Board of directors effectiveness, audit committee effectiveness, and cost of equity: Role of voluntary integrated reporting

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

This study aims to examine the effect of corporate governance structure effectiveness on Integrated Reporting (IR) disclosure. Corporate governance structures in this study consist of board of directors and audit committee. The study also examined the effect of IR disclosure on cost of equity. Further, this study examines the effect of both board of directors and audit committee effectiveness on cost of equity through IR disclosure. Board of directors and audit committee effectiveness can be seen from the characteristics of independence, activity, size and competence. Hypothesis testing is carried out by using a structural equation modelling (SEM) of 373 observations (firm-year) with the sample taken from more than 20 countries where the firms listed on The International Integrated Reporting Council (IIRC) network database during the period 2015-2017. The results of this study evidence that IR disclosure has an effect on reducing cost of equity. However, the result for the influence both of the board of directors and audit committee effectiveness are still mixed. The findings indicate that the effectiveness of the board of directors and audit committee do not affect IR disclosure. And there is no significant influence in indirect relationship between board of directors and audit committee effectiveness, IR disclosure and cost of equity. Implication of this research is to encourage regulators to begin reviewing policies to start implementing IR in public companies, because based on the results of this study, IR disclosures can have an impact on reducing cost of equity.

Original languageEnglish
Title of host publicationProceedings of the 32nd International Business Information Management Association Conference, IBIMA 2018 - Vision 2020
Subtitle of host publicationSustainable Economic Development and Application of Innovation Management from Regional expansion to Global Growth
EditorsKhalid S. Soliman
PublisherInternational Business Information Management Association, IBIMA
Pages7156-7183
Number of pages28
ISBN (Electronic)9780999855119
Publication statusPublished - 1 Jan 2019
Event32nd International Business Information Management Association Conference, IBIMA 2018 - Seville, Spain
Duration: 15 Nov 201816 Nov 2018

Publication series

NameProceedings of the 32nd International Business Information Management Association Conference, IBIMA 2018 - Vision 2020: Sustainable Economic Development and Application of Innovation Management from Regional expansion to Global Growth

Conference

Conference32nd International Business Information Management Association Conference, IBIMA 2018
CountrySpain
CitySeville
Period15/11/1816/11/18

Keywords

  • Audit committee effectiveness
  • Board of directors effectiveness
  • Cost of equity
  • Voluntary integrated reporting

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