Proceedings of the 1st Economics and Business International Conference 2017 (EBIC 2017)

The Influence of Cost of Equity on Financial Distress and Firm Value

Authors
Anna Sumaryati, Nila Tristiarini
Corresponding Author
Anna Sumaryati
Available Online January 2018.
DOI
https://doi.org/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/).

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Volume Title
Proceedings of the 1st Economics and Business International Conference 2017 (EBIC 2017)
Series
Advances in Economics, Business and Management Research
Publication Date
January 2018
ISBN
978-94-6252-470-5
ISSN
2352-5428
DOI
https://doi.org/10.2991/ebic-17.2018.31How to use a DOI?
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  - https://doi.org/10.2991/ebic-17.2018.31
ID  - Sumaryati2018/01
ER  -