Title: CHANGE OF DIRECTORS AS A MEDIATION VARIABLE OF THE EFFECT OF FINANCIAL DISTRESS ON COST OF EQUITY
Author: FANITA ARTISARI
Affiliations: Masters Program in Accounting, Faculty of Economics and Business, Universitas Airlangga , Surabaya, Indonesia
Publisher: Universitas Airlangga
Abstract
This research aims to obtain empirical evidence of the influence of financial distress on the cost of equity with director turnover as a mediating variable. Financial distress conditions are characterized by the company's inability to pay its debt obligations within the specified time until the payment is due. Based on IDX data, the number of companies that experienced delisting in the 2009 - 2016 period was 28 companies. In relation to the company, the financial distress situation of a company is information that can influence company policy. The board of directors is the center of control within the company, and is the main person responsible for the long-term health and success of the company. In some cases, the change of directors is intended to overcome the problem of losses in the company. Good directors result in increased company quality, thereby increasing the cost of equity. The population of this research is 125 manufacturing companies listed on the Indonesia Stock Exchange in 2012-2016. The sample used in this research was purposive sampling. The data source is secondary data, obtained from annual reports for the 2012-2016 period on the Indonesian Stock Exchange and the official websites of each manufacturing company. This research uses path analysis. The results obtained in this research are that financial distress has a positive effect on the cost of equity, financial distress has a positive effect on the change of directors, change of directors has a positive effect on the cost of equity, and change of directors can mediate the effect of financial distress on the cost of equity.
Keywords: financial distress, change of directors, cost of equity
Sources: http://repository.unair.ac.id/81788/
