◽  
Turnover Rate ◽  
Equity Capital ◽  
Liquidity Effect ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Stock Liquidity ◽  
Liquidity Measures ◽  
The Cost

This study examines the stock liquidity and cost of equity capital (COEC) effects around the CNX Nifty index revisions during the period 1998–2011. To examine these effects, the inclusion (exclusion) firms are compared with their matching peers. The stock liquidity effect has been examined by using distinct liquidity measures, such as trading volume, turnover rate and illiquidity ratio. The COEC effect has been examined with the help of cost of equity, stock liquidity, firm size, leverage and inclusion (exclusion) dummies. It was found that the stocks included to the CNX NIFTY were less liquid than their matching peers were, whereas the stocks excluded were experiencing more liquidity than their matching peers. Further, the study finds an increase in the COEC for the included firms and a decrease in the COEC for the excluded firms.

Information asymmetry and the cost of equity capital

2013 ◽  
Vol 27 ◽  
pp. 611-620 ◽  
Author(s):  
William Peng He ◽  
Andrew Lepone ◽  
Henry Leung
Keyword(s):  
Information Asymmetry ◽  
Equity Capital ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
The Cost
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