The Differences Cost of Equity Capital between Before and After Adoption of IFRS

Abstract

The objective of this study was to analyze and compare between cost of equity capital between before and after adoption of IFRS on Statement of Financial Accounting Standard Financial Instrument (PSAK) for banking companies listed in Indonesian Stock Exchange.. Selecting sample was by purposive sampling with specific criteria. Results of this study proved that cost of equity capital was lower for after adoption of IFRS on Statement of Financial Accounting Standard Financial Instrument for banking companies listed in Indonesian Stock Exchange than before adoption. It meant that adoption IFRS could reduce cost of equity capital. This result had an impact on reducing non performing loan, increasing loan to deposit ratio, and increasing net interest margin. ABSTRAK. Pemilihan sampel didasarkan pada metode purposive sampling dengan kriteria yang telah ditentukan. Hasil penelitian membuktikan bahwa terdapat biaya modal ekuitas lebih rendah untuk sesudah adopsi IFRS dalam PSAK instrumen keuangan pada perusahaan perbankan yang terdaftar di BEI dibanding sebelum adopsi. Ini berdampak pada turunnya non-performing loan, meningkatkan loan to deposit ratio, dan meningkatkan net interest margin.