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Value relevance of earnings, cost of equity, and cost of debt
Last modified: 2017-07-27
Abstract
This paper was trying to prove the influence of value relevance of earnings to cost of equity and to cost of debt. This study was done on manufacturing companies listed on Indonesia Stock Exchange during 2015 and 2016. The measure of value relevance was adjusted R square resulted from 15 years rolling data from 2002 to 2016 and 2001 to 2015. The results showed that earnings have no value relevance for shareholders and creditors. It can be known from the insignificant influences of value relevance to cost of equity and to cost of debt. Shareholders and creditors made investment decisions based on other things rather than company’s earnings
Keywords
value relevance of earnings, cost of equity and cost of debt
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