The effects of Corporate Governance, Audit Quality, and Conservatism on Loan Collateral Requirements
In competitive credit markets, borrowers and lenders have equal information on default risks. Under these circumstances, loan collateral are less important in credit decision-making. But in emerging credit market, like Indonesia, borrowers and lenders do not possess equal information on firms’ futu...
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| Format: | Article |
| Language: | Indonesian |
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Petra Christian University
2020-05-01
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| Series: | Jurnal Akuntansi dan Keuangan |
| Subjects: | |
| Online Access: | https://jurnalakuntansi.petra.ac.id/index.php/aku/article/view/22595 |
| _version_ | 1811255126048899072 |
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| author | Sansaloni Butar Butar |
| author_facet | Sansaloni Butar Butar |
| author_sort | Sansaloni Butar Butar |
| collection | DOAJ |
| description | In competitive credit markets, borrowers and lenders have equal information on default risks. Under these circumstances, loan collateral are less important in credit decision-making. But in emerging credit market, like Indonesia, borrowers and lenders do not possess equal information on firms’ future prospect, making use of collateral in mitigating default risk have become common practice. Despite strong theoretical support for the use of collateral to protect lenders from default risk, excessive protection may have a negative effect on the debt markets. However, some Indonesian firms are not required to provide collateral for bank debts. This study examines the effect of Board of Commissioners independence, governance committees, audit quality, and conservatism on the likelihood of using loan collateral. Using slovin formula, as much as 785 firm listed in Indonesia Stock Exchange were collected during sample period of 2012-2015. Logistic regression analysis suggest that firms with higher Board of Commissioners independence, having separate governance committee, hire Big 4 auditors, apply conservative accounting policies are less likely to provide loan collateral. |
| first_indexed | 2024-04-12T17:19:04Z |
| format | Article |
| id | doaj.art-8d08f2431b514fbfac0876646ab38bd6 |
| institution | Directory Open Access Journal |
| issn | 1411-0288 2338-8137 |
| language | Indonesian |
| last_indexed | 2024-04-12T17:19:04Z |
| publishDate | 2020-05-01 |
| publisher | Petra Christian University |
| record_format | Article |
| series | Jurnal Akuntansi dan Keuangan |
| spelling | doaj.art-8d08f2431b514fbfac0876646ab38bd62022-12-22T03:23:32ZindPetra Christian UniversityJurnal Akuntansi dan Keuangan1411-02882338-81372020-05-0122110.9744/jak.22.1.28-39The effects of Corporate Governance, Audit Quality, and Conservatism on Loan Collateral RequirementsSansaloni Butar Butar0"Universitas Katolik Soegijapranata"In competitive credit markets, borrowers and lenders have equal information on default risks. Under these circumstances, loan collateral are less important in credit decision-making. But in emerging credit market, like Indonesia, borrowers and lenders do not possess equal information on firms’ future prospect, making use of collateral in mitigating default risk have become common practice. Despite strong theoretical support for the use of collateral to protect lenders from default risk, excessive protection may have a negative effect on the debt markets. However, some Indonesian firms are not required to provide collateral for bank debts. This study examines the effect of Board of Commissioners independence, governance committees, audit quality, and conservatism on the likelihood of using loan collateral. Using slovin formula, as much as 785 firm listed in Indonesia Stock Exchange were collected during sample period of 2012-2015. Logistic regression analysis suggest that firms with higher Board of Commissioners independence, having separate governance committee, hire Big 4 auditors, apply conservative accounting policies are less likely to provide loan collateral.https://jurnalakuntansi.petra.ac.id/index.php/aku/article/view/22595Collateralconservatismboard of Commissioners independenceaudit qualitygovernance committees |
| spellingShingle | Sansaloni Butar Butar The effects of Corporate Governance, Audit Quality, and Conservatism on Loan Collateral Requirements Jurnal Akuntansi dan Keuangan Collateral conservatism board of Commissioners independence audit quality governance committees |
| title | The effects of Corporate Governance, Audit Quality, and Conservatism on Loan Collateral Requirements |
| title_full | The effects of Corporate Governance, Audit Quality, and Conservatism on Loan Collateral Requirements |
| title_fullStr | The effects of Corporate Governance, Audit Quality, and Conservatism on Loan Collateral Requirements |
| title_full_unstemmed | The effects of Corporate Governance, Audit Quality, and Conservatism on Loan Collateral Requirements |
| title_short | The effects of Corporate Governance, Audit Quality, and Conservatism on Loan Collateral Requirements |
| title_sort | effects of corporate governance audit quality and conservatism on loan collateral requirements |
| topic | Collateral conservatism board of Commissioners independence audit quality governance committees |
| url | https://jurnalakuntansi.petra.ac.id/index.php/aku/article/view/22595 |
| work_keys_str_mv | AT sansalonibutarbutar theeffectsofcorporategovernanceauditqualityandconservatismonloancollateralrequirements AT sansalonibutarbutar effectsofcorporategovernanceauditqualityandconservatismonloancollateralrequirements |