CORPORATE RISK DISCLOSURE: THE EFFECT OF CORPORATE GOVERNANCE

Ahmad, Arisona and Muhammad, Muhammad and Narullia, Dwi (2021) CORPORATE RISK DISCLOSURE: THE EFFECT OF CORPORATE GOVERNANCE. JOURNAL OF APPLIED MANAGERIAL ACCOUNTING, 5 (1). pp. 101-113. ISSN 2548-9917

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Abstract

This research investigates the role of corporate governance on the disclosure of corporate business risk management with leverage and company size as control variables. Research data were taken from a company that classified as LQ 45 on the Indonesian stock exchange from 2015 to 2018. This research finds that disclosure of business risk management as a sign that management has managed the company with the good attitude increases along with increased corporate governance activities. Leverage and company size also affect company policies regarding the disclosure of corporate business risks. Overall, the results of this study are consistent with the assumption that corporate governance affects company policies regarding business risk disclosure. However, in contrast to the initial hypothesis, the composition of the board commissioners reduces the risk management disclosure activity in the company. This is because the board of commissioners considers that business risk disclosure can increase costs and reduce its competitive advantage so that investors will respond negatively. Apart from these variables, this study contributes to agency theory, where the findings of this study indicate the confirmation of the application of theory in the context of this study.

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