The Effect Board Characteristics On Enterprise Risk Management Disclosures: Evidence from State-Owned Enterprise In Indonesia
DOI:
https://doi.org/10.14738/abr.812.9525Keywords:
Board Size, Board Independence, Corporate Governance, Enterprise Risk Management Disclosure, Indonesia Stock ExchangeAbstract
The purpose of this study is to examine the effect of corporate governance, namely board characteristics on enterprise risk management disclosure. The research object of State-Owned Enterprises listed on the Indonesia Stock Exchange in 2018-2019, with a total sample of 40 annual reports with purposive sampling technique and multiple regression analysis. The results of this study prove that board size no effect on enterprise risk management disclosure, while board independence effect enterprise risk management disclosure. This shows that the commissioners understand and carry out their duties as an independent party in supervising, directing, and evaluating the implementation of corporate governance and corporate strategic policies so that Board Independence in State-Owned Enterprises in Indonesia functions properly.
References
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Abraham, S., & Cox, P. (2007). Analyzing the determinants of narrative risk information in UK FTSE 100 annual reports. British Accounting Review, 39(3), 227–248. https://doi.org/10.1016/j.bar.2007.06.002
Amran, A., Bin, A. M. R., & Hassan, B. C. H. M. (2009). Risk reporting: An exploratory study on risk management disclosure in Malaysian annual reports. Managerial Auditing Journal, 24(1), 39–57. https://doi.org/10.1108/02686900910919893
Beasley, M. S., Clune, R. N., & Hermanson, D. R. (2005). Enterprise risk management: An empirical analysis of factors associated with the extent of implementation. Journal of Accounting and Public Policy, 24(6), 521–531. https://doi.org/10.1016/j.jaccpubpol.2005.10.001
Elzahar, H., & Hussainey, K. (2012). Determinants of narrative risk disclosures in UK interim reports. Journal of Risk Finance, 13(2), 133–147. https://doi.org/10.1108/15265941211203189
Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. Journal of Law & Economics, 26(4), 9–15.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1017/CBO9780511817410.023
Lajili, K. (2009). Corporate Risk Disclosure and Corporate Governance. Journal of Risk and Financial Management, 2(1), 94–117. https://doi.org/10.3390/jrfm2010094
Lajili, & Zeghal. (2005). A Content Analysis of Risk Management Disclosures in Canadian Annual Reports. Canadian Journal of Administrative Sciences, 22(2), 1215–142. https://doi.org/http://dx.doi.org/10.1108/17506200710779521
Lopes, P. T., & Rodrigues, L. L. (2007). Accounting for financial instruments: An analysis of the determinants of disclosure in the Portuguese stock exchange. International Journal of Accounting, 42(1), 25–56. https://doi.org/10.1016/j.intacc.2006.12.002
Ntim, C. G., Lindop, S., & Thomas, D. A. (2013). Corporate governance and risk reporting in South Africa: A study of corporate risk disclosures in the pre-and post-2007/2008 global financial crisis periods. International Review of Financial Analysis, 30, 363–383. https://doi.org/10.1016/j.irfa.2013.07.001
Olveira, J., Rodrigues, L. L., & Craight, R. (2011). Risk-related disclosures by non-finance companies: Portuguese practices and disclosure characteristics. Managerial Auditing Journal, 26(9), 817–839. https://doi.org/10.1108/02686901111171466
Probohudono, A. N., Tower, G., & Rusmin, R. (2013). Risk disclosure during the global financial crisis. Social Responsibility Journal. https://doi.org/10.1108/17471111311307859
Singh, M., Mathur, I., & Gleason, K. C. (2004). Governance and performance implications of diversification strategies: Evidence from large U.S. firms. Financial Review, 39(4), 489–526. https://doi.org/10.1111/j.0732-8516.2004.00086.x
Vandemaele, S., Vergauwen, P., & Michiels, A. (2009). Management risk reporting practices and their determinants: a study of Belgian listed firms. Business, 1–24.
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Published
2021-01-15
How to Cite
Kurniawanto, H. (2021). The Effect Board Characteristics On Enterprise Risk Management Disclosures: Evidence from State-Owned Enterprise In Indonesia. Archives of Business Research, 8(12), 230–237. https://doi.org/10.14738/abr.812.9525
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