Good Corporate Governance and Liquidity: The Urgency of Risk Disclosure of Manufacturing Companies in Indonesia

Arry Eksandy

doi:10.23887/ijssb.v7i3.73662

Authors

Arry Eksandy Universitas Pembangunan Jaya

DOI:

https://doi.org/10.23887/ijssb.v7i3.73662

Keywords:

Profitability, Free Cash Flow, Company Size, Dividend Policy, Good Corporate Governance

Abstract

The purpose of this study was to determine the influence of the liquidity (those that are proxy ed with current ratio) and good corporate governance (those that are proxied with size of the board of commissioners, proportion of independent commissioners, institutional ownership, and managerial ownership) to risk disclosure. The analytical method used is panel data regression analysis for manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the period of 2016-2018. The research sample consisted of 13 companies with a purposive sampling method. The reason for using the 2016-2018 period is to get the condition of manufacturing companies in Indonesia which were still relatively stable before the Covid-19 pandemic. The results showed that managerial ownership had a significant positive effect on risk disclosure. Liquidity, size of the board of commissioners, proportion of independent commissioners, and institutional ownership do not have a significant influence on risk disclosure. The novelty of this research is the formation of a theoretical model of good corporate governance through indicators of managerial ownership in influencing risk disclosure, thereby providing an overview of the importance of ownership by managers so that risk disclosure can be carried out optimally. This research contributes to the understanding of the factors influencing risk disclosure and provides guidance for companies in improving good corporate governance to achieve optimal risk disclosure.

References

Abraham, S., & Shrives, P. J. (2014). Improving the relevance of risk factor disclosure in corporate annual reports. The British Accounting Review, 46(1), 91–107. https://doi.org/10.1016/j.bar.2013.10.002. DOI: https://doi.org/10.1016/j.bar.2013.10.002

Ahmad, A., Muhammad, M., & Narullia, D. (2021). Corporate risk disclosure: the effect of corporate governance. Journal of Applied Managerial Accounting, 5(1), 101–113. https://doi.org/10.30871/jama.v5i1.2794. DOI: https://doi.org/10.30871/jama.v5i1.2794

Buckby, S., Gallery, G., & Ma, J. (2015). An analysis of risk management disclosures: Australian evidence. Managerial Auditing Journal, 30(8/9), 812–869. https://doi.org/10.1108/MAJ-09-2013-0934. DOI: https://doi.org/10.1108/MAJ-09-2013-0934

Darmadi, S. (2013). Corporate governance disclosure in the annual report: An exploratory study on Indonesian Islamic banks. Humanomics, 29(1), 4–23. https://doi.org/10.1108/08288661311299295. DOI: https://doi.org/10.1108/08288661311299295

Doi, C. J., & Harto, P. (2014). Analisis pengaruh karakteristik perusahaan terhadap pengungkapan risiko. Diponegoro Journal of Accounting, 3(2), 345–355. https://ejournal3.undip.ac.id/index.php/accounting/article/view/6108.

Elshandidy, T., & Neri, L. (2015). Corporate Governance, Risk Disclosure Practices, and Market Liquidity: Comparative Evidence from the UK and Italy. Corporate Governance: An International Review, 23(4), 331–356. https://doi.org/10.1111/corg.12095. DOI: https://doi.org/10.1111/corg.12095

Fatihudin, D. (2015). Metode penelitian: Untuk ilmu ekonomi, manajemen, dan akuntansi. Zifatama Jawara.

Febrianto, A. D., & Khabib, N. (2021). The effect of islamic corporate governance on internet financial reporting with risk disclosure as a moderator variable at Indonesian islamic banks. Indonesian Journal of Islamic Economics Research, 3(2), 97–107. https://doi.org/10.18326/ijier.v3i2.6422. DOI: https://doi.org/10.18326/ijier.v3i2.6422

Gunawan, B., & Zakiyah, Y. N. (2017). Pengaruh mekanisme corporate governance, ukuran perusahaan, dan leverage terhadap risk management disclosure. Ekspansi: Jurnal Ekonomi, Keuangan, Perbankan, Dan Akuntansi, 9(1), 1–18. https://doi.org/10.35313/ekspansi.v9i1.559. DOI: https://doi.org/10.24914/jeb.v17i1.237

Hasibuan, D. H., & Auliya, M. (2019). The Effects of Characteristics of the Board of Commissioners and Audit Committee on the Level of Risk Disclosure in Financial Sector Service Companies in the Banking Sector Listed on the Indonesia Stock Exchange in the Period 2015-2017. Riset: Jurnal Aplikasi Ekonomi Akuntansi Dan Bisnis, 1(2), 79–89. https://doi.org/10.35212/riset.v1i2.22. DOI: https://doi.org/10.35212/riset.v1i2.22

Hatane, S. E., Supangat, S., Tarigan, J., & Jie, F. (2019). Does internal corporate governance mechanism control firm risk? Evidence from Indonesia’s three high-risk sectors. Corporate Governance: The International Journal of Business in Society, 19(6), 1362–1376. https://doi.org/10.1108/CG-02-2019-0071. DOI: https://doi.org/10.1108/CG-02-2019-0071

Karami, G., & Sedigi, F. (2015). Disclosure level and its determinants in Banks with emphasis on corporate governance mechanisms and islamic centrality. Financial Research Journal, 17(2), 357–376. https://doi.org/10.22059/JFR.2015.57316.

Khumairoh, N. A., & Agustina, L. (2017). The roles of the board of commissioner in moderating factors affeting the disclosure of enterprise risk management. Accounting Analysis Journal, 6(3), 445–457. https://doi.org/10.15294/aaj.v6i3.18908.

Madrigal, M. H., Guzmán, B. A., & Guzmán, C. A. (2015). Determinants of corporate risk disclosure in large Spanish companies: a snapshotDeterminantes de la divulgación de riesgos corporativos en empresas españolas grandes: una aproximación. Contaduría y Administración, 60(4), 757–775. https://doi.org/10.1016/j.cya.2015.05.014. DOI: https://doi.org/10.1016/j.cya.2015.05.014

Muslih, M., & Mulyaningtyas, C. T. (2019). Pengaruh Corporate Governance, Kompetisi dan Karakteristik Perusahaan Terhadap Pengungkapan Risiko Perusahaan. Jurnal ASET (Akuntansi Riset), 11(1), 179–188. https://doi.org/10.17509/jaset.v11i1.17303. DOI: https://doi.org/10.17509/jaset.v11i1.17303

Natalylova, K. (2013). Pengaruh corporate governance terhadap corporate social responsibility dan kinerja perusahaan yang mendapatkan indonesia suistainabilty reporting awards. Media Bisnis, 5(2a), 162–182. https://doi.org/10.34208/mb.v5i2a.1448.

Nurbaiti, A., & Rynalda, D. (2023). Effect Of Good Corporate Governance And Leverage On Risk Management Disclosure. JHSS (Journal of Humanities and Social Studies), 7(3), 1010–1015. https://doi.org/10.33751/jhss.v7i3.8629.

Sari, M. P., Pratama, F. N. A., & Yuyetta, E. N. A. (2022). Company Size As a Moderating Variable on Enterprise Risk Management Disclosure of Banking Companies in Indonesia. Jurnal Dinamika Akuntansi, 14(1), 76–88. https://doi.org/10.15294/jda.v14i1.35621. DOI: https://doi.org/10.15294/jda.v14i1.35621

Setiyawati, H., & Basar, Y. S. (2017). Pengaruh Pengungkapan Corporate Social Responsibility Dan Penerapan Good Corporate Governance Terhadap Tingkat Profitabilitas (Studi Empiris Pada Perusahaan Sektor PertambanganYang Terdaftar Di BEI. Jurnal Akuntansi, 21(3), 351–360. https://doi.org/10.24912/ja.v21i3.266. DOI: https://doi.org/10.24912/ja.v21i3.266

Sihombing, J., & Pangaribuan, H. (2017). A Study Of Corporate Governance Structure, Disclosure And Information Asymmetry In Indonesia Banking Industry. Jurnal Akuntansi, 21(2), 156–169. https://doi.org/10.24912/ja.v21i2.192. DOI: https://doi.org/10.24912/ja.v21i2.192

Soebyakto, B. B., & Sinulingga, A. (2018). Company characteristics and risk management disclosure: empirical study of manufacturing companies listed on the Indonesia stock exchange. Problems and Perspectives in Management, 16(2), 396. https://doi.org/10.21511/ppm.16(2).2018.36. DOI: https://doi.org/10.21511/ppm.16(2).2018.36

Sulistyaningsih, S., & Gunawan, B. (2018). Analisis faktor-faktor yang memengaruhi risk management disclosure (Studi empiris pada perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia tahun 2012-2014). Riset Akuntansi Dan Keuangan Indonesia, 1(1), 1–11. https://doi.org/10.23917/reaksi.v1i1.1973. DOI: https://doi.org/10.23917/reaksi.v1i1.1973

Swarte, W., Lindrianasari, L., Prasetyo, T. J., Sudrajat, S., & Dharma, F. (2019). Pengaruh Struktur Kepemilikan Dan Tata Kelola Perusahaan Terhadap Pengungkapan Manajemen Risiko. Ekuitas: Jurnal Ekonomi Dan Keuangan, 3(4), 505–523. https://doi.org/10.24034/j25485024.y2019.v3.i4.4205. DOI: https://doi.org/10.24034/j25485024.y2019.v3.i4.4205

Syabani, A., & Siregar, S. V. (2014). Determinants of risk disclosure level: Case of Indonesia. The Indonesian Journal of Accounting Research, 17(2). https://doi.org/10.33312/ijar.398.

Syaifurakhman, B., & Laksito, H. (2016). Faktor-Faktor Yang Mempengaruhi Pengungkapan Risiko (Studi Empiris Pada Perusahaan Manufaktur Yang Terdaftar Di Bursa Efek Indonesia Tahun 2014). Diponegoro Journal of Accounting, 5(4), 1–12. https://ejournal3.undip.ac.id/index.php/accounting/article/view/18298

Viola, B., Aryanto, J., Marsetio, N. C., & Yuliati, R. (2023). The Impacts of Board Characteristics and Size on Risk Disclosure: Evidence from Indonesian Mining Firms. Journal of Economics, Business, & Accountancy Ventura, 25(3), 255–272. https://doi.org/10.14414/jebav.v25i3.3435 DOI: https://doi.org/10.14414/jebav.v25i3.3435

Wicaksono, S. A., & Adiwibowo, A. S. (2017). Analisis Determinan Pengungkapan Risiko (Studi Empiris Pada Perusahaan Perbankan Yang Terdaftar Di Bursa Efek Indonesia Tahun 2013–2015). Diponegoro Journal of Accounting, 6(4), 144–157. https://ejournal3.undip.ac.id/index.php/accounting/article/view/18204.

Widiastuti, H., Utami, E. R., & Handoko, R. (2018). Pengaruh ukuran perusahaan, tipe industri, growth, dan media exposure terhadap pengungkapan tanggung jawab sosial perusahaan (studi empiris pada perusahaan yang terdaftar di bursa efek Indonesia tahun 2014-2015). Riset Akuntansi Dan Keuangan Indonesia, 3(2), 107–117. https://doi.org/10.23917/reaksi.v3i2.6745. DOI: https://doi.org/10.23917/reaksi.v3i2.6745

Wijayanti, R., Ariani, K. R., & Suyatmin, S. (2022). The Role of Corporate Governance Mechanism on Disclosure of Enterprise Risk Management in Indonesian Banking Industry. Riset Akuntansi Dan Keuangan Indonesia, 7(1), 117–126. https://doi.org/10.23917/reaksi.v7i1.18061. DOI: https://doi.org/10.23917/reaksi.v7i1.18061

Yunifa, L., & Juliarto, A. (2017). Analisis pengaruh karakteristik perusahaan terhadap tingkat pengungkapan risiko pada perusahaan manufaktur. Diponegoro Journal of Accounting, 6(3), 538–549. https://ejournal3.undip.ac.id/index.php/accounting/article/view/19264.