Abstract:

This study aims to examine the effect of corporate governance structure effectiveness on integrated reporting disclosure. Corporate governance structures in this study consist of board of directors and audit committee. The study also examined the effect of integrated reporting disclosure on cost of equity. Further, examine the effect of both board of directors and audit committee effectiveness on cost of equity through integrated reporting disclosure. Board of directors and audit committee effectiveness can be seen from the characteristics of independence, activity, size and competence. The previous studies find that these characteristics are required to enable both of board of directors and audit committee perform better corporate governance. Hypothesis testing is carried out by using a structural equation modelling (SEM) model of 373 observations (firm-year) with the sample taken from more than 20 countries where the firms listed on The International Integrated Reporting Council (IIRC) network database during the period 2015-2017. The results of this study evidence that integrated reporting disclosure has an effect on reducing cost of equity. However, the result for the influence both of the board of directors and audit committee effectiveness are still mixed. The findings indicate that the effectiveness of the board of directors and audit committee do not affect integrated reporting disclosure. And there is no significant influence in indirect relationship between board of directors and audit committee effectiveness, integrated reporting disclosure and cost of equity. This is the first study on mediating relationship between corporate governance structures and equity costs through integrated reporting disclosure.