Title: VOLUNTARY DISCLOSURE DECISION IN PUBLIC COMPANIES: A Comparative Study on Making Voluntary Disclosure in Cigarette Companies PT. HM Sampoerna Tbk, PT. Gudang Garam Tbk. and PT BAT Indonesia Tbk in Gaining Public Trust

Authors: L. Tri Lestari

Affiliations: Master of Accounting Study Program, Faculty of Economics and Business, Universitas Airlangga Surabaya

Publisher: Universitas Airlangga

Abstract

Disclosure is a financial report which is the final product of accounting, apart from being the main medium for conveying information by management to parties outside the company or the public, it also contains the company's financial condition and other information, which is used to communicate to shareholders, creditors, stockholders, salon stockholders and other interested parties.

Financial report disclosure can be grouped into two, namely: (1) Mandatory disclosure and (2) Voluntary disclosure.

The purpose of this study is to determine the decision-making process of company management in making Voluntary Disclosures in three publicly listed cigarette companies in East Java. This is done by describing the Voluntary Disclosures in the annual reports of the three companies published on the Surabaya Stock Exchange. These findings are then compared to obtain general conclusions about the decision to make Voluntary Disclosures.

The results show that based on the analysis of 33 items on voluntary disclosure (referring to the opinion of Meek, Meek et. al. 1995) it can be stated as follows: The decision to make Voluntary Disclosure in companies that have gone public has a non-uniform framework, from the three categories of information studied, which include: (I). Strategic Information, (2). Non-Financial Information and (3). Financial Information. These differences cannot be separated from the management's views on the questions: (1). For whom from the perspective of information should it be disclosed? (2) What is the purpose of the information? (3) How much information should be disclosed?

The types of information disclosed to the public indicate that not all publicly traded companies feel the need to disclose all information based on these three types to the public. Because the first two types are considered supplementary information only, some companies consider supplementary information unnecessary for full disclosure to the public. However, financial information, although minimal, is considered important by the three companies studied to be disclosed to the public in their annual reports, as an obligation of publicly traded companies. Therefore, management's perspective is crucial in determining the extent of voluntary disclosure.

There is a tendency of the three companies studied to only provide disclosures to the public about financial information, only on financial information that has been ongoing or definite information on the company. Information that is in the nature of projections or estimates that will occur according to the company's planning or targets tends not to be informed to the public, for example: information regarding the projected number of sales for the following year, information regarding the projected sales profit for the following year and information regarding the projected amount of cash flow for the following year, because it is too risky if the company cannot achieve the targets as informed to the public.

Likewise, regarding information that is sensitive in the eyes of the public, the three companies studied chose not to provide information to the public, for example: company statements or descriptions regarding the provision of equal employment opportunities, regardless of ethnicity, religion and race (Sara).

In addition, the three companies studied showed that the information provided through Annual Reports (Annual Financial Reports) in the capital market (Surabaya Stock Exchange) generally provided sufficient information for investors to understand the company's development.

Keywords: Voluntary Disclosure, Decision Making, Voluntary Elements, the view of management.

Sources: http://repository.unair.ac.id/184/