CORPORATE GOVERNANCE, KUALITAS LABA, DAN BIAYA EKUITAS, STUDI EMPIRIS PERUSAHAAN MANUFAKTUR DI BURSA EFEK INDONESIA TAHUN 2009

Abstract

The purpose of this study is to examine the impact of corporate governance (CG) mechanisms on earnings quality as well as the impact of corporate governance and earnings quality on cost of equity of listed manufacturing firms at Indonesian Stock Exchange in year 2009. CG mechanism is measured by the effectiveness of board of commissioners and the effectiveness of audit committee and audit quality (audit firm size and audit firm tenure). This study uses discretionary accruals as the proxy of earnings quality. In addition, this study also uses earnings variability and common factor as the proxy of earnings quality. The results show that the effectiveness of audit committee tends to impact positively and significantly on earnings quality. However, effectiveness of board of commissioners and audit firm size do not have significant impact on earnings quality and on cost of equity. The effectiveness of audit committee and audit firm tenure tend to impact positively and significantly to cost of equity. In addition, accruals quality, earnings variability, and common factor as the proxy for earnings quality tend to have negative impact on cost of equity