Abstract
This research aims to obtain empirical evidence on the effect of company characteritics on risk management disclosure (RMD) from the annual reports of manufacturing companies. The sample consists of manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the period 2010–2012. The total sample included 72 companies with three years observation and the examined firms reached 216. Results indicate that independent variables (firm size, profitability, leverage, public ownership, management ownership, and business complexity) have a significant effect on RMD. However, the hypotheses test with partial t-test indicate different results. Firm size (FS) and management ownership (MO) have significant effects, whereas leverage (LEV) has a negative and significant effect on RMD. Other variables, namely profitability (PRO), public ownership (PO), and business complexity (BC), have no significant effect on RMD.
Highlights
In conducting business and operational activities, the company requires funds in every economic activity it executes in order to ensure its sustainability in the future (Jones et al, 2017)
Other results in this study indicate that the most disclosed type of risk in the annual reports of non-financial companies listed on the Indonesia Stock Exchange (IDX) is their financial risk
This research tests the effects of several company characteristics, such as Firm size (FS), PRO, LEV, public ownership (PO), management ownership (MO), and business complexity (BC), on the risk management disclosure (RMD) of manufacturing companies listed on IDX during the period 2010–2012
Summary
In conducting business and operational activities, the company requires funds in every economic activity it executes in order to ensure its sustainability in the future (Jones et al, 2017). To keep pace with such development, which is a result of the more competitive and complex global economic conditions, the company requires substantial funds so that it can achieve its organizational goals. On the one hand, having limited funds to finance operations restricts every unit of company activity, prompting the company to source out funds from external parties, such as investors or creditors.
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