Investigating the effect of other independent variables

Oct 13, 2025 by windailys.com 38 views

Factors Affecting the Level of Disclosure of Financial Statements in Manufacturing Companies Listed on the Indonesia Stock Exchange for the 2008-2010 Period

Introduction

Financial statements are a crucial tool for companies to provide information to stakeholders regarding their financial conditions and performance. In the period 2008 to 2010, manufacturing companies listed on the Indonesia Stock Exchange showed variations in the level of disclosure of their financial statements. This study aims to understand the effect of company size, return on equity (ROE), debt to equity ratio (DER), return on assets (ROA), and net profit margins (NPM) on the level of disclosure of financial statements.

Background

Financial statements are a vital component of a company's disclosure policy, providing stakeholders with valuable information about the company's financial health and performance. The level of disclosure of financial statements can be influenced by various factors, including company size, profitability, and risk management strategies. In the context of manufacturing companies listed on the Indonesia Stock Exchange, understanding the factors that affect the level of disclosure of financial statements is essential for investors and other stakeholders to make informed decisions.

Methodology

This study used a quantitative approach, analyzing data from manufacturing companies listed on the Indonesia Stock Exchange for the period 2008-2010. The data were obtained from the Indonesia Stock Exchange website (www.idx.co.id) and annual reports issued by the sampled companies. The analysis model used in this study includes multiple regression, T-test, and F-test. The T-test was used to analyze the partial effect of independent variables on the dependent variable, while the F-test was used to analyze the simultaneous effect of all independent variables on the dependent variable.

Results

The results of this study showed that company size, ROE, DER, and ROA did not have a significant effect on the level of disclosure of financial statements. This can be interpreted that although these factors are important, they do not always contribute directly to how the company reveals its financial statements. On the other hand, NPM was proven to have a positive and significant influence on the level of disclosure of financial statements, indicating that companies with higher net profit tend to be more open in presenting their financial information.

Deeper Analysis

The effect of significant NPM on the level of disclosure can be explained through several perspectives. First, companies that have good profit performance usually feel more confident to share their financial information with the public, thereby increasing transparency. This not only serves to attract investors but also to build trust among other stakeholders.

In addition, the size of the company that does not show a significant effect may be caused by changing market conditions and regulatory demands that are not always comparable to the company's operational scale. Some large companies may not fully reveal all aspects of their financial even though they have the capacity to do it.

The ratio of debt to equity and return of assets, which also does not show significant effects, may be influenced by company risk management strategies. Some companies may choose to take greater risks in their capital structure, which in turn affects their decision regarding the disclosure of financial information.

Conclusion

From this study, it can be concluded that among the factors studied, NPM is the only factor that has a significant influence on the level of disclosure of financial statements in manufacturing companies listed on the Indonesia Stock Exchange in the 2008-2010 period. These findings provide valuable insight for investors and other stakeholders to understand the factors that can affect the transparency of the company's financial statements, as well as showing the importance of NPM as an indicator of financial health that can encourage greater disclosure.

Implications

The findings of this study have several implications for investors and other stakeholders. First, investors should consider NPM as an important factor in evaluating the level of disclosure of financial statements. Companies with higher NPM tend to be more transparent in presenting their financial information, which can reduce the risk of investing in the company. Second, regulators should consider the importance of NPM in promoting transparency and accountability in the financial reporting of companies listed on the Indonesia Stock Exchange.

Limitations

This study has several limitations. First, the study only analyzed data from manufacturing companies listed on the Indonesia Stock Exchange for the period 2008-2010. Future studies should consider analyzing data from other industries and time periods to generalize the findings. Second, the study only considered five independent variables, which may not be exhaustive. Future studies should consider including other independent variables that may affect the level of disclosure of financial statements.

Future Research Directions

Future research should consider exploring the following research directions:

Investigating the effect of other independent variables: Future studies should consider including other independent variables that may affect the level of disclosure of financial statements, such as company age, industry type, and board composition.
Analyzing data from other industries and time periods: Future studies should consider analyzing data from other industries and time periods to generalize the findings of this study.
Examining the impact of regulatory changes: Future studies should consider examining the impact of regulatory changes on the level of disclosure of financial statements.
Investigating the role of corporate governance: Future studies should consider investigating the role of corporate governance in promoting transparency and accountability in the financial reporting of companies listed on the Indonesia Stock Exchange.
Q&A: Factors Affecting the Level of Disclosure of Financial Statements in Manufacturing Companies Listed on the Indonesia Stock Exchange for the 2008-2010 Period

Q: What is the purpose of this study?

A: The purpose of this study is to understand the effect of company size, return on equity (ROE), debt to equity ratio (DER), return on assets (ROA), and net profit margins (NPM) on the level of disclosure of financial statements in manufacturing companies listed on the Indonesia Stock Exchange for the 2008-2010 period.

Q: What are the main findings of this study?

A: The main findings of this study are that company size, ROE, DER, and ROA do not have a significant effect on the level of disclosure of financial statements, while NPM has a positive and significant influence on the level of disclosure of financial statements.

Q: Why is NPM an important factor in the level of disclosure of financial statements?

A: NPM is an important factor in the level of disclosure of financial statements because companies with higher NPM tend to be more transparent in presenting their financial information. This is because companies with good profit performance usually feel more confident to share their financial information with the public, thereby increasing transparency.

Q: What are the implications of this study for investors and other stakeholders?

A: The implications of this study for investors and other stakeholders are that they should consider NPM as an important factor in evaluating the level of disclosure of financial statements. Companies with higher NPM tend to be more transparent in presenting their financial information, which can reduce the risk of investing in the company.

Q: What are the limitations of this study?

A: The limitations of this study are that it only analyzed data from manufacturing companies listed on the Indonesia Stock Exchange for the period 2008-2010, and it only considered five independent variables. Future studies should consider analyzing data from other industries and time periods, and including other independent variables that may affect the level of disclosure of financial statements.

Q: What are the future research directions for this study?

A: The future research directions for this study are to investigate the effect of other independent variables, analyze data from other industries and time periods, examine the impact of regulatory changes, and investigate the role of corporate governance in promoting transparency and accountability in the financial reporting of companies listed on the Indonesia Stock Exchange.

Q: How can this study contribute to the development of financial reporting standards in Indonesia?

A: This study can contribute to the development of financial reporting standards in Indonesia by providing insights into the factors that affect the level of disclosure of financial statements. The findings of this study can be used to inform the development of financial reporting standards that promote transparency and accountability in the financial reporting of companies listed on the Indonesia Stock Exchange.

Q: What are the practical implications of this study for companies listed on the Indonesia Stock Exchange?

A: The practical implications of this study for companies listed on the Indonesia Stock Exchange are that they should consider the importance of NPM in promoting transparency and accountability in their financial reporting. Companies with higher NPM tend to be more transparent in presenting their financial information, which can reduce the risk of investing in the company.

Q: How can this study be used to inform investment decisions?

A: This study can be used to inform investment decisions by providing insights into the factors that affect the level of disclosure of financial statements. Investors can use the findings of this study to evaluate the level of disclosure of financial statements of companies listed on the Indonesia Stock Exchange, and make informed investment decisions based on the level of transparency and accountability of the company.