DETERMINANTS OF COST OF EQUITY CAPITAL.
Journal Title: International Journal of Advanced Research (IJAR) - Year 2018, Vol 6, Issue 7
Abstract
This study aims to identify the effect of information asymmetry, right issue, interest rate, inflation rate, return on asset(ROA), earning per share (EPS), price to earning ratio (PER), debt to equity ratio(DER) to cost of equity capital (COEC). This research uses 14 samples of banking companies listed in Indonesia Stock Exchange 2012-2015. Sampling technique in this research using purposive sampling technique, and data analysis technique using descriptive statistics, classical assumption test, multiple linear regression analysis, and hypothesis test . The results of this study indicate that the variable of information asymmetry, inflation rate and earning per share partially significant effect on cost of equity capital while variable of right issue, interest rate, return on asset, price to earning ratio and debt to equity ratio have no significant effect. While the result of F test is known that the significance value of 0.011 is smaller than 0.05, it can be deduced that the variables DER, Interest Rate, Information Asymmetry, EPS, Inflation Rate, PER, ROA, Right Issue simultaneously affect the Cost of Equity Capital. From result of regression test, it is known that Adj R-squared (Adjusted R2) value is 0,266 which means information asymmetry, right issue, interest rate, inflation rate, ROA, EPS, PER and DER variable can explain cost of equity capital equal to 26.6%. While the rest of 73.4% is explained by other variables in addition to the variables studied.
Authors and Affiliations
Inung Wijayanti.
Keywords
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- EP ID EP366839
- DOI 10.21474/IJAR01/7477
- Views 88
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