Corporate Governance Quality

Oct 13, 2025 by magicalceylontours.com 130 views

The Effect of Profitability, Liquidity, Leverage, Age Listing, and Managerial Ownership on the Application of Internet Financial Reporting in the Consumer Goods Sector Company in Indonesia

Introduction

The rapid development of information and communication technology has brought significant changes in various aspects of life, including the business world and finance. One of the significant changes is the emergence of financial reporting practices via the internet or known as internet financial reporting (IFR). IFR has become a crucial aspect of corporate governance, as it provides stakeholders with timely and accurate financial information. This research aims to investigate the effect of various financial and non-financial factors on the application of IFR in the Consumer Goods sector company listed on the Indonesia Stock Exchange (IDX) in the 2017-2019 period.

Background

The Consumer Goods sector is one of the largest sectors in Indonesia, with many companies listed on the IDX. The sector is characterized by high competition, and companies need to be transparent and accountable to their stakeholders. IFR has become a crucial tool for companies to provide timely and accurate financial information to their stakeholders. However, the application of IFR is not mandatory, and companies need to be motivated to implement it.

Research Methodology

This study uses an associative quantitative method with a sample of 34 companies listed on the IDX in the Consumer Goods sector. The analysis technique used is logistical regression with the help of SPSS 26 software. The study examines the effect of five factors on the application of IFR:

*** Profitability: ** The company's ability to generate profits. *** Liquidity: ** The company's ability to fulfill its short-term obligations. *** Leverage: ** The level of debt use in company funding. *** List of Listing: ** The length of the company is registered on the IDX. *** Managerial ownership: ** Proportion of company share ownership owned by management.

Results

The results of the study showed that:

*** Profitability and liquidity have no significant effect on the application of IFR. ** This can be interpreted that companies that have high profitability and liquidity will not necessarily be more encouraged to implement IFR. *** Leverage has a significant effect on the application of IFR. ** Meaning, companies with high levels of leverage tend to be more active in implementing IFR. Possibly, companies with high leverage feel the need to increase transparency and accountability to investors and creditors related to their debt management. *** The list of listings does not have a significant effect on the application of IFR. ** This finding indicates that the length of time the company is registered on the IDX is not a determining factor in the application of IFR. *** Managerial ownership has a significant effect on the application of IFR. ** This shows that companies with a high proportion of managerial ownership tend to be more active in implementing IFR. Possibly, company management that has large share ownership is more motivated to increase the value of the company, including by increasing transparency through the application of IFR.

Research Implications

This research has several implications that can be useful for stakeholders, including:

*** For companies: ** Research results can be a reference for the companyConsumer Goodsin determining the strategy of implementing IFR. *** For investors: ** This research can help investors in assessing the quality of financial information presented by the company. *** For Regulators: ** This research can be a consideration for regulators in developing policies related to the application of IFR in Indonesia.

Suggestion

Further research can consider other factors that may affect the application of IFR, such as:

*** Pressure from investors and creditors: ** The higher the pressure from investors and creditors to get transparent financial information, the higher the possibility of the company implementing IFR. *** Support from management: ** Full support from management is very important in encouraging the application of IFR in the company. *** Corporate Governance Quality: ** Companies with good corporate governance tend to be more encouraged to implement IFR. *** Organizational culture: ** Organizational culture that emphasizes transparency and accountability will encourage the application of IFR.

Conclusion

In conclusion, this study provides insights into the factors that influence the application of IFR in the Consumer Goods sector company in Indonesia. The study found that leverage and managerial ownership have a significant effect on the application of IFR, while profitability, liquidity, and list of listing do not have a significant effect. The study has several implications for stakeholders, including companies, investors, and regulators. Further research can consider other factors that may affect the application of IFR.

Recommendations

Based on the findings of this study, the following recommendations can be made:

*** Companies: ** Companies should consider the level of leverage and managerial ownership when deciding to implement IFR. *** Investors: ** Investors should consider the level of leverage and managerial ownership when assessing the quality of financial information presented by the company. *** Regulators: ** Regulators should consider the level of leverage and managerial ownership when developing policies related to the application of IFR in Indonesia.

Limitations

This study has several limitations, including:

*** Sample size: ** The sample size of 34 companies is relatively small. *** Data availability: ** The data used in this study is limited to the 2017-2019 period. *** Generalizability: ** The findings of this study may not be generalizable to other sectors or companies.

Future Research Directions

Future research can consider other factors that may affect the application of IFR, such as pressure from investors and creditors, support from management, corporate governance quality, and organizational culture. Additionally, future research can consider the impact of IFR on the financial performance of companies.
Q&A: The Effect of Profitability, Liquidity, Leverage, Age Listing, and Managerial Ownership on the Application of Internet Financial Reporting

Q: What is internet financial reporting (IFR)?

A: IFR is a financial reporting practice that provides stakeholders with timely and accurate financial information through the internet. It has become a crucial aspect of corporate governance, as it increases transparency and accountability.

Q: What are the factors that affect the application of IFR?

A: The study found that leverage and managerial ownership have a significant effect on the application of IFR, while profitability, liquidity, and list of listing do not have a significant effect.

Q: What is the significance of leverage in the application of IFR?

A: Companies with high levels of leverage tend to be more active in implementing IFR. This is because companies with high leverage feel the need to increase transparency and accountability to investors and creditors related to their debt management.

Q: What is the significance of managerial ownership in the application of IFR?

A: Companies with a high proportion of managerial ownership tend to be more active in implementing IFR. This is because company management that has large share ownership is more motivated to increase the value of the company, including by increasing transparency through the application of IFR.

Q: What are the implications of this study for companies?

A: The study provides insights for companies in determining the strategy of implementing IFR. Companies should consider the level of leverage and managerial ownership when deciding to implement IFR.

Q: What are the implications of this study for investors?

A: The study provides insights for investors in assessing the quality of financial information presented by the company. Investors should consider the level of leverage and managerial ownership when assessing the quality of financial information.

Q: What are the implications of this study for regulators?

A: The study provides insights for regulators in developing policies related to the application of IFR in Indonesia. Regulators should consider the level of leverage and managerial ownership when developing policies related to the application of IFR.

Q: What are the limitations of this study?

A: The study has several limitations, including a relatively small sample size, limited data availability, and limited generalizability.

Q: What are the future research directions?

A: Future research can consider other factors that may affect the application of IFR, such as pressure from investors and creditors, support from management, corporate governance quality, and organizational culture. Additionally, future research can consider the impact of IFR on the financial performance of companies.

Q: What are the practical implications of this study?

A: The study provides practical implications for companies, investors, and regulators. Companies should consider the level of leverage and managerial ownership when deciding to implement IFR. Investors should consider the level of leverage and managerial ownership when assessing the quality of financial information. Regulators should consider the level of leverage and managerial ownership when developing policies related to the application of IFR.

Q: What are the theoretical implications of this study?

A: The study provides theoretical implications for the field of accounting and finance. The study contributes to the understanding of the factors that affect the application of IFR and provides insights for companies, investors, and regulators.

Q: What are the policy implications of this study?

A: The study provides policy implications for regulators in developing policies related to the application of IFR in Indonesia. Regulators should consider the level of leverage and managerial ownership when developing policies related to the application of IFR.

Q: What are the future research directions in the field of accounting and finance?