CONSERVATISM AND THE COST OF EQUITY CAPITAL: A MULTI-DIMENSIONAL MEASUREMENT APPROACH

https://doi.org/10.22146/jieb.6219

Hendrik Gamaliel(1*), Slamet Sugiri(2)

(1) Universitas Sam Ratulangi
(2) Universitas Gadjah Mada
(*) Corresponding Author

Abstract


Conservatism is a permanent phenomenon and issue in the accounting practice. It has been
developing in two forms, ex ante and ex post, measured in various ways—the accruals,
valuation model, and book-to-market measures. Prior studies document inconclusive findings
on the association between conservatism and the cost of equity capital. These inconsistent
findings motivate us to examine whether the various measures of conservatism have different
effects on the relationship between conservatism and the cost of equity capital. We
find that the accruals measure explains the relationship, while the valuation model and
book-to-market measures do not. Our findings suggest that different measures of conservatism
relate differently to different articulations. Researchers, therefore, should be cautious in
interpreting the relationship between conservatism and the cost of equity capital.
Keywords: ex ante and ex post conservatism, cost of equity capital, various measures of
conservatism


Full Text:

PDF PDF



DOI: https://doi.org/10.22146/jieb.6219

Article Metrics

Abstract views : 1250 | views : 1072 | views : 1596

Refbacks

  • There are currently no refbacks.




Copyright (c) 2013 Journal of Indonesian Economy and Business

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Journal of Indonesian Economy and Business

Journal

Editorial Team
Focus and Scope
Peer Review Process
Publication Ethics
Screening for Plagiarism

Authors

Author Guidelines
Submission Guidelines
Online Submissions
Copyright Notice
Privacy Statement
Author Fees

Download

Author Pack
Submission Form & Manuscript Template

 

Reviewer

Reviewer Guidelines
Reviewer Acknowledgement

 

Reader

General Search
Achieves
Author index
Title index

 

 

The Journal of Indonesian Economy and Business (print ISSN 2085-8272; online ISSN 2338-5847) is published by the Faculty of Economics and Business Universitas Gadjah Mada, Indonesia. The content of this website is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License

© 2019 Journal of Indonesian Economy and Business 
 Visitor Statistics