The Quality of Risk Disclosure: Evidence from Infrastructure Industry in Indonesia

Abstract

The objective of this study was to analyze the quality of mandatory and voluntary risk disclosure in Indonesia during the period of 2011 and 2012. The risk disclosure quality is defined as the quality of risk information that are disclosed by firms in term of relative quantity (adjusted by type of sub-industry and firm size), depthness (the potential impact of risk disclosed on firm’s future performance), the coverage within every type of risk, and the outlook profile of firm’s risk management. This study used samples of 48 firm-years of infrastructure companies that were listed in Indonesia Stock Exchange. Infrastructure industry was chosen due to the strategic role of this industry to support the acceleration and expansion of Indonesia's economic development. By using a descriptive qualitative method, the result showed that firms were still emphasizing on relative quantity dimension compared to the other three dimensions: coverage, depth, and outlook profile of firm risk management. In addition, the quality of mandatory risk disclosure was better than voluntary risk disclosure either for depth, coverage, or an outlook profile of firm risk management dimension. In other words, financial risk items (mandatory risk disclosure items) have better quality rather than non-financial risk items (voluntary risk disclosure items).

Company Characteristics, Corporate Governance and Risk Disclosure

“…The risk disclosure analysis consists of mandatory risk disclosures that include financial items and voluntary risk disclosures that include non-financial items that are disclosed in the company's annual report (Geraldina, 2017). Risk disclosure is an important aspect of implementing risk management because it helps users of financial statements to assess current and future risks (Miihkinen, 2013).…”

Determinants Of The Level Of Corporate Risk Disclosure In Manufacturing Companiesyear 2017-2021

“…Perusahaan hanya menekankan pada jumlah informasi risiko (dimensi kuantitas relatif), tetapi masih sedikit pengungkapan mengenai dampak risiko terhadap kinerja masa depan perusahaan (kedalaman dimensi) dan pengelolaan risiko perusahaan (profil prospek dimensi manajemen risiko) serta cakupan item risiko juga masih rendah. Untuk meningkatkan kualitas pengungkapan risiko di masa depan, perusahaan perlu meningkatkan kedalaman, cakupan dan profil prospek manajemen risiko dalam laporan tahunannya (Geraldina, 2017).…”

Efek Firm Size, Profitability, Gearing Ratio, Dan Public Ownership Terhadap Risk Disclosure

“…Menurut (Geraldina, 2017) informasi pengugkapan risiko yang dilakukan perusahaan dalam laporan keuangan merupakan salah satu langkah yang dapat digunakan untuk berkomunikasi mengenai risiko atau ancaman yang dimiliki perusahaan kepada para pihak eksternal perusahaan terutama para kreditor dan investor. Menurut (Oluwagbemiga, 2014) dengan meningkatnya pengungkapan risiko yang dilakukan oleh perusahaan diharapkan dapat mengurangi tingkat perbedaaan informasi diperoleh para pengguna laporan keuangan.…”