TY - JOUR
T1 - A quest to minimize cost of debt by utilizing human resources disclosure
AU - Putra, Fajar Kristanto Gautama
AU - Harymawan, Iman
AU - Nasih, Mohammad
AU - Augustia, Dian
N1 - Publisher Copyright:
© 2020, Czestochowa University of Technology. All rights reserved.
PY - 2020
Y1 - 2020
N2 - Firm’s debt providers take the cost of debt as their compensation for asymmetry information they encountered. Human resource disclosure is one of the vital information needed by the firm’s creditor to ensure that responsible and qualified individuals manage their funds. The purpose of this paper is to examine the extent of human resource disclosure and identify their association with the cost of debt in annual reports of Indonesian listed firms. This research is conducted using 650 firm-year observations of Indonesian listed firms from all industries, except the financial industry from 2014 to 2015. A cross-sectional ordinary least square (OLS) is used to test the research hypotheses. Consistent with expectation, we found that human resources disclosure has a negative association with the cost of debt. We also document that creditors perceived all of the human resources disclosure section must be integrated, not separately disclosed. Furthermore, the research results in sub-samples that we found that only in small-sized firms and firms that have low leverage, which is experiencing the beneficiaries of human resources disclosure in the context of lowering the cost of debt. These results imply that Indonesia’s creditor perceived a firm’s capital which its majority component from internal is a less risky investment; therefore, they impose a lower cost of debt. Interestingly, Indonesia’s creditor also has serious concern about the development of small firms by providing a low cost of debt. Proxy of human resource disclosure only based on annual report disclosure, not considering the firm official website and firm social media.
AB - Firm’s debt providers take the cost of debt as their compensation for asymmetry information they encountered. Human resource disclosure is one of the vital information needed by the firm’s creditor to ensure that responsible and qualified individuals manage their funds. The purpose of this paper is to examine the extent of human resource disclosure and identify their association with the cost of debt in annual reports of Indonesian listed firms. This research is conducted using 650 firm-year observations of Indonesian listed firms from all industries, except the financial industry from 2014 to 2015. A cross-sectional ordinary least square (OLS) is used to test the research hypotheses. Consistent with expectation, we found that human resources disclosure has a negative association with the cost of debt. We also document that creditors perceived all of the human resources disclosure section must be integrated, not separately disclosed. Furthermore, the research results in sub-samples that we found that only in small-sized firms and firms that have low leverage, which is experiencing the beneficiaries of human resources disclosure in the context of lowering the cost of debt. These results imply that Indonesia’s creditor perceived a firm’s capital which its majority component from internal is a less risky investment; therefore, they impose a lower cost of debt. Interestingly, Indonesia’s creditor also has serious concern about the development of small firms by providing a low cost of debt. Proxy of human resource disclosure only based on annual report disclosure, not considering the firm official website and firm social media.
KW - Cost of debt
KW - Human disclosure index
KW - Non-financial disclosure
UR - http://www.scopus.com/inward/record.url?scp=85088235933&partnerID=8YFLogxK
U2 - 10.17512/pjms.2020.21.2.24
DO - 10.17512/pjms.2020.21.2.24
M3 - Article
AN - SCOPUS:85088235933
SN - 2081-7452
VL - 21
SP - 342
EP - 355
JO - Polish Journal of Management Studies
JF - Polish Journal of Management Studies
IS - 2
ER -