Factors Affecting the Integrity of Manufacturing Company Financial Statements in Indonesian Stock Exchange and Malaysian Stock Exchange

Abstract

This study aims to examine the effect of managerial ownership, auditors switching and intellectual capital on the integrity of financial statements with leverage and firm size as control variables. The study employed literature and observation study of the research object to obtain the research data. The research objects are manufacturing companies listed on IDX and MYX within the period of 2014-2017. Research data were analyzed using Eviews software with multiple linear regression analysis method. In this study the t statistical test is used to measure and assess the significance level of each independent variable (managerial ownership, auditor switching and intellectual capital) and control variables (firm size and leverage) on the dependent variable, namely the integrity of financial statements applied in Indonesia and Malaysia. The results showed that in the Indonesian manufacturing companies, managerial ownership, auditors switching and intellectual capital have a positive effect on the integrity of financial statements. Meanwhile, in the Malaysian manufacturing companies, from the three dependent variables used in the study, only managerial ownership has an effect on the integrity of financial statements. With regard to the control variables used, leverage and firm size are equally positive for the integrity of financial statements of companies just in Indonesia. This research is different from the previous study in that the objects of this study are manufacturing companies listed on the Indonesia Stock Exchange (IDX) and Bursa Malaysia (MYX) within the period of 2014-2017, which is a longer period of time. Further, the researchers add independent variables to managerial ownership, auditor switching, and intellectual capital

Determinants of Financial Statements Integrity in Company Index Kompas 100

“…Intellectual capital management has no impact on production activities to make the company more efficient and more economical. With a high level of intellectual capital, companies usually become uncontrollable, so that it can harm the company, such as the occurrence of corporate fraud committed by employees (Fauziah & Panggabean, 2019).…”

“…This is a concern in Statement of Financial Accounting Standards (PSAK) No.19 regarding intangible assets because intangible assets have an impact on financial performance which is reflected in the financial statements. According to Fauziah & Panggabean (2019), there is significant impact of intellectual capital in Indonesia on Integrity Financial statements, but reverse in Malaysia, the integrity of financial statements cannot be affected by intellectual capital.…”

Investment Decisions, Funding Decisions and Activity Ratios on Firm Value in Indonesia

“…Signal hypothesis recommends how organizations ought to flag clients of monetary statements. Fauziah & Panggabean (2019), Pernamasari (2020), Restianti & Agustina (2018), Sunarto et al (2021 defines signals as actions taken by management that convey to investors how management views the prospects of the company.Information that a company is superior to another company can serve as a signal (Kurniawati, 2018;Siregar et al, 2018;Sutriasih et al, 2013;Tampubolon, 2016).Because information is basically a description, picture, or description that presents the company's viability, past, present, and future conditions, and their impact on the company, this information is very important for entrepreneurs and investors.All parties outside the company may also be influenced in their investment decisions by information released by the company.Signal theory is based on the assumption that managers and shareholders have different access to company information. Managers naturally have better information about the company than shareholders which leads to information asymmetry between managers and shareholders.…”

Pengaruh Leverage, Kepemilikan Manajerial, Dan Ukuran Perusahaan Terhadap Integritas Laporan Keuangan

“…Hasil penelitian ini mendukung hasil penelitian terdahulu yang dilakukan oleh (Lubis, Fujianti, & Amyulianthy, 2019) dan (Pratika & Primasari, 2020) yang menyatakan bahwa ukuran perusahaan tidak berpengaruh terhadap integritas laporan keuangan. Hasil penelitian ini tidak sejalan dengan penelitian yang dilakukan oleh (Fauziah & Panggabean, 2019) menyatakan bahwa ukuran perusahaan berpengaruh positif terhadap integritas laporan keuangan dengan semakin besar ukuran perusahaan maka semakin meningkat integritas laporan keuangannya karena manajer cenderung lebih konservatif ketika memilih untuk mengurangi keuntungan tanpa adanya overstate atas nilai asetnya sehingga laporan keuangan yang dihasilkan akan reliable.…”