TY - GEN
T1 - Board of directors effectiveness, audit committee effectiveness, and cost of equity
T2 - 32nd International Business Information Management Association Conference, IBIMA 2018
AU - Falatifah, Mira
AU - Hermawan, Ancella Anitawati
N1 - Publisher Copyright:
Copyright © 2018 International Business Information Management Association (IBIMA).
PY - 2018
Y1 - 2018
N2 - 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.
AB - 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.
KW - Audit committee effectiveness
KW - Board of directors effectiveness
KW - Cost of equity
KW - Voluntary integrated reporting
UR - http://www.scopus.com/inward/record.url?scp=85063066540&partnerID=8YFLogxK
M3 - Conference contribution
AN - SCOPUS:85063066540
T3 - Proceedings 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
SP - 7156
EP - 7183
BT - Proceedings of the 32nd International Business Information Management Association Conference, IBIMA 2018 - Vision 2020
A2 - Soliman, Khalid S.
PB - International Business Information Management Association, IBIMA
Y2 - 15 November 2018 through 16 November 2018
ER -