THE EFFECT OF FIRM SIZE, LEVERAGE, INDEPENDENT AUDIT COMMITTEE, INSTITUTIONAL OWNERSHIP ON CORPORATE RISK DISCLOSURE
Keywords:
Corporate Risk Disclosure, Institutional Ownership, Independent Audit Committee, Leverage, Firm SizeAbstract
Corporate risk disclosure as a disclosure of the present or future situation that is not desired by the company and has the potential to occur and includes handling the risks carried out by the company. Disclosure is required for a transparency firm. This study was aimed to find out the effect of firm size, leverage, independent audit committee, institutional ownership on corporate risk disclosure. Statistical analysis method used in this research was multiple regression analysis method. The results of this study found out that larger company size and larger institutional ownership will increase corporate risk disclosure while leverage and independent audit committee reduce corporate risk disclosure. The other results implied from this study that firm size, leverage, independent audit committee and institutional ownership simultaneously influence and increase corporate risk disclosure. Optimal disclosure is needed so that information reaching various parties is a reflection of actual events and the quality of decisions taken would be better
References
Achmad, T., Faisal, F., & Oktarina, M. (2017) Factors influence voluntary corporate risk disclosure practice by Indonesian companies. Corporate ownership & control, 14(3): 286-292. Spring.
Adiyanto, H. B. (2015). Faktor-faktor yang mempengaruhi tingkat pengungkapan risiko perusahaan (corporate risk disclosure) pada industri perbankan di Indonesia. Jakarta: STIE Indonesia Banking School. (Tesis).
Aldamen, H., Duncan, K., Kelly, S., McNamara, R., & Nagel, S. (2011). Audit committee characteristics and firm performance during the global financial crisis. Accounting and finance, 52(4): 971-1000.
Amran, A., Bin, A. M., & Hassan, B. C. (2008). Risk reporting: an explanatory study on risk management disclosure in Malaysian annual reports. Managerial auditing journal, 24(1): 39-57.
Arens, A. A., Elder, R. J., & Beasley. (2012). Auditing and assurance services. England: Pearson.
Armstrong, C. S., Core, J. E., & Guay, W. R. (2014). Do independent directors cause improvements in firm transparency? Journal of financial economics, 113(3): 383-403.
Ashfaq, K., Zhang, R., Munaim, A., & Razzaq, N. (2016). An investigation into the determinants of risk disclosure in banks: evidence from financial sector of Pakistan. International journal of economics and financial issues, 6(3): 1049-1058.
Atanasovski, A., Serafimoska, M., Jovanovski, K., & Jovevski, D. (2015). Risk disclosure practices in annual reports of listed companies: evidence from a developing country. Research journal of finance and accounting, 6(1): 184-192.
Birt, J., Rankin, M., & Song, C. L. (2013). Derivatives use and financial instrument disclosure in the extractives industry. Accounting & finance, 53(1): 55-83.
Boone, A. L., & White, J. T. (2015). The effect of institutional ownership on firm transparency and information production. Journal of financial economics, 117(3): 508-533.
Borghesi, A., & Gaudenzi, B. (2013). Risk management: how to assess, transfer and communicate critical risks. Italia: Springer.
Bushee, B. J., Carter, M. E., & Gerakos, J. (2014). Institutional investor preferences for corporate governance mechanisms. Journal of management accounting research, 26(2): 123-149. Fall.
Celik, S., & Isaksson, M. (2014). Institutional investors and ownership engagement. OECD journal: financial market trends, 2013(9): 93-114.
Chan, A. M., Liu, G., & Sun, J. (2013). Independent audit committee members’ board tenure and audit fees. Accounting and finance, 53(4): 1129-1147.
Chung, K. H., & Zhang, H. (2011). Corporate governance and institutional ownership. Journal of financial and quantitative analysis, 46(1): 247-273.
Delen, D., Kuzey, C., & Uyar, A. (2013). Measuring firm performance using financial ratios: a decision tree approach. Expert systems with applications: An international journal, 40(10): 3970-3983.
Dobler, M., Lajili, K., & Zeghal, D. (2011). Attributes of corporate risk disclosure: An international investigation in the manufacturing sector. Journal of international accounting research, 10(2):
Elshandidy, T., Fraser, I., & Hussainey, K. (2013). Aggregated, voluntary, and mandatory risk disclosure incentives: Evidence from UK FTSE all-share companies. International review of financial analysis, 30: 320-333.
Elzahar, H., & Hussainey, K. (2012). Determinants of narrative risk disclosures in UK interim reports. The journal of risk finance, 13(2): 133-147.
Fahmi, I. (2014). Analisis kinerja keuangan. Bandung: Alfabeta.
Gitman, J. J., & Zutter, C. J. (2012). Principles of managerial finance. 13th ed. England: Pearson Education Limited.
Hadani, M. (2012). Institutional ownership monitoring and corporate political activity: governance implications. Journal of business research, 65(2012): 944-950.
Hassan, M. K. (2009). UAE corporations-specific characteristics and level of risk disclosure. Managerial auditing journal, 24(7): 668-687.
Hery. (2015). Analisis laporan keuangan pendekatan rasio keuangan. Jakarta: PT Buku Sru.
Ho, P. L., & Taylor, G. (2013). Corporate governance and different types of voluntary disclosure: evidence from Malaysian listed firms. Pacific accounting review, 25(1): 4-29.
Jaafar, M. A., Hussin, W. N. W., & Bamahros, H. M. (2016). Are all audit committee directors equal? the busyness of chair, financial expert and other member. International institute (Tokyo), 19(7):2893-2900.
Juhmani, O. I. (2013). Ownership structure and corporate voluntary disclosure: evidence from Bahrain. International journal of accounting and financial reporting, 3(2): 133-148.
Kartikasari, D., & Merianti, M. (2016). The effect of leverage and firm size to profitability of public manufacturing companies in Indonesia. International journal of economics and financial issues, 6(2): 409-413.
Kasmir. (2008). Analisis laporan keuangan. Jakarta: PT Raja Grafindo Persada.
Kaye, B. (2017). Commonwealth bank in new lawsuit over climate risks. [Online]. Available: https://www.reuters.com/article/us-australia-cba-climatechange/ commonwealth-bank-in-new-lawsuit-over-climate-risks-idUSKBN1AO0C3. [18 Agustus 2017].
Keputusan Bapepam LK. (2012). Penyampaian Laporan Tahunan Emiten atau Perusahaan Publik (Nomor KEP-431/BL/2012). [Online]. Available: http://www.ptba.co.id/public/uploads/peraturan_Bapepam_dan_LK_X_K.6_1_agustus_2012_tentang_penyampaian_laporan_tahunan.pdf.
Keputusan Bapepam LK. (2012). Pembentukan Pedoman Pelaksanaan Kerja Komite Audit (Nomor KEP-643/BL/2012). [Online]. Available: http://www.sampoerna.com /id/investor_information/capital_market_regulation/documents/peraturan%20ix.i.5%20pembentukan%20dan%20pedoman%20pelaksanaan%20kerja%20komite%20audit.pdf.
Khan, A., Kaleem, A., & Nazir, M. S. (2012). Impact of financial leverage on agency cost of free cash flow: evidence from the manufacturing sector of Pakistan. Journal of basic and applied scientific research, 2(7): 6694-6700.
Kibiya, M. U., Ahmad, A. C., & Amran, N. A. (2016). Audit committee independence, financial expertise, share ownership and financial reporting quality: further evidence from Nigeria. International journal of economics and financial issues, 6(ST7): 125-131.
Lajili, K., & Zeghal, D. (2005). A content analysis of risk management disclosures in Canadian annual reports. Canadian journal of administrative science, 22(2): 125-142.
Lan, Y., Wang, L., & Zhang, X. (2013). Determinants and features of voluntary disclosure in the Chinese stock market. China journal of accounting research, 6(4): 265-285.
Lee, S., Upneja, A., Ozdemir, O., & Sun, K. (2014). A synergy effect of internationalization and firm size on performance. International journal of contemporary hospitality management, 26(1): 35-50.
Linsley, P. M., & Shrives, P. J. (2005). Transparency and the disclosure of risk information in the banking sector. Journal of financial regulation and compliance, 13(3): 205-214.
Lipunga, A. M. (2014). Risk disclosure practices of Malawian commercial banks. Journal of contemporary issues in business research, 3(3):154-167.
Madrigal, M. H., Guzman, B. A., & Guzman C. A. (2015). Determinants of corporate risk disclosure in large Spanish companies: a snapshot. Contaduria y Administracion, 60(4): 757-775.
Mazumder, M. M. (2016). Exploring the impact of ownership structure on earnings predictability: insights from Japan. Indian journal of corporate governance, 9(2): 97-121.
Miihkinen, A. (2012). What drives quality of firm risk disclosure? The impact of a national disclosure standard and reporting incentives under IFRS. The international journal of accounting, 47(4): 437-468.
Miihkinen, A. (2013). The usefulness of firm risk disclosures under different firm riskiness, investor-interest, and market conditions: new evidence from Finland. Advances in accounting, incorporating advances in international accounting, 29(2): 312-331.
Muscettola, M. (2013). Leverage risk the weight of borrowed capital distinguishes the solvency of firms: an empirical analysis on a sample of 4,500. International journal of economics and finance, 5(12): 24-39.
Nahar, S., Azim, M., & Jubb, C. A. (2016). Risk disclosure, cost of capital and bank performance. International journal of accounting & information management, 24(4): 476-494.
Organisation for Economic Co-operation and Development. (2015). G20/OECD principles of corporate governance. [Online]. Available: https://www.oecd.org/daf/ca/ Corporate-Governance-Principles-ENG.pdf.
Peraturan Bank Indonesia. (2012). Transparansi dan Publikasi Laporan Bank (Nomor 14/14/PBI/2012). [Online]. Available: http://www.bi.go.id/id/peraturan/ perbankan /Documents/7ed01062d1ca44a89211259eab989036PBINo14_14_PBI_2012.pdf.
Peraturan Otoritas Jasa Keuangan. (2014). Tata Kelola Perusahaan yang Baik Bagi Perusahaan Pembiayaan (Nomor 30/POJK05/2014). [Online]. Available: http://www.ojk.go.id/id/regulasi/otoritas-jasa-keuangan/peraturan-ojk/Documents/ POJK30TataKelolaPerusahaanYangBaikBagiPerusahaanPembiayaan_1417050360.pdf.
Peraturan Otoritas Jasa Keuangan. (2016). Penerapan Tata Kelola Bagi Bank Umum (Nomor 55/POJK03/2016). [Online]. Available: http://www.ojk.go.id/id/ kanal/ perbankan/regulasi/peraturan-ojk/Documents/Pages/POJK-tentang-Penerapan-Tata-Kelola-bagi-Bank-Umum/SAL%20-%20POJK%20Tata%20Kelola.pdf.
Probohudono, A. N., Tower, G., & Rusmin, R. (2013). Risk disclosure during the global financial crisis. Social responsibility journal, 9(1): 124-136.
Ramadan, I. Z. (2013). Debt-performance relation. evidence from Jordan. International journal of academic research in accounting, finance and management sciences, 3(1): 323-331.
Siahaan, U. M., Suhadak, Handayani, S. R., & Solimun. (2014). The influence of company size and capital structure towards liquidity, corporate performance and firm value, for large and small group companies. European journal of business and management, 6(18): 148-156.
Slezak, M. (2017). Commonwealth beank's first climate policy attacked by environmental groups. [Online]. Tersedia: https://www.theguardian.com/australia-news/2017/ aug/14/commonwealth-banks-first-climate-policy-attacked-by-environmental-groups. [18 Agustus 2017].
SOX. (2012). The sarbanes-oxley act at 15. America: Sarbanes-Oxley Act.
Suhardjanto, D., Dewi, A., Rahmawati, E., & Firazonia, M. (2012). Peran corporate govermamce dalam praktik risk disclosure pada perbankan Indonesia. Jurnal akuntansi dan auditing, 9(1):1-96.
Sun, J., Lan, G., & Liu, G. (2014). Independent audit committee characteristics and real earnings management. Managerial auditing journal, 29(2): 153-172.
The Institute of Internal Auditors. (2013). The Audit Committee: Internal Audit Oversight. [Online]. Available: https://na.theiia.org/standards-guidance/Public%20 Documents/The-Audit-Committee-Internal-Audit-Oversight-Implementing-Best-Practices-and-Higher-Standards.pdf.
Urquiza, B. F., Navarro, M.C.A., & Trombetta, M. (2012). Disclosure strategies and cost of capital. Managerial and decisions economics, 33(7-8): 501-509.
Undang-Undang Republik Indonesia. (2008). Usaha mikro, kecil, dan menengah (Nomor 20). [Online]. Available: file:///C:/Users/User.User-PC.000/ Downloads/ UU_NO_20_2008.PDF.
Valencia, F. (2014). Monetary policy, bank leverage, and financial stability. Journal of economic dynamics and control, (47): 20-38.
Watson, D., & Head, A. (2007). Corporate finance principles & practice. England: Pearson Educated Limited.
Younger, E. (2017). Commonwealth bank faces legal action over failure to disclose climate change risk in report. [Online]. Tersedia: http://www.abc.net.au/news/2017-08-08/commonwealth-bank-legal-action-over-climate-change-disclosure/8786046. [19 Agustus 2016].
Zhang, X., Taylor, D., Qu, W., & Oliver, J. (2013). Corporate risk disclosures: influence of institutional shareholders and audit committee. Corporate ownership & control, 10(4): 341-353.
Zhou, T., & Wang, X. (2013). Institutional ownership, risk disclosure, and potential benefits: from the perspectives of internal control and firm risk. Frontiers of business research China, 7(4): 535-560.
Zu, X., & Kaynak, H. (2012). An agency theory perspective on supply chain quality management. International journal of operations & production management, 32(4): 423-446.
