Statement Disclosure Research Articles

Risk translation: how cryptocurrency impacts company risk, beta and returns

PurposeAs cryptocurrencies continue to gain viability as an asset class, institutional investors and publicly traded firms have started taking investment positions in digital currencies. What firms may not be considering, however, is the effect these assets may have on their risk profiles. This study aims to (1) measure the effect of cryptocurrencies on the risk and return characteristics of publicly traded companies; (2) decipher the motives behind holding cryptocurrencies as an asset class; and (3) determine whether one reason for holding is more effective than another. To conduct this research, the four largest publicly traded holders of cryptocurrency as well as four of the most prominent cryptocurrencies are explored.Design/methodology/approachThe cross-sectional analysis approach has been used to analyze the daily returns, volatility, betas and Sharpe Ratios of firms during periods without cryptocurrency strategies and during periods with cryptocurrency strategies.FindingsThe impact of the cryptocurrency asset class on common stock performance and corporate disclosures are documented. The importance of risk disclosures on cryptocurrency holdings is emphasized: Firms must better inform their stakeholders through comprehensive disclosures in financial statements. Firms utilize cryptocurrencies for various reasons such as treasury management tools or as direct sources of income. Consequently, the impact on returns and risks varies substantially.Originality/valueTo the best of the authors’ knowledge, this is one of the first studies on cryptocurrency investments in the treasury departments of publicly traded companies. The study contributes to the literature by extracting relevant information regarding company risk reporting and cryptocurrency risk at firms. The conclusions also promote firm transparency with detailed reporting of cryptocurrency holding risks.

THE ROLE OF OWNERSHIP CONCENTRATION AS MODERATION ON BIOLOGICAL ASSET INTENSITY, COMPANY SIZE, AND FIRM GROWTH ON BIOLOGICAL ASSET DISCLOSURE IN AGRICULTURAL INDUSTRY IN INDONESIA

Disclosure in financial statements is now important for users. The purpose of this study is to empirically prove whether there is an influence between Biological Asset Intensity, Company Size, and Firm Growth on Biological Asset Disclosure. In addition, this study wants to see whether the Ownership Concentration moderates the relationship between those variables. The population of this study is agricultural companies listed on the Indonesia Stock Exchange (IDX) in the period 2018 to 2020. Purposive sampling was usedthe sampling technique and the total sample obtained was 51 samples. The data were processed using SPSS ver 26.0 with multiple regression analysis and Moderated Regression Analysis (MRA) methods. The results of the analysis of this study found that Biological Asset Intensity, Company Size, and Firm Growth did not have a significant effect on Biological Asset Disclosure. The results of the moderation analysis, Ownership Concentration proves to strengthen the relationship between Biological Asset Intensity and Company Size on Biological Asset Disclosure. However, Ownership Concentration has proven to weaken the relationship between Firm Growth and Biological Asset Disclosure.The implication of this research is the need to increase the role of centralized ownership in terms of financial statements in order to provide added value for investors.

THE ROLE OF OWNERSHIP CONCENTRATION AS MODERATION ON BIOLOGICAL ASSET INTENSITY, COMPANY SIZE, AND FIRM GROWTH ON BIOLOGICAL ASSET DISCLOSURE IN AGRICULTURAL INDUSTRY IN INDONESIA

Disclosure in financial statements is now important for users. The purpose of this study is to empirically prove whether there is an influence between Biological Asset Intensity, Company Size, and Firm Growth on Biological Asset Disclosure. In addition, this study wants to see whether the Ownership Concentration moderates the relationship between those variables. The population of this study is agricultural companies listed on the Indonesia Stock Exchange (IDX) in the period 2018 to 2020. Purposive sampling was usedthe sampling technique and the total sample obtained was 51 samples. The data were processed using SPSS ver 26.0 with multiple regression analysis and Moderated Regression Analysis (MRA) methods. The results of the analysis of this study found that Biological Asset Intensity, Company Size, and Firm Growth did not have a significant effect on Biological Asset Disclosure. The results of the moderation analysis, Ownership Concentration proves to strengthen the relationship between Biological Asset Intensity and Company Size on Biological Asset Disclosure. However, Ownership Concentration has proven to weaken the relationship between Firm Growth and Biological Asset Disclosure.The implication of this research is the need to increase the role of centralized ownership in terms of financial statements in order to provide added value for investors.

Analisis Tingkat Pengungkapan Laporan Keuangan Pemerintah Daerah di Sumatera

The purpose of this study was to determine the level of financial reporting disclosure of provincial/district/city governments in Sumatra in 2020. The study population was 164 local government financial reports. The sampling technique used is a saturated sampling technique, namely a sampling technique that uses all members of the population as a sample. The data used is secondary data in the form of data and information on financial statements of provincial/district and city governments in Sumatra. This study uses 7 disclosure indicators, with a total of 302 mandatory disclosures. The results show that the level of disclosure in the financial statements of provincial/district and city governments in Sumatra is still low. The average level of disclosure is 54.47%. In future research, it is expected to conduct interviews and observations to identify the factors that cause high and low disclosures in local government financial statements.

ANALYSIS OF THE APPLICATION OF THE STATEMENT OF FINANCIAL ACCOUNTING STANDARDS (PSAK) 106 CONCERNING MUSYARAKAH FINANCING AT BANK BRI SYARIAH BRANCH OFFICE BANDUNG CITARUM

AbstractThis study aims to determine the suitability of applying accounting treatment regarding the recognition, measurement, presentation, and disclosure of financial statements of musyarakah financing transactions with PSAK No. 106 at BRI Syariah Branch Office Bandung Citarum in 2019. This research is a field study with a qualitative approach. The subject of research is at BRI Syariah Branch Office Bandung Citarum. In contrast, the object of research is the recognition, measurement, presentation, and disclosure of financial statements of musyarakah financing transactions in 2019. Data collection techniques in research using interviews and documentation. The results of this study show that : (1) the recognition of musyarakah financing accounting is not entirely by PSAK No. 106 because profit sharing income is calculated based on projections and losses due to accidents are the responsibility of customers, with discounts given; (2) accounting measurement of musyarakah financing by PSAK No. 106; (3) the presentation of musyarakah financing accounting is not by PSAK No. 106 because the cash handed over to customers is presented as musyarakah financing: (4) the disclosure of musyarakah financing accounting is not by PSAK No. 106 because BRI Syariah Branch Office Bandung Citarum does not make notes to the financial statements.Keywords: Musyarakah Financing, Statement of Financial Accounting Standards (PSAK) No. 1

Report on Local Government Finances Determinants: Evidence from Stewardship Perspectives

This study aims to provide empirical findings regarding the determinants of the level of reports of local government finance disclosure in districts/cities in East Java province. Determinants of the level of reports of local government finance disclosure include regional characteristics, complexity, and audit findings which are broken down into independent variables, including regional wealth, level of dependence, total assets, number of local government agencies, population, number of findings, and level of irregularities. The sample in this study was 93 reports on local government finances audited by the Audit Board of the Republic of Indonesia representing East Java Province for the 2017-2019 period (3 years), which were obtained using the purposive sampling method. The analytical method uses multiple linear regression analysis. The results showed that regional wealth and the level of dependence had a negative effect. Total assets positively affected the level of disclosure of financial statements. At the same time, the number of local government agencies, population, number of findings, and level of irregularities did not significantly affect the financial reports of district/city regional governments in East Java province. The central government needs to encourage regional financial transparency, especially for regions with a high local revenue and dependency level.

How good is the government? Analysis of west java’s local government disclosure through an integrated reporting framework

The present study aims to determine the level and quality of comprehensive performance disclosure of the West Java government of Indonesia using an integrated reporting framework. The study analyzes the disclosure of government performance information based on the Notes to the Financial Statements of 27 districts/city governments and one provincial government in the West Java region from 2016–2020. The data was obtained by conducting a content analysis of the government's financial statements using the integrated reporting quality disclosure matrix. Data were analyzed using descriptive statistics, non-parametric tests, and a cluster analysis. The results indicate that: (1) the quality of disclosure in government financial statements according to the integrated reporting framework is still low, with an average score of 35.19%; (2) there is no difference in the scores of disclosure items between district and city governments, but there is an increase in disclosure per year for two elements and total disclosure; and (3) the cluster formed indicates that 22 of 28 district and city governments need to improve the quality of their disclosures. In general, the disclosure quality of the West Java government’s financial statements is still at a low level. The results indicate the need to improve the quality of financial reporting by the government and the use of integrated reporting as a frame of reference.

Effect of disclosure the footnotes on financial instruments: Empirical evidence from Vietnamese commercial banks

The study investigates the factors that influence the level of disclosure information on commercial bank financial statements in Vietnam. The study collected data for analysis using the expected number of samples from the financial statements of 31 joint stock commercial banks in Vietnam for 5 consecutive years (from 2016 to 2020). Based on data analysis using a regression model, the study found a statistically significant relationship between the level of disclosure of financial statement disclosures and audit quality variables such as equity structure, number of board members, and bank size.

Forward looking statement, investor sentiment and stock liquidity

Information is a critical element of capital markets, and liquidity is the lifeblood of capital markets. Relative to historical information, forward-looking information is of significant value to investors. Based on textual analysis calculations, we selected Chinese A-share listed companies as a research sample to explore the impact of forward-looking information disclosure level on stock liquidity. It is found that the higher the level of forward-looking information disclosure, the better the stock liquidity. Investor sentiment is the transmission mechanism through which the forward looking statement disclosure level affects stock liquidity. The heterogeneity analysis shows that the level of forward-Looking statement disclosure has a more significant effect on stock liquidity improvement for state-owned enterprises and enterprises in low-market regions than those in regions with high marketization levels. The article expands and enriches the research on forward-looking information disclosure, and also has some reference value for regulators to formulate laws and regulations and regulate forward-looking information disclosure.

The Effect of Audit Opinion and Audit Findings on the Level of Disclosure of Local Government Financial Statements at Regency / City in Maluku Province 2016-2021

This study aims to empirically examine the effect of audit opinion and audit findings on the level of disclosure of financial statements of district / city local governments in Maluku province. This study uses secondary data, namely the audit reports or local government financial reports by BPK-RI in 2016-2021. The sample used in this study amounted to 30 consisting of 5 districts / cities in Maluku province that have not been able to get an unqualified opinion (WTP). The data were processed using the SPSS version 22 application. This study shows that audit opinion and audit findings have no effect on the level of disclosure of district / city government financial reports in Maluku province.

Impact of Cybersecurity Disclosures on Stakeholder Intentions

ABSTRACT Regulators have urged companies to enhance the informativeness of cybersecurity risk disclosures in financial statements. However, little is known about how the perceived attributes of cybersecurity risk disclosures may influence various stakeholders’ attitudes and behavioral intentions. Drawing on the Belief Reinforcement Model (BRM) and Elaboration Likelihood Model (ELM), this study examines how privacy concern moderates the role of the perceived presence of specificity and the belief about the verifiability of cybersecurity risk disclosures on trust violation and the behavioral intentions of different stakeholders (i.e. users, investors, and employees). The evidence from our experiment suggests that the perceived presence of specific disclosure elements and the belief about disclosure verifiability influences behavioral intentions for all three stakeholders through beliefs and attitudes. Further, those influences vary depending on the level of individuals’ privacy concerns.

Characteristics and disclosure of local government financial statements

AbstractThis study aims to examine the effect of local government characteristics on district/city Regional Government Financial Statements (LKPD) disclosures. Examination of the Characteristics of the Local Government will provide a better understanding of the disclosure of district/city Regional Government Financial Statements (LKPD). This study's independent variable consists of own-source revenue, level of dependence, total asset, capital expenditures, total population, and employee spending findings. The dependent variable is LGFR disclosure. The samples in this study are local governments with a 5-year observation period from 2016-2020. The examples were selected using the purposive sampling technique and acquired 175 pieces, which the district/city government compiled in Central Java Province and through the BPK examination process. The analytical method in this study is multiple regression analysis. The research results show that the level of dependence, total assets, capital expenditures, total population, and employee spending significantly affect the LGFR disclosure. At the same time, own-source revenue has no significant effect on the LGFR disclosure. The findings on the PAD variable align with the fact that PAD information is optional to be the focus of reporting in LKPD.AbstrakPenelitian ini bertujuan untuk menguji pengaruh karakteristik pemerintah daerah terhadap pengungkapan Laporan Keuangan Pemerintah Daerah (LKPD). Pengujian atas karakteristik Pemerintah Daerah akan memberikan pemahaman yang lebih baik atas pengungkapan Laporan Keuangan Pemerintah Daerah. Variabel independen dalam penelitian ini terdiri dari sumber kekayaan asli daerah (PAD), ketergantungan daerah, total aset, belanja modal, jumlah penduduk, dan belanja pegawai. Untuk variabel dependen yaitu pengungkapan LKPD. Penelitian ini menggunakan sampel pemerintah daerah kabupaten/kota dengan periode pengamatan tahun 2016-2020. Sampel dipilih menggunakan teknik purposive sampling dan diperoleh data sebanyak 175 sampel yang disusun pemerintah daerah kabupaten/kota di Provinsi Jawa Tengah serta sudah melalui proses pemeriksaan BPK. Metode analisis pada penelitian ini adalah analisis regresi berganda. Hasil penelitian menunjukkan bahwa total aset berpengaruh secara signifikan dan positif terhadap pengungkapan LKPD. Ketergantungan daerah, total aset, belanja modal, jumlah penduduk, dan belanja pegawai berpengaruh terhadap pengungkapan LKPD. Sedangkan, sumber kekayaan asli daerah (PAD) tidak berpengaruh signifikan terhadap pengungkapan LKPD. Hasil temuan atas variabel PAD ini sejalan dengan bahwa informasi PAD tidak menjadi fokus pelaporan dalam LKPD.

The accounting treatment of expected credit losses by South African banks during COVID-19

Orientation: The coronavirus disease 2019 (COVID-19) pandemic negatively affected borrowers’ ability to repay debt, which is expected to influence banks’ calculation of their expected credit loss (ECL) allowance. Comprehensive disclosure regarding the application of managerial judgement in calculating ECLs would produce decision-useful financial information.Research purpose: This study explored the effects of the COVID-19 pandemic on the measurement and disclosure of ECL allowances by South African listed banks.Motivation for the study: It is unknown whether decision-useful financial information regarding South African banks’ ECLs was produced during the pandemic, mirroring developed countries.Research approach/design and method: Content analysis of quantitative and qualitative data from annual financial statements was employed for a sample of listed banks.Main findings: Banks employed a variety of relief measures to accommodate borrowers, but these relief measures did not automatically trigger a significant increase in credit risk. More loans were subject to lifetime ECLs, causing the ECL allowance to increase substantially during the first year of the pandemic. Forward-looking information as well as postmodel adjustments were employed to measure the ECL allowance.Practical/managerial implications: The ECL allowances of South African listed banks increased during the pandemic. Disclosure in the annual financial statements and identifying ECLs as a key audit matter provided evidence of adequate consideration of the credit risk and forward-looking information influencing ECLs by banks and their auditors. Improved disclosure regarding postmodel adjustments is required.Contribution/value-add: During the COVID-19 pandemic, decision-useful financial information regarding the calculation of banks’ ECL allowances was available for South African banks, mirroring developed countries.

FUND MANAGEMENT: AN EXPLARATORY CASE STUDY OF MOSQUES IN SOUTH SULAWESI INDONESIA

This paper identifies the mosques' source of funds, fund distribution, and parties responsible for managing the fund. The research used mixed methods, qualitative research and quantitative, which interviewed mosque administrators and Jema'ah and collected secondary data through in-depth interviews in 80 mosques in South Sulawesi, Indonesia. The findings of this study solidify the results of previous research, where it was found that the primary sources of mosques' funds were public charity contributions. The fund was also utilized optimally for the operations and physical development of the mosques. Financial recording of the Mosque is only done when cash comes in and out. Then cash in and out, and the total cash is delivered using the Mosque's Microphone. This paper recommends that the government should have regulations regarding the disclosure of financial statements and fund management, such as making an annual report on Mosques overseas, such as Masjid Taqwa Brisbane and Mosque foundation in the UK

Public firm disclosures and the market for innovation

We examine the spillover effect of public firm disclosures on the patent trading market. The patent market is rife with information frictions, yet can potentially facilitate the reallocation of innovation to the most productive users. We find that going from the 25th percentile to the 75th percentile in public firm presence – our proxy for public firm disclosures – is linked to a 9.4% increase in other related parties' future patent sales. The positive link between public firm presence is stronger where information asymmetry is greatest and where information uncertainty prevails relative to transactions less likely to suffer from information frictions. Tests exploiting cross-sectional variation and public firms' EDGAR implementation corroborate the resolution of information frictions as a mechanism. Additional tests reveal financial statement disclosure as an important information source facilitating patent sales. Our results speak to an important and underexplored externality of public firm disclosures – its contribution to the patent market.

The determinants and effects of the early adoption of IFRS 15:Evidence from a developing country

Our study examines the determinants (especially governance and board characteristics) of the early adoption of the International Financial Reporting Standard 15 (IFRS 15) in a developing market—namely, the Egyptian Stock Exchange. Further, our study examines the difference in IFRS 15ʹs effects on the financial statement accounts between the early adopters and the non-early adopters. Based on the Egyptian Stock Exchange (EGX) 100 index, the study uses 79 firm-year observations for the early adoption period (2019–2020). We manually collected data from the Egyptian companies’ annual reports and the Thomson Reuters database and analysed them using logistic regression and t-tests. Out of the various examined governance mechanisms, we found that board size significantly negatively affects the early adoption of IFRS 15. In contrast, female directors have a significant positive effect on the early adoption of IFRS 15 in Egypt. Regarding the effects of firm characteristics, we found that firm age, firm size, and financial leverage have significant positive effects on the early adoption of IFRS 15. In contrast, profitability and audit quality have an insignificant effect on the early adoption of IFRS 15. Finally, we found a significant difference in profitability between IFRS 15 early adopting companies compared to non-early adopters. This result reflects the economic value of early embracing IFRS standards and their updates in emerging markets, such as Egypt. To the best of our knowledge, this is the first study that examines the determinants of IFRS 15ʹs early adoption and its effects on the financial statement disclosures in an emerging country. Our study turns the attention of investors in emerging markets such as Egypt to the changes and updates in IFRS related to revenues, which can enhance the transparency and accountability in these markets.

PENGARUH PERSEPSI KESESUAIAN, SISTEM INTERNAL KONTROL, DAN PENERAPAN GOOD CORPORATE GOVERNANCE TERHADAP KECURANGAN AKUNTANSI PADA PT. BANK PERMATA, TBK

Accounting fraud is a misstatement or intentional omission of amounts or disclosures in financial statements to deceive users of financial statements and misstatements arising from improper treatment of assets (often referred to as misappropriation or embezzlement) related to the theft of entity assets that result in financial statements not being presented. in accordance with generally accepted accounting principles in Indonesia. This study aims to determine the effect of perceived conformity, internal control systems and also the implementation of good corporate governance at PT Bank Permata, Tbk. The method used in this study is a quantitative method, with a sample of 38 out of 51 all employees of PT Bank Permata, Tbk who serve as administration/finance, marketing, customer service and teller. The type of data used is primary data. The results showed that partially the perceived facility suitability variable had no effect on the accounting fraud variable. The internal control system variable has a partial effect on the accounting fraud variable. The good corporate governance variable partially has no effect on accounting fraud. And simultaneously the variables of conformity perception, internal control system and good corporate governance have an effect on accounting fraud

ОРГАНІЗАЦІЯ І МЕТОДИКА ОБЛІКУ, АНАЛІЗУ, АУДИТУ ЗАПАСІВ НА ОСНОВІ МІЖНАРОДНИХ СТАНДАРТІВ ФІНАНСОВОЇ ЗВІТНОСТІ

The article defines that the main normative legal act of Ukraine, which determines the methodological principles of the formation of information about stocks in accounting and its disclosure in financial statements, is NAR(S) 9. It was created on the basis of IAS 2. The common approaches of these documents are: determination of net sales value; the use of inventory valuation methods at the balance sheet date and at the time of disposal, etc. The differences relate to the following aspects: definition of stocks, their classification, evaluation of stocks at the time of their receipt, disclosure of information about them in appendices to financial statements, list and conditions of attribution of costs included in the cost of stocks. The advantages of IAS 2 are systematized: compliance with the best accounting practices in the world, logical presentation of the main provisions, accessibility of their perception by qualified users, orientation to the development of a plan and program of audits of transactions with stocks. The disadvantage is the use of the "reversal" method for the subsequent revaluation of stocks in the case of their previous revaluation. It is shown that the form of coordination of the provisions of NAR(S) 9 and IAS 2 is the implementation of the latter into domestic practice in view of the clearly expressed course of Ukraine towards European integration. The dynamics of the value of stocks of economic entities of the national economy during 2013-2021 were analyzed. It was established that their growth was due to inflationary processes and changes in exchange rates, which were not taken into account when evaluating reserves under NAR(S) 9. In the conditions of the inflationary economy of Ukraine, domestic business entities were offered the use of the provisions of IAS 2 in terms of including exchange rate differences in the initial cost of reserves taking into account the provisions of IAS 21 "Effect of changes in exchange rates". The role of stocks in the formation of current assets is shown statistically, their relatively even distribution among enterprises of different sizes, the rating of medium, large, small and micro enterprises by the size of stocks is determined. The necessity of differentiating methods of analysis and auditing of operations with stocks for enterprises of different sizes is substantiated. The main objects of the audit with reserves based on the synthesis of the requirements of NAR(S) and IFRS are proposed.

한국의 국제재무보고 표준언어(XBRL)의 정착을 위한 대응방안

This study aims to provide a reasonable basis for the feasibility of introducing XBRL based on a review of prior studies on the usefulness of XBRL and a correlation between IFRS and XBRL disclosures to facilitate financial statements disclosure using the XBRL. In addition, by comparing the current status of the introduction of XBRL in major countries, an applicable improvement plan in Korea is derived. Prior studies on the usefulness of XBRL argue that financial statement information structured by the introduction of XBRL has a low possibility of error and earnings management, and high convenience of analysis. As a result of reviewing the relationship between IFRS and XBRL disclosures, the XBRL provide the content as it is in a structured form, rather than by changing the content of existing financial statements. And just as XBRL taxonomies are developed and updated in due process based on the principle-based IFRS by IASB, it is expected that the comparability between countries will be significantly improved if authoritative bodies update taxonomies appropriately reflect their disclosure practices. And it was found that both the United States and the EU are introducing XBRL more strongly than Korea. The U.S. requires all listed companies and some other companies to apply Inline XBRL to prepare financial statements and notes in 10-Q and 10-K reports. The EU requires all listed companies to apply Inline XBRL to prepare consolidated financial statements in annual reports. The U.S. and the EU are led by supervisory agencies over the underlying laws, but in Korea, it is judged that the introduction of XBRL is not smooth. Therefore, in order to revitalize the introduction of XBRL in Korea, it is necessary to prepare a clear legal basis for the introduction of XBRL, and to create an stakeholder-centered XBRL ecosystem based on this.

Analysis of potential factors of financial statement disclosure: Evidence from Indonesian local government

This study explores the relationship between the number of local parliamentarians, local government budget expenditures, Java/non-Java jurisdiction, liabilities, and Local Own-source revenue and financial statement disclosure. It relies on multiple theoretical frameworks and uses a sample of 180 local government financial reports in Indonesia for 2021 that have been audited by the Indonesian National Audit Board. Using the SPSS Version 25 program, multiple regression analysis was used in this study to assess hypotheses. The results found that Java/non-Java jurisdiction (β = 0.259; p < 0.05) and Local Own-source revenue (β = 0.321; p < 0.05) affect the disclosure of financial statements. In addition, the number of local parliamentarians (β = 0.071; p > 0.05), local government budget expenditure (β = 0.038; p > 0.05), and liability (β = 0.005; p > 0.05) does not affect the disclosure of financial statements. The contribution to local government is to analyze potential aspects related to the government’s increased pressure to make financial statement disclosure. The use of information technology to meet social demands more effectively and efficiently is one option for regional governments to disclose their financial statements.