Good Corporate Governance and Cost of Debt: Listed Companies on Indonesian Institute for Corporate Governance

Corporate governance concept became stronger in Indonesia after the economic crisis that occurred in 1997 because of lack of legal, unestablished accounting and auditing standards, underegulated capital market, weak supervision of the Commissioners and the neglect of minority rights. To solve these problems, companies implemented corporate governance concept so that access to low cost-debt financing will be easily obtained. Therefore, corporate governance is a factor that cannot be ignored in decision making for creditors. This study aimed to analyze the effect of Good Corporate Governance (Board of Commissioners, Audit Committee, Managerial Ownership and Institutional Ownership) on Cost of Debt in companies listed in Indonesian Institute for Corporate Governance 2010-2013. The samples used were 10 companies. This research method is using path analysis to see the direct and indirect effect between Good Corporate Governance and Cost of Debt through Corporate Governance Perception Index as intervening variable. The results of this study showed that the variables of Good Corporate Governance (Board of Commissioners, Audit Committee, Managerial Ownership and Institutional Ownership) partially and simultaneously does not have a significant effect to the Cost of Debt in companies listed in Indonesian Institute for Corporate Governance 2010-2013.