The Effect of Voluntary Risk Management Disclosure and Risk Management Committee on Firm Value
Downloads
Objective: This study aimed to analyze the effect of voluntary risk management disclosure (VRMD) and the existence of a risk management committee (RMC) on firm value.
Design/Methods/Approach: The research sample is companies listed on the Indonesia Stock Exchange for 2016, with 136 observations. The data obtained are based on annual reports. This study uses a quantitative approach with multiple linear analysis, with the help of the STATA 14 software program, as hypothesis testing.
Findings: The results showed that voluntary risk management disclosure positively and significantly in the firm's value. The existence of the risk management committee had no significant effect on the firm's value.
Originality: In this study, the researcher sees not only the existence of a risk management committee to measure risk management. However, the Voluntary Risk Management Disclosure score is rarely studied in Indonesia.
Practical/Policy implication: This study has implications for investors to be more careful in analyzing the risks faced by the company so that investors avoid mistakes in making investment decisions and for the government to develop guidelines for disclosure of voluntary (non-financial) risk management and risk management committees.
Abdel-Azim, M. H., & Abdelmoniem, Z. (2015). Risk management and Disclosure and Their Impact on Firm Value: The Case of Egypt. International Journal of Business, 9(1).
Abdullah, M., Abdul Shukor, Z., Mohamed, Z. M., & Ahmad, A. (2015). Risk management disclosure: A study on voluntary risk management disclosure's effect on firm value. Journal of Applied Accounting, 16(3), 400–432.
Akindele, R. I. (2012). Risk Management and Corporate Governance Performance – Empirical Evidence From the Nigerian. IFE Psychologia: An International Journal, 20(March), 103–121.
Al-Akra, M., & Ali, M. J. (2012). The value relevance of corporate voluntary disclosure in the Middle-East: The case of Jordan. Journal of Accounting and Public Policy, 31(5), 533–549. https://doi.org/10.1016/j.jaccpubpol.2011.10.007
Amran, A., Manaf Rosli Bin, A., & Che Haat Mohd Hassan, B. (2009). Risk reporting: An exploratory study on risk management disclosure in Malaysian annual reports. Managerial Auditing Journal, 24(1), 39–57. https://doi.org/10.1108/02686900910919893
Peraturan Bank Indonesia Tentang Pelaksanaan Good Corporate Governance, Peraturan Bank Indonesia (2006). https://www.ojk.go.id/id/kanal/perbankan/regulasi/peraturan-bank-indonesia/Pages/peraturan-bank-indonesia-nomor-11-33-pbi-2009.aspx
Beasley, M. S., Clune, R., & Hermanson, D. R. (2005). Enterprise risk management: An empirical analysis of factors associated with the extent of implementation. Journal of Accounting and Public Policy, 24(6), 521–531. https://doi.org/10.1016/j.jaccpubpol.2005.10.001
Beattie, V., McInnes, B., & Fearnley, S. (2004). A Methodology for Analysing and Evaluating Narratives in Annual Reports: A Comprehensive Descriptive Profile and Metrics for Disclosure Quality Attributes. Accounting Forum, 28(3), 205–236. https://doi.org/10.1080/0969160x.2013.766418
Bhuiyan, M. B. U., Cheema, M. A., & Man, Y. (2020). Risk Committee, Corporate Risk-Taking, and Firm Value. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3681601
Brown, I., Steen, A., & Foreman, J. (2009). Risk management in corporate governance: A review and proposal. Corporate Governance: An International Review, 17(5), 546–558. https://doi.org/10.1111/j.1467-8683.2009.00763.x
Cabedo, J. D., & Tirado, J. M. (2004). The disclosure of risk in financial statements. Accounting Forum, 28(2), 181–200. https://doi.org/10.1016/j.accfor.2003.10.002
Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signalling theory: A review and assessment. Journal of Management, 37(1), 39–67.
Financial Reporting Council (FRC). (2011). Boards and Risk: A Summary of Discussions with Companies, Investors and Advisers. In Financial Reporting Council. FRC.
Gordon, L. A., Loeb, M. P., & Sohail, T. (2010). Market value of voluntary disclosures concerning information security. MIS Quarterly: Management Information Systems, 34(SPEC. ISSUE 3), 567–594. https://doi.org/10.2307/25750692
Haruman, T. (2008). Struktur Kepemilikan, Keputusan Keuangan dan Nilai Perusahaan”. Finance and Banking Journal. Simposium Nasional Akuntansi 11, Volume 10., 150–165.
Hassan, O. A. G., Romilly, P., Giorgioni, G., & Power, D. (2009). The value relevance of disclosure: Evidence from the emerging capital market of Egypt. International Journal of Accounting, 44(1), 79–102. https://doi.org/10.1016/j.intacc.2008.12.005
Healy, P. M., & Palepu, K. G. (2001). Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature. Journal of Accounting and Economics, 31(1–3), 405–440. https://doi.org/10.1016/S0165-4101(01)00018-0
Pernyataan Standar Akuntansi Keuangan Nomor 60 Revisi 2016: Pengungkapan, (2016).
Institute of Chartered Accountants in England and Wales (ICAEW). (2002). No surprises: the case for better risk reporting. In Balance Sheet (Vol. 10, Issue 4). https://doi.org/10.1108/09657960210450745
Komite Nasional Kebijakan Governance. (2006). Pedoman Umum Good Corporate Governance Indonesia.
Latan, H. (2016). Aplikasi Analisis Data Statistik untuk Ilmu Sosial Sains dengan STATA.
Linsley, P. M., & Shrives, P. J. (2006). Risk reporting: A study of risk disclosures in the annual reports of UK companies. British Accounting Review, 38(4), 387–404. https://doi.org/10.1016/j.bar.2006.05.002
Miihkinen, A. (2013). The usefulness of firm risk disclosures under different firm riskiness, investor-interest, and market conditions: New evidence from Finland. Advances in Accounting, 29(2), 312–331. https://doi.org/10.1016/j.adiac.2013.09.006
Milne, M. J., & Adler, R. W. (1999). Exploring the reliability of social and environmental disclosures content analysis. Accounting, Auditing & Accountability Journal, 12(2), 237–256. https://doi.org/10.1108/09513579910270138
Ousama, A. A., Fatima, A. H., & Majdi, A. R. H. (2011). Effects of intellectual capital information disclosed in annual reports on market capitalization: Evidence from Bursa Malaysia. Journal of Human Resource Costing& Accounting, 15(2), 85–101.
Petersen, M. A. (2009). Estimating standard errors in finance panel data sets: Comparing approaches. Review of Financial Studies, 22(1), 435–480. https://doi.org/10.1093/rfs/hhn053
Rahman, M. Z. (1998). The Role of Accounting in The East Asian Financial Crisis: Lessons Learned. Transnational Corporations, 7(3), 1–52.
Shukor, A. zaleha, Abdullah, M., & Rahmad, M. (2017). The Influences of Risk Management Committee and Audit Committee towards Voluntary Risk Management Disclosure. Jurnal Pengurusan, 50, 83 – 95.
Solomon, J. F., Solomon, A., Norton, S. D., & Joseph, N. L. (2000). A conceptual framework for corporate risk disclosure emerging from the agenda for corporate governance reform. British Accounting Review, 32(4), 447–478. https://doi.org/10.1006/bare.2000.0145
Uyar, A., & Kiliç, M. (2012). Value relevance of voluntary disclosure: Evidence from Turkish firms. Journal of Intellectual Capital, 13(3), 363–376. https://doi.org/10.1108/14691931211248918
Copyright (c) 2022 Iman Harymawan, Dwi Ragil Rahmawati
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish with this journal agree to the following terms:
1. The author(s) hold the copyright of the article without restrictions.
2. The author(s) retain publishing rights without restrictions
3. The legal formal aspect of journal publication accessibility refers to Creative Commons Attribution (CC BY).
