The Influence of Cost of Equity on Financial Distress and Firm Value
- DOI
- 10.2991/ebic-17.2018.31How to use a DOI?
- Keywords
- Cost of Equity, Financial Distress, Firm Value
- Abstract
Cost of equity is the cost incurred by the company to meet the rate of return expected by investors, either in the form of dividends or capital gains Since investors wanted a rate of return on the investment, then the company should compensate the shareholders with the economic return implicit in forecasting in the future, which may be different from the previous performance. The company's incapability in controlling the cost of equity can increase the occurrence of financial distress, which in turn can decrease the firm value. The purpose of this research is to find out whether the cost of equity can influence the occurrence of financial distress, which suffers a substantial reduction in firm value. The research variables are cost of equity as an independent variable, Financial distress as a mediator and Firm Value as an independent variable. The population of the research is the go public companies in the corporate governance perception index ranking by Corporate Forum for Governance in Indonesia. The sample selection of the study using the purposive sampling method so that the number of samples is 144 companies. The result shows that the cost of equity has a significant effect on financial distress and Firm Value, but the financial distress doesn't affect firm Value.
- Copyright
- © 2018, the Authors. Published by Atlantis Press.
- Open Access
- This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).
Cite this article
TY - CONF AU - Anna Sumaryati AU - Nila Tristiarini PY - 2018/01 DA - 2018/01 TI - The Influence of Cost of Equity on Financial Distress and Firm Value BT - Proceedings of the 1st Economics and Business International Conference 2017 (EBIC 2017) PB - Atlantis Press SP - 194 EP - 197 SN - 2352-5428 UR - https://doi.org/10.2991/ebic-17.2018.31 DO - 10.2991/ebic-17.2018.31 ID - Sumaryati2018/01 ER -