Jurnal

1.      JUDUL DAN PENGARANG

Corporate Governance Perception Index (CGPI) and Cost of Debt

Juniarti

2.      ABSTRAK

Corporate  Governance  Perception  Index  (CGPI)  is  the ranking  of  good  corporate  governance  by  IndonesianInstitute for Corporate Governance (IICG) with SWA  magazine. Companies that follow the CGPI survey showed a  willingness  to  become  a  trusted  and  open.  This  effort  should  be  perceived  positively  by  stakeholders.  Some previous researches showed that a corporate governance has a significant impact on the lowering the cost of debt (Piot & Piera 2007; Sengupta & Bhojraj 2003; Ashbaugh & Skaife et al 2006). Therefore, this paper is aimed to search  the  benefit  of  GCG  implementation  to  the  cost  of  debt.   All  companies  listed  on  the  Indonesia  Stock Exchange (IDX) which have a GCG score for survey period 2004-2009 are selected as a research sample. Other variables  such  as  Debt  to Asset  (DA),  Return  on  Asset  (ROA),  Sales  Growth  (Sgrowth),  Firm  Size  (Fsize  and Market to Book (MTB) are considered as control variables. The results do not support the hypothesis. Several explanations, including the low level of creditor’sconfidence to the good corporate governance practices have been discussed to support the research findings

3.      MASALAH

Therefore, this paper is aimed to search  the  benefit  of  GCG  implementation  to  the  cost  of  debt.

4.      OBJEK

All  companies  listed  on  the  Indonesia  Stock Exchange (IDX) which have a GCG score for survey period 2004-2009 are selected as a research sample.

5.      VARIABEL

Debt  to Asset  (DA),  Return  on  Asset  (ROA),  Sales  Growth  (Sgrowth),  Firm  Size  (Fsize  and Market to Book (MTB).

6.      DATA

Data sekunder

7.      METODE PENGUMPULAN DATA

Searching the financial reports on the website IDX

8.      METODE ANALISIS DATA

Regression equation formulated to test the hypothesis is as follow:

CoD = β0+ β1GCG + β2ROA + β3DA + β4SGrowth + β5MTB + β6FSize + β7Y8 + µ(1)

whereas :

CoD                   : Cost of Debt

β0                      : constant

β1,2,3,4,5,6,7    : regression coefficient of each variable

GCG                   : GCG Score

ROA                   : Return on Asset

DA                     : Debt to asset ratio

SGrowth            : Sales Growth

MTB                  : Market to Book Ratio

FSize                  : Firm Size

Y8                      : Year of crisis (2007-2008)

µ                        : Error term

9.      KESIMPULAN

This research cannot prove  the existing relationship of GCG implementation proxied by GCG score to the CoD. However it is too early to conclude that there is no benefit of GCG implementation to companies.

Some explanations are as follows, firstly, GCG survey is new practice therefore need more time to make users convince with the result. Secondly, the GCG survey  is not mandatory, only a few companies participate  in this survey. Thirdly, Some companies still can not see the benefit to participate in the GCG survey even costly. While the fourth and the fith explanations are there isno guarantee that firm with high GCG score is freefrom default risk, and aspects used to measure GCG implementation are still vary, it make companies and users (creditors) confuse with its results.

Further, the results of variable control testing show that only Fsize has a strong affect to the CoD,while other five variables such as D/A, ROA, SGrowth MTB, Y8 have no affect to the CoD. However all the variables have the explanation value in changes of CoD, using 10% confidence level.

Since GCG score is one of the proxies of GCG implementation, it give an opportunity for future research to use another measurement of GCG implementation, so the robustness problem in this current research could befixed. Extended the sample period is also another opportunity for future research to improve the current result and to

closeness the results with the real fact.