Good Corporate Governance, Information Asymmetry, and Carbon Emission Disclosure on Cost of Equity

Abstract

The Cost of Equity (COE) reflects the return expected by investors and is influenced by various factors related to corporate governance, information transparency, and sustainability practices. However, empirical studies examining the simultaneous effects of Good Corporate Governance (GCG), Information Asymmetry, and Carbon Emission Disclosure (CED) on the Cost of Equity remain limited, particularly in Consumer Non-Cyclical companies listed on the Indonesia Stock Exchange (IDX). Therefore, this study aims to examine the effects of Good Corporate Governance, Information Asymmetry, and Carbon Emission Disclosure on the Cost of Equity. This study employed a quantitative approach using secondary data obtained from annual reports, sustainability reports, and financial statements of Consumer Non-Cyclical companies listed on the IDX during 2020–2024. The sample consisted of 35 companies (175 firm-year observations) selected using purposive sampling. The data were analyzed using panel data regression with the Random Effect Model (REM). The results indicate that Good Corporate Governance, proxied by institutional ownership, has a negative and significant effect on the Cost of Equity, while Information Asymmetry has a positive and significant effect. In contrast, Carbon Emission Disclosure has no significant effect on the Cost of Equity. These findings suggest that investors place greater emphasis on corporate governance quality and information transparency than on voluntary environmental disclosure when assessing investment risk. Therefore, improving governance practices and reducing information asymmetry are important strategies for lowering the Cost of Equity.

Keywords: Cost of Equity, Good Corporate Governance, Information Asymmetry, Carbon Emission Disclosure