Abstract
This study examines the role of the risk management committee as a moderating variable. The risk management committee will moderate the relationship between firm size, profitability, ownership concentration, and the size of the Enterprise Risk Management (ERM) disclosure board. The study is based on agency theory, which discusses the relationship between management and company owners and shareholders. The research sample consisted of 56 manufacturing companies in Indonesia with 224 units of analysis obtained using the purposive sampling technique. It has been proven that the risk management committee can moderate the relationship between firm size and ERM disclosure and ownership concentration and ERM disclosure. Company size is known to affect the disclosure of risk management in a company. But ownership concentration shows different things, that is, it does not affect corporate risk management disclosures. The results also show that the risk management committee cannot moderate the relationship between profitability and the size of the board of commissioners on the company’s risk management disclosures. It has also not been proven that profitability and the size of the board of commissioners directly affect corporate risk management disclosures. Thus, it can be stated that the risk management committee plays a role in controlling the extent of the company’s risk management disclosures; this is necessary to maintain stakeholder trust in the company.
Highlights
Today, companies are forced to always be transparent in their business to achieve targeted performance
According to Tarantika and Solikhah (2019), sure so far only testing the direct influence rela- Lechner and Gatzert (2017), and Saggar and Singh tionship model, especially research in Indonesia. (2017), the larger the size of a company, the greater. Even though this direct relationship may be influ- the disclosure of Enterprise Risk Management (ERM), companies need enced by the cause, it is strengthened by the pres- to present ERM disclosures so as not to mislead ence of other variables This study proposes a mod- interested parties
This study resulted in an adjusted R2 value of 0.370; this means that 37% of the variation in enterprise risk management disclosure as a dependent variable can be explained by the moderating variables and independent variables used in this study; other variables can explain the remaining 63% outside of this study
Summary
Companies are forced to always be transparent in their business to achieve targeted performance. This transparency is designed to ensure that corporate governance can run well and produce optimal performance. An annual report presented by a company becomes a means of presenting and disclosing financial and non-financial information. This information becomes the basis for business decision making by various stakeholders. Various information contained in the annual report becomes the basis for analyzing the situation when dealing with unexpected situations in a business operation; this situation is known as risk
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