The study aims to examine the effect of risk disclosure quality on cost of equity. Using a samples of 397 firm years of companies listed in the Indonesia Stock Exchange during the 2011-2012 periods, empirical evidence of this study confirms the argument which is stated that mandatory risk disclosure quality has negative effect on cost of equity. This result has implication for firms that increasing mandatory risk disclosure quality provides new information that decrease the information asymmetry between firm and investors to trade, decreasing investors’ risk bearing and their expected rate of return, thereby decreasing firms’ cost of equity. This study also contributes to the methodology development by using confirmatory factor analysis to extract two measures of cost of equity into single latent variable score of cost of equity, so simplify to make results analysis and conclusion as well.