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C. Logical Framework
Independent Variable Dependent Variable
Environment Risk Management Cost Of Capital WACC
Environment Indicator Rasio from Sustainibility report
WACC, Cost of Equity, and Cost of Debt
Hypothesis Test: Simple Regression
Analysis
Conclusion
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D.
Hypothesis
From the explanation concern with this research, hypothesis that can be formulated as follows:
H1 : The higher the level of environmental risk management the lower the cost of
equity capital. H2 : The higher the level of environmental risk management the lower the
firm‘s cost
of debt capital for a given level of debt. H3 :
The higher the level of en vironmental risk management the lower the firm‘s
weighted average cost of capital WACC.
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CHAPTER III
RESEARCH METHODOLOGY
A. Scope of Research
This research is empirical study of hypothesis testing to prove the relationship between environmental risk management and the cost of capital. Where in this study, which act as the
independent variable is the environmental risk management measured by environment indicators in the sustainability reports. Meanwhile, the dependent variable is the cost of
capital WACC, debt capital, and equity capital. The environment risk management data is using the environment indicators in the
sustainability report. Kytle and Ruggie 2005 expresses that company‘s risk can be reduced
and managed through better CSR programs. This research is a quantitative research with the steps of descriptive relationship and
evaluation. The research will examine sustainability reports and financial statements of 14 Indonesian company listed in Indonesia Stock Exchange within timeframe 2009 to 2011. In
total, there are 42 reports that will be analyzed. This research is using purposive sampling method. The scope of this research is limited to the reports of the selected companies.
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B. Sampling Method
Sampling method is a research method which the data is taken from the population. Sample is a part of population which is taken for the purpose of research. Sample consist of
member of population. The sample in this research is the selected Indonesian companies listed in the Indonesia Stock Exchange in the period within 2009
– 2011.
This research will conduct a purposive sampling. Regarding to the population in this research must meet the following criteria:
1. The Emitent has published their sustainiblity reports on an annual basis within 2009- 2011.
2. The Emitent applies GRI cross index as the guidance for the sustainability report. 3.
The Emitent has published their sustainability report on the company‘s website.
4. The companies used for sample are the listed companies in Indonesia Stock Exchange in the period 2009-2011
5. The companies published their sustainability report and annual report separately.
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C. Data Collection Method
Kategori