Cost of Equity Capital and the Determinant: A Study in Industrial Firms in Indonesia

Abstract

This research aims to analyse the effects of accounting information asymmetry, market risk, audit quality, and company size on cost of equity capital on industrial companies registered in Indonesia Stock Exchange from 2017 to 2021. Data analysis techniques consist of descriptive statistics, classical assumption testing, and hypothesis testing with multiple linear regression analysis method. The test results show that market risk and company size has positive and negative effect on the cost of equity capital respectively, while accounting information asymmetry and audit quality does not affect the cost of equity capital. The limitation in this study is that the measurement of audit quality variables is only obtained by the standard of public accounting firm, and there are still 62,7 percent of other factors outside the independent variable which can affect the value of the company’s cost of equity capital.