The Influence of Intellectual Capital, Audit Quality and Corporate Governance Mechanisms on Financial Statement Integrity and Their Impact on Company Financial Performance

Abstract

The objective of this research was to ascertain how intellectual capital, audit quality, corporate governance mechanisms affected the financial statement integrity and their impact on company financial performance. The population in this research are manufacturing companies listed on the Indonesian Stock Exchange in 2016-2020. The number of samples in this research were 33 manufacturing companies listed on the Indonesian Stock Exchange. The amount of data in this research uses as many as 165 of 33 manufacturing companies listed on the Indonesian Stock Exchange. Sampling technique through purposive sampling method. The statistical method uses multiple linear regression analysis by testing the t-statistical hypothesis test through Eviews 12. T-Statistical test results showed that intellectual capital had a significant negative effect and independent commissioners had a significant positive effect on financial statement integrity, while audit quality, institutional ownership, audit committees did not affect financial statement integrity and financial statement integrity, intellectual capital, audit quality, independent commissioners had a significant positive effect on company’s financial performance, while institutional ownership, audit committees did not influence the financial statement integrity.

Integrity of Financial Statement Factors: Intellectual Capital, Independent Commissioner, and Company Size

“…Theoretically, a company with a high number of independent commissioners would be subject to more scrutiny, which would reduce the possibility of fraud or data manipulation in day-to-day operations and improve the accuracy and consistency of financial statements (Abbas et al, 2021). According to studies, financial reporting is much more trustworthy when independent commissioners are present (Lesmono & Setiyawati, 2023) and (Marlinda et al, 2022). By efficiently overseeing the financial statement production process, independent commissioners improve the financial statements' accuracy (Annisa & Muslih, 2023).…”