The Effect of Corporate Governance Mechanism and Submission Quality of Financial Report on the Financial report Integrity Moderated with Political Connection

Abstract

This study aims to determine the role of corporate governance mechanisms and the quality of financial report submission on financial report integrity by placing political connections as a moderating variable. The research method used is a quantitative method, with the unit of analysis being the company. The sample selection technique is purposive sampling, the selected sample is 43 manufacturing companies listed on the Indonesia Stock Exchange for the 2015-2019 period, so the number of observation data is 215 annual data. The data analysis used is panel data regression. The results of the study indicate that the corporate governance mechanism is not entirely able to provide a positive correlation to improving the integrity of financial statements, one of which is that independent commissioners may not be able to balance the decision-making process and to protect the rights of stakeholders, especially minority shareholders. Political connections are also very important to be a concern because they can influence existing governance, to improve reports with high integrity. This finding is very useful for investors to be careful in understanding the information contained in the financial statements because the corporate governance mechanism and the existence of political connections can affect its integrity. This political connection is often considered to weaken the mechanism of good corporate governance and the quality of the submission of financial reports which in turn can reduce the existence of the high financial report integrity.