Cost of capital, audit and earnings quality under financial crisis: A global empirical investigation

The Effect of Disclosure and Earnings Quality on the Cost of Equity in Indonesia

“…The results of this study support agency theory and signal theory which states that companies that disclose information relevantly or reflect the actual state of the company will be able to reduce the cost of equity. The results of the study are also consistent with previous studies, namely Fatma and Abdelwahed (2010), Persakis (2015), Eliwa et al (2016), Pramita (2016), and Lahaya (2017) that income is more relevant (better the quality of earnings), the lower the cost of equity issued by the company.…”

“…However, the results obtained from several previous studies are still not consistent. On the one hand, several studies show that earnings quality is negatively related to the cost of equity, that high accrual quality and more relevant income make it possible to reduce the cost of equity issued by companies (Fatma and Abdelwahed, 2010;Persakis, 2015;Eliwa et al, 2016;Pramita, 2016;and Lahaya 2017). Other studies have found a positive relationship between earnings quality and the cost of equity.…”

Globalization, free markets and investor protection

“…Evidence contends that earnings quality declined during the financial crisis particularly for countries with poor investor protection (Persakis and Iatridis, 2015). In Table 3, we examine the effects of the global downturn on the globalization-protection nexus.…”

State-Owned Company Decision on Choosing Auditor: Evidence From Earning Quality Analysis

“…Public investor will be suffered from this condition because management of BUMN may falsify the financial information. This will reduce stakeholder trust on BUMN then the cost of capital will be higher (Persakis & Iatridis 2015). To anticipate this condition, BUMN need to engaged more independent, professional, and competent accounting firm.…”