Abstract
The purposes of this study are to find out the effect of corporate governance structure on information asymmetry, to find out the effect of corporate governance structure on disclosure, and to find out the effect of disclosure on information asymmetry in Indonesia banking industry. This study used partial least square/ variance based statistical method. The results of this study found out that good implementation of corporate governance structure will increase disclosure in Indonesia banking industry. The other result implied that the higher implementation disclosure will reduce information asymmetry in Indonesia banking industry (disclosure represented by the indicator of percentage corporate governance items disclosed or as IPCG).
Highlights
The influence of growing globalization massively impact on investment
The aim of this study are to find out the effect of corporate governance structure on information asymmetry in Indonesia banking industry, to find out the effect of corporate governance structure on disclosure in Indonesia banking industry and to find out the effect of disclosure on information asymmetry in Indonesia banking industry
Path testing models with partial least square regression approach (PLS) approach resulted that only two hypotheses were accepted, namely: 1. Corporate governance structure has a significant impact on disclosure in Indonesia banking industry
Summary
Investors need to be convinced that the company where they invested has a standard corporate management and a good reporting standard the correct implementation and monitoring in order to provide a return as expected by them. Transmission of relevant information on the actual events to the involved various parties in the organization (stakeholders) is very important in order to avoid information asymmetry. The collapse of Enron, Worldcom and some other global as well as local cases has proven the importance of the high quality of information in the company among stakeholders. Disclosure of information is a fundamental principle in the system of good governance in the company, namely transparency. With a good corporate governance, it is expected that disclosure of relevant information will increase and will decrease the information asymmetry, especially among agent and principal
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