Company’s Performance Improve Cost of Equity of Cigarette Industries in Emerging Countries
DOI:
https://doi.org/10.38035/dijemss.v8i1.7373Keywords:
Cost of equity, Financial performance, Cigarette industry, Emerging countries, Firm characteristicsAbstract
The cigarette industry in emerging countries operates under substantial market volatility, regulatory pressure, and changing financial conditions, creating uncertainty in determining the cost of equity required by investors. This study aims to examine the effects of corporate financial performance on the cost of equity of cigarette companies in emerging countries, focusing on Debt to Equity Ratio, tax, growth, tangible assets, firm size, current ratio, and Price to Book Value. A quantitative approach was employed using secondary financial data from 12 listed cigarette companies observed during 2022–2024, resulting in 36 firm-year observations. Data were collected from corporate financial statements and analyzed using multiple linear regression with the Ordinary Least Squares method. The results show that Debt to Equity Ratio, tax, tangible assets, firm size, and current ratio significantly affect the cost of equity, whereas growth and Price to Book Value do not have significant effects. Simultaneously, the financial performance variables significantly explain variations in the cost of equity. These findings contribute to the corporate finance literature by providing empirical evidence on firm-specific determinants of the cost of equity in the cigarette industry and offer practical insights for managers and investors in evaluating financing decisions and investment risk.
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Copyright (c) 2026 Herman Ruslim, Elvita Salju, Bambang Sunatar, Enggal Sriwardiningsih
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