Factors influencing financial statement disclosure: Empirical evidence from Indonesia
-
DOIhttp://dx.doi.org/10.21511/imfi.19(2).2022.20
-
Article InfoVolume 19 2022, Issue #2, pp. 230-237
- Cited by
- 685 Views
-
295 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Identifying the characteristics of Indonesian local governments that disclose financial statements looks relevant in order to find out the reasons for local governments in making policies to disclose financial statements. This study aims to examine whether financial condition, financial independence and political competition have an effect on the disclosure of financial statements in local governments, particularly districts/cities in Sumatra, Indonesia. A sample of 151 districts and cities on the Indonesian island of Sumatra were used in this quantitative analysis. The use of cluster sampling due to the implementation of accrual accounting based on the government regulation No. 71 of 2010 is applied in all districts/cities in Sumatra and has the same characteristics. The data analysis technique used in this study is a multiple linear regression with the SPSS test tool. The results reveal that factors influencing the financial statements disclosure is influenced by financial conditions (β = 0.095; p < 0.05), financial independence (β = 0.069; p < 0.05), and political competition (β = 0.038; p < 0.05). Overall, the results show a strong conclusion regarding the factors that affect the financial statements of the Indonesian government. The findings of this investigation can be a useful consideration for local governments in improving the quality of their external communications and improving public governance.
- Keywords
-
JEL Classification (Paper profile tab)G18, H83, M41, M48
-
References31
-
Tables4
-
Figures0
-
- Table 1. Summary of the final sample
- Table 2. Measurement of variables
- Table 3. Summary of descriptive statistics
- Table 4. Multiple regression test
-
- Aswar, K., Jumansyah, J., Mulyani, S., & Sumardjo, M. (2021). Moderating effect of internal control system to determinants influencing the financial statement disclosure. Investment Management and Financial Innovations, 18(3), 104-112.
- Aswar, K., Fanany, A. Y., Sumardjo, M., Wiguna, M., & Hariyani, E. (2022). Determinant factors on the disclosure level of local government’s financial statements in Indonesia. Public and Municipal Finance, 11(1), 1-9.
- Baimukhamedova, A., Baimukhamedova, G., & Luchaninova, A. (2017). Financial disclosure and the cost of equaity capital: The empirical test of the largest listed companies of Kazakhstan. Journal of Asian Finance, Economic and Business, 4(3), 5-17.
- Bardhan, P., & Yang T. T. (2004). Political competition in economic perspective. University of California at Berkeley.
- Badan Pemeriksa Keuangan Republik Indonesia. (2018). Summary of the 2018 Semester I Audit Results. Jakarta, Indonesia.
- Cinca, S. C., Tomas, M. R., & Tarragona, P.P. (2009). Factors influencing e-disclosure in local public administration. Environment and Planning C: Government and Policy, 27(2), 355-378.
- Ermawati, E. & Aswar, K. (2020). Assessing regional finance independence in Indonesian local governments. European Journal of Business and Management Research, 5(1), 1-5.
- Fuadi, M. Z., & Asmara, J. A. (2020). Audit findings on the level of disclosure of local government financial statements (case study of district /city governments in Aceh). Jurnal Ilmiah Mahasiswa Ekonomi Akuntansi, 5(1), 96-106.
- Garcia, A. C., & Garcia, J. G. (2008). Determinants of internet financial disclosure by local governments. Spanish Journal of Fincance and Accounting, 37(137), 63-84.
- Garcia, A. C. (2010). Determinant of online reporting of accounting information by Spanish local government authorities. Local Government Studies, 36(5), 679-695.
- Ghozali, I., & Chariri, A. (2014). International Accounting Theory of Financial Reporting Standards. Semarang: Badan Penerbit Universitas Diponegoro.
- Giroux, G., & Deis, D. (1993). Investor interests and government accounting disclosure. Accounting, Auditing & Accountability Journal, 6(1), 63-78.
- Giroux, G., & McLelland, A. J. (2003). Governance structures and accounting at large municipalities. Journal of Accounting and Public Policy, 22(3), 203-230.
- Ingram, R. W., & DeJong, D. V. (1987). The effect of regulation on local government disclosure practices. Journal of Accounting and Public Policy, 6(4), 245-270.
- Kanapickiene, R., & Keliuotyte-Staniuleniene, G. (2019). Disclosure of non-current tangible assets information in local government financial statements: The case of Lithuania. Economies, 7(116), 1-25.
- Kasmir. (2009). Introduction to Financial Management. Jakarta: Kencana.
- Laswad, F., Fisher, R., & Oyelere, P. (2005). Determinants of voluntary Internet financial reporting by local government authorities. Journal of Accounting and Public Policy, 24(2), 101-121.
- Marsella, C., & Aswar, K. (2019). An investigation of financial statement disclosure in local government financial statements. International Journal of Business and Economic Affairs, 4(6), 273-281.
- Muñoz, L. A., & Bolívar, A. P. R. (2015). Determining factors of transparency and accountability in local governments: A meta-analytic study. Lex Localis, 13(2), 129-160.
- Nor, W., Hudaya, M., & Novriyandana, R. (2019). Financial statements disclosure on Indonesian local government websites: A quest of its determinant(s). Asian Journal of Accounting Research, 4(1), 112-128.
- Owusu-Ansah, S., & Yeoh, J. (2005). The effect of legislation on fourth amendment protection. Michigan Law Review, 41(1), 92-109.
- Patrick, P. A. (2007). The determinants of organizational innovativeness: the adoption of gasb 34 in pennsylvania local government. The Pennsylvania State University, United States, Pennsylvania.
- Peraturan Pemerintah (PP) Nomor 71 Tahun 2010 tentang Standar Akuntansi Pemerintahan.
- Pérez, C. C., Bolívar, M. P. R., & Hernández, A. M. L. (2008). E-Government process and incentives for online public financial information. Online Information Review, 32(3), 379-400.
- Persson, T., & Tabellini, G. (2000). Political Economics. London: MIT Press.
- Rahim, W. M., & Martani. D. (2010). Analysis of the influence of internet access levels, political competition, audit opinions, characteristics of local governments, and demographic characteristics on disclosure of financial and non-financial information on local government websites. Journal of Universitas Indonesia, 1-79.
- Styles, A.K., & Tennyson, M. (2007). The accessibility of financial reporting of US municipalities on the internet. Journal of Public Budgeting, Accounting & Financial Manajemen, 19(1), 56-92.
- Sumatriani, S., Pagulung, G., Said, D., Pontoh, G. T., & Jamaluddin, J. (2021). The effects of shareholders’ rights, disclosures, and transparency on firm value. Journal of Asian Finance, Economic and Business, 8(3), 383-390.
- Suparno, S., & Nanda, R. (2016). The effect of regional financial independence, functional differentiation and functional specialization on the level of mandatory disclosure of local government financial reports. Jurnal Dinamika Akuntansi & Bisnis, 3(2), 105-118.
- Tabash, M. (2019). An empirical investigation on the relation between disclosure and financial performance of Islamic bank in the United Arab Emirates. Journal of Asian Finance, Economic and Business, 6(4), 27-35.
- Tagesson, T., Klugman, M., & Ekstrom, M, L. (2013). What explains the extent and content of social disclosures in Swedish municipalities’ annual reports. Journal of Management and Governance, 17(2), 217-235.