The impact of political connection on cost of debt with corporate governance as a moderating variable: Evidence from Indonesia

Ratna Emilia, Ratna Wardhani

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

Abstract

This research aims to examine the impact of political connection on cost of debt with corporate governance as moderating variable. Sample of this thesis are non-financial industries companies which listed in Indonesian Stock Exchange on 2012-2015 with total 176 companies. The measurement of political connection in this study using Faccio (2006) model and the cost of debt measurement using Bliss and Gul (2012) model. The first result of this thesis indicates that political connection has positive influence on cost of debt. Second, corporate governance has negative impact on cost of debt. Third, corporate governance as a moderating variable strengthen the positive relation between political connection and cost of debt. The implication of this thesis is by the presence of the influence of political connection in the company, can reduce the cost of debt are getting higher due the creditor assumes that the company which has political connection riskier than a company that did not have any political connection. Good corporate governance can reduce the impact of political connection.

Original languageEnglish
Title of host publicationProceedings of the 33rd International Business Information Management Association Conference, IBIMA 2019
Subtitle of host publicationEducation Excellence and Innovation Management through Vision 2020
EditorsKhalid S. Soliman
PublisherInternational Business Information Management Association, IBIMA
Pages9399-9409
Number of pages11
ISBN (Electronic)9780999855126
Publication statusPublished - 1 Jan 2019
Event33rd International Business Information Management Association Conference: Education Excellence and Innovation Management through Vision 2020, IBIMA 2019 - Granada, Spain
Duration: 10 Apr 201911 Apr 2019

Publication series

NameProceedings of the 33rd International Business Information Management Association Conference, IBIMA 2019: Education Excellence and Innovation Management through Vision 2020

Conference

Conference33rd International Business Information Management Association Conference: Education Excellence and Innovation Management through Vision 2020, IBIMA 2019
Country/TerritorySpain
CityGranada
Period10/04/1911/04/19

Keywords

  • Corporate governance
  • Cost of debt
  • Political connection

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