The objective of this study is to examine the effect of intellectual capital
disclosures on cost of equity capital. In this research, cost of equity capital was
measured by Ohlson model which had been modified by Random Walk Model,
while Li et al.(2008) index were used to measure intellectual capital disclosures.
This study used purposive sampling method in data collection.
Data were collected using secondary data of 221 nonfinancial companies
that published annual report at IDX website in 2009-2010. This study used
Ordinary Least Square (OLS)regression for the data analysis. The result showed
that intellectual capital disclosures had no significant effect on cost of equity
capital.
This study also used four control variables, size, leverage, beta, and
market to book value ratio. From four selected control variables,size had positive
significant effect on cost of equity capital, and beta had negative significant effect
on cost of equity capital. Variables leverage and market to book value ratio had
no effect on cost of equity capital
