Title : Valuation of Financial Reporting Quality: Is it an issue in the firm's valuation?
Authors:
- Nur Fadjrih is fun
- Dian Agustia
- Muchlis Muchlis
Department : Accounting
Journal Name : Asian Journal of Accounting Research
Kinds of Journal:
Keywords : Dynamic Factors, Static Factors, Institution Risk Factor, Financial Reporting Quality, Firm Value
Abstract:
Purpose
The purpose of this study is to test the determinant of financial report quality and its consequences to the Company values.
Design/methodology/approach
This research is using a quantitative approach and testing a theory by formulating some hypothes. The sample of this study is 85 Go Public Companies listed in the Indonesia Stock Exchange, for a 5-Year Observation Period from 2016 to 2020. Hence, it has a total of 425 observations. Were Analyzed Using Path Analysis data.
Findings
The results found that innate factors from financial reporting quality (FRQ) consists of dynamic factors (operation cycle and sales volatility) as well as static factors (firm's size, fs). These factors help to achieve frq and are able to provide a positive response to the market. On the other hand, Static Factors (Firm's Age, FA) and Institution Risk Factors (Leverage) are not able to produce frq. Thus, it cannot be consired as an economic decision maker for an investor.
Practical Implications
Research Implications Include Theoretical and Practical Implications. Theoretical Implications Program that the valuation of clean surplus theory, which shows the value of the company, is reflected in the components of the financial statements. This study also uses more than one quality of financial reporting. The Practical Implications of the Research is that research results are expected to provide information for the Company's management, to fulfill quality financial reporting and so that the market or investors will respond positively to these conditions. In addition, Quality Financial Reporting Information Provides Benefits for Investors and Capital Market Analysts (Consisting of Investors, Brokers and Market Securities Analysts) in Determining Investment Decisions. The Financial Services Authority is also able to improve the implementation of corporate governance practices in Indonesia, through reform of the framework supervision of the financial services sector.
Originality/value
This research examines the determinants of frq and its consequences on firm's value (FV). Innate Factors Proxies from From Include Dynamic Factors (Operation Cycle and Sales Volatility), Static Factors (FS and FA) and Institution Risk Factors (Leverage). A follow-up study on the value of the Company because it shows the magnitude of the market response (financial statement users) on the quality of financial reporting, which is reflected in fv, the original of this research is that the object of research is carried out in developing countries, specifically in Indonesia Most of the previous research was carried out in developed country.
For details : https://www.emald.com/inight/content/doi/10.1108/ajar-08-2022-0251/Full/html
