PENGUJIAN KANDUNGAN INFORMASI PENGUNGKAPAN BERBASIS REPUTASI DALAM MENURUNKAN COST OF EQUITY CAPITAL

EXAMINATION OF DISCLOSURE INFORMATION CONTENT BASED ON REPUTATION TO REDUCE COST OF EQUITY CAPITAL. This study aims to generate empirical evidence on the role of reputation based disclosure in reducing cost of equity capital both through direct relationship or indirect relationship. This aim was based on the differences in the result of study on the role of disclosure in its relationship with cost of equity capital. This study contributes in adding knowledge on private information in form of reputation based disclosure presented as public information, thus its role with cost of equity capital can be revealed. The population of this study is all manufacturing companies listed in IDX from 2009 to 2013. The sample is selected based on purposive sampling. The final samples consist of 91 companies. The hypothesis is tested using panel least square. This study shows that reputation based disclosure can reduce the cost of equity capital which means reputation based disclosure was captured as a signal that was used to estimate return parameters. Thus, investors are confident in giving positive assessment to emitent and reducing their required of return. This means that reputation based disclosure has direct relationship with cost of equity capital. Reputation based disclosure also reduce information asymmetry and as well as increasing stocks liquidity. I find no evidence of an association between information asymmetry on cost of equity capital, so indirect relationship between reputation based disclosure with cost of equity capital through information asymmetry is not present. [Keywords: private information, public information, reputation, cost of equity capital, information asymmetry