Accruals quality and the cost of debt: the European evidence

Eliwa, Yasser; Gregoriou, Andros; Paterson, Audrey

doi:10.1108/ijaim-01-2018-0008

Cited by 26 publications

(30 citation statements)

References 66 publications

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“…We provide evidence that IR contains incremental information value to the debt market. The study extends findings of prior research that show the role of financial reporting quality on cost of debt (Ahmed et al, 2002;Eliwa et al, 2019) by documenting the incremental effect of IR and the joint effect of IR and earnings quality in reducing cost of debt. The findings show lenders take into account both financial reporting and IR in making decisions.…”

Section: Introductionsupporting

confidence: 78%

Integrated reporting, financial reporting quality and cost of debt

Muttakin

Mihret

Lemma

et al. 2020

IJAIM

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Purpose Although proponents of integrated reporting (IR) advocate that this emerging practice has the potential to transform corporate reporting, the eventuation of this expectation would depend on the incentive IR provides to firms. This study aims to examine whether IR is associated with cost of debt and whether IR moderates the relationship between financial reporting quality and cost of debt. Design/methodology/approach Based on insights drawn from information asymmetry and agency theories, the authors develop models that link IR and financial reporting quality with a firm’s cost of debt. The authors analyze 847 firm-year observations drawn from non-financial firms traded on the Johannesburg Stock Exchange, for the period between 2009 and 2015. Findings The authors find that firms that provide integrated reports tend to have a lower cost of debt than those do not provide IR. The authors also find an inverse association between financial reporting quality and cost of debt, and that integrated reports accentuate this association. The findings suggest that the debt market perceives value in the information presented in integrated reports beyond what is furnished in financial reports. Originality/value To the best of the authors’ knowledge, this study is the first to document evidence suggesting that the debt market perceives value in the information presented in integrated reports, beyond what is furnished in financial reports.

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Section: Introductionsupporting

confidence: 78%

Integrated reporting, financial reporting quality and cost of debt

Muttakin

Mihret

Lemma

et al. 2020

IJAIM

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“…The hypothesised association between CSEP and the cost of equity capital is based on the assumption that other variables are held constant. Previous studies suggest four control variables that may affect the cost of equity capital, namely, firm size ( Size ), CAPM Beta ( Beta ), leverage and growth (Francis et al , 2005; Gray et al , 2009; Eliwa et al , 2016; Eliwa et al , 2019b). We measure Size as a log of a company’s total assets in year t .…”

Section: Sample Selection and Methodologymentioning

confidence: 99%

The impact of corporate social and environmental practices on the cost of equity capital: UK evidence

Ahmed

Eliwa

Power

2019

IJAIM

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Purpose There has been an ongoing call from various groups of stakeholders for social and environmental practices to be integrated into companies’ operations. A number of companies have responded by engaging in socially and environmentally responsible activities, while others choose not to participate in these activities, which incur additional costs. The absence of consensus regarding the economic implications of social and environmental practices provides the impetus for this paper. This study aims to examine the association between corporate social and environmental practices (CSEP) and the cost of equity capital measured by four ex ante measures using a sample of UK listed companies. Design/methodology/approach First, we undertake a review of the extant literature on CSEP. Second, using a sample of 236 companies surveyed in “Britain’s most admired companies” in terms of “community and environmental responsibility” during the period 2010-2014, we estimate four implied a cost of equity capital proxies. The relationship between a companies’ cost of equity capital and its CSEP is then calculated. Findings The authors find evidence that companies with higher levels of CSEP have a lower cost of equity capital. This finding determines the significant role played by CSEP in helping users to make useful decisions. Also, it supports arguments that firms with socially responsible practices have lower risk and higher valuation. Practical implications The finding encourages companies to be more socially and environmentally responsible. Furthermore, it provides up-to-date evidence of the economic consequences of CSEP. The results should, therefore, be of interest to managers, regulators and standard-setters charged with developing regulations to control CSEP, as these practices are still undertaken on a voluntary basis by companies. Originality/value To the best of the authors’ knowledge, this is the first study to investigate the association between CSEP of British companies and their cost of equity capital. The study complements Ghoul et al. (2011), who examine the relationship between CSR and the cost of equity capital of the US sample. The authors extend Ghoul et al. (2011) by using a sample of the UK market after applying International Financial Reporting Standards.

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“…Penelitian yang telah menguji kebijakan utang telah dilakukan dalam beberapa penelitian sebelumnya. Adapun faktor-faktor yang digunakan untuk menguji biaya utang di antaranya adalah kualitas akrual (Candra & Ekawati, 2017;Eliwa et al, 2019;Thu et al, 2018;Triningtyas & Siregar, 2014;Yentine, 2018), kebijakan dividen (Farooq & Jabbouri, 2015;Jabbouri & El Attar, 2017) dan volatilitas laba (Huq, 2016;Pongrangga & Kurniawati, 2020). Penelitian lainnya berkaitan dengan faktor ukuran perusahaan (Ashkhabi & Agustina, 2015;Suryani et al, 2019;Thu et al, 2018), struktur kepemilikan (Agustami & Yunanda, 2014;Ashkhabi & Agustina, 2015;Robiansyah et al, 2019;Wardani & Rumahorbo, 2018), kualitas audit (Robiansyah et al, 2019).…”

Section: Pendahuluanunclassified

“…Discretionary accruals memberikan keleluasaan dan fleksibilitas bagi manajemen untuk mengatur atau memanipulasi tingkat akrual perusahaan melalui pertimbangannya baik untuk kepentingan perusahaan maupun pribadi. Eliwa et al (2019) menemukan bahwa kualitas akrual berpengaruh negatif terhadap biaya utang, sedangkan Triningtyas & Siregar (2014) dan Yentine (2018) menemukan bahwa kualitas akrual tidak berpengaruh terhadap biaya utang. Oleh karena itu, pengujian kembali pengaruh kualitas akrual terhadap biaya utang perlu dilakukan.…”

Section: Pendahuluanunclassified

Biaya Utang dari Sudut Pandang Kebijakan Dividen, Volatilitas Laba, dan Kualitas Akrual

Firmansyah¹,

Fauzi²,

Yuniar³

2020

akurasi

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Utang merupakan instrumen pembiayaan yang penting bagi perusahaan. Namun, kreditur mengharapkan imbalan atas utang yang diberikan ke perusahaan yaitu biaya utang. Penelitian ini bertujuan untuk menguji kebijakan dividen, volalititas laba, dan kualitas akrual terhadap biaya utang perusahaan. Sampel yang digunakan dalam penelitian ini adalah perusahaan pada subsektor properti dan real estate yang terdaftar di Bursa Efek Indonesia periode tahun 2015 sampai dengan 2018. Dengan menggunakan purposive sampling, total sampel yang digunakan dalam penelitian ini berjumlah 111 observasi. Pengujian data dilakukan dengan analisis regresi linear berganda data panel. Hasil penelitian ini menunjukkan bahwa kebijakan dividen berpengaruh negatif terhadap biaya utang, sedangkan volatilitas laba dan kualitas akrual tidak berpengaruh terhadap biaya utang. Penelitian ini menunjukkan terdapat perbedaan penilaian keputusan investasi antara kreditor dan investor.

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Accruals quality and the cost of debt: the European evidence

Cited by 26 publications

References 66 publications

Integrated reporting, financial reporting quality and cost of debt

Integrated reporting, financial reporting quality and cost of debt

The impact of corporate social and environmental practices on the cost of equity capital: UK evidence

Biaya Utang dari Sudut Pandang Kebijakan Dividen, Volatilitas Laba, dan Kualitas Akrual

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