Good Corporate Governance: Does The Timeliness of Financial Reporting Has an Effect to The Investors’ Reaction?

Reni Furwanti,Dini Maulana Lestari,Slamet Haryono

doi:10.31940/jbk.v17i1.2320

Reni Furwanti, Dini Maulana Lestari + Show 1 more

Open Access

https://doi.org/10.31940/jbk.v17i1.2320

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Abstract

This research aims to find out the influence of independent committee boards, audit committee repats, foreign ownership, and audit quality on the timeliness of financial reporting and their impact on investors' reactions both directly and indirectly. This research uses a quantitative method with population and sample of companies registered in Jakarta Islamic Index (JII). Data will be processed using path analysis using IMB SPSS Statistic 22 software. Based on the results of this research, it is known that directly, independent commissioner variables and audit quality have a positive effect on investor reactions, while foreign ownership variables and audit committee meetings have a negative effect on investors’ reactions. While the indirect influence can be known that only audit committee meetings, foreign ownership, and audit quality can have a significant impact on investors' reactions through the timeliness of disclosure of financial statements as intervening variables. The implication of this research is to prove that the existence of corporate governance in terms of determining the intensity of audit committee meetings, foreign ownership, and determination of KAP selection in improving the quality of audits can make the company more efficient and timely in disclosing its financial statements in order make positive reactions from investors that indicates good news for the company.

Highlights

Good Corporate Governance, Independent Board of Commissioners, AuditCommittee Meetings, Foreign Ownership, and Audit Quality are simultaneously affected to increase companies’ performance as reported on previous researches and general theory
Good Corporate Governance can be a strategy to improve the response or positive reaction from investors to remain loyal to the company (Abdullah, 2006; Fujianti, 2016)). It is not enough, so that the element of the company's compliance with the timeliness of disclosure of the financial report can be an additional strategy in obtaining a portion investor reaction to the company (Tarmidi et al, 2019). This condition refers to the general theory of compliance and agency which revealed that, if the companies have such batter good governance management, in the term of independent board of commissioners, intensity audit committee meeting, foreign ownership, and audit quality, it will trigger companies to do their obligation in publishing the financial report on the exact time regarding to increasing such interest of investors in order to invest their amount of capital to the companies
Timeliness of financial reporting can mediate and amplify the influence of most dependent variables to independent, there is one dependent variable that cannot be mediated and reinforced by the timeliness of financial reporting variable which is an independent variable of the board of commissioners. this is because the independent composition of the independents board of commissioners does not have a meaningful influence on the preparation of financial statements and their impact on the delay in disclosure of financial statements that may affect investor reaction to the relevant company

Summary

INTRODUCTION

Good Corporate Governance, Independent Board of Commissioners, Audit. Committee Meetings, Foreign Ownership, and Audit Quality are simultaneously affected to increase companies’ performance as reported on previous researches and general theory. It is not enough, so that the element of the company's compliance with the timeliness of disclosure of the financial report can be an additional strategy in obtaining a portion investor reaction to the company (Tarmidi et al, 2019) This condition refers to the general theory of compliance and agency which revealed that, if the companies have such batter good governance management, in the term of independent board of commissioners, intensity audit committee meeting, foreign ownership, and audit quality, it will trigger companies to do their obligation in publishing the financial report on the exact time regarding to increasing such interest of investors in order to invest their amount of capital to the companies. Description: Y1 (Timeliness of Financial reporting Disclosure) Y2 (Investor Reaction) β0 (Coefficient) β1X1 (Coefficient of the Independent Committee Board) β2X2 (Coefficient of Audit Committee Meeting) β3X3 (Foreign Ownership Coefficient) β4X4 (Audit Quality Coefficient) β Y1 (Coefficient of Timeliness of Financial reporting)

TESTS METHOD Classical Assumption Test Normality Test

DISCUSSION

CONCLUSIONS