FIRM CHARACTERISTICS AND COMPLIANCE WITH OPERATING SEGMENT DISCLOSURES BASED ON PSAK 5

Authors

  • Khairina Nur Izzaty STIE Bank BPD Jateng, Indonesia
  • Yanti Pujiastuti STIE Bank BPD Jateng, Indonesia

DOI:

https://doi.org/10.29040/ijebar.v4i4.1488

Abstract

The purpose of this study is to find empirical evidence of the influence of company characteristics and disclosure practices of segments of manufacturing companies listed on the Indonesia Stock Exchange (IDX) and the factors that affect the level of segment disclosure of these companies. Consistent with previous research related to segment disclosure, in this study, the level of segment disclosure was tested using a disclosure index based on the mandatory requirements in the Statement of Financial Accounting Standards (PSAK) 5 Operating Segments. The results showed that the average level of segment disclosure with a sample of 88 manufacturing companies listed on the IDX from 2016 to 2018 was 51.2% with a range between 12.5% to 91.7%. Users of financial statements from the sample firms expect broader segment disclosure from the larger, more leveraged firms. Furthermore, the results of the study confirm that industry competition, profitability and earnings quality do not have a significant effect on the level of segment disclosure. These results can provide feedback to regulators in Indonesia regarding current segment disclosure practices by companies listed on the IDX as well as the factors that affect the level of segment disclosure.

Author Biographies

Khairina Nur Izzaty, STIE Bank BPD Jateng

Accounting

Yanti Pujiastuti, STIE Bank BPD Jateng

Financial Management

References

Alfaraih, M. M., & Alanezi, F. S. (2011). What Explains Variation In Segment Reporting? Evidence From Kuwait. International Business & Economics Research Journal (IBER), 10(7), 31. https://doi.org/10.19030/iber.v10i7.4665

Berger, P. G., & Hann, R. N. (2007). Segment Profitability and the Proprietary and Agency Costs of Disclosure. The Accounting Review, 82(4), 869–906. https://www.aaajournals.org/doi/pdf/10.2308/accr.2007.82.4.869

Blanco, B., García Lara, J. M., & Tribó, J. (2014). The relation between segment disclosure and earnings quality. Journal of Accounting and Public Policy, 33(5), 449–469. https://doi.org/10.1016/j.jaccpubpol.2014.06.002

Dechow, P. M., & Dichev, I. D. (2002). The Quality of Accruals and Earnings: The Role of Accrual Estimation Error. The Accounting Review, 77(s-1), 35–59.

Ghozali, I. (2011). Aplikasi Analisis Multivariate dengan Program IBM SPSS 19 (5th ed.). Badan Penerbit Universitas Diponegoro.

Hakim, M. N. N., & Achmad, T. (2020). ANALISIS PENGARUH KOMPETISI INDUSTRI TERHADAP PENGUNGKAPAN SEGMEN OPERASI PERUSAHAANitle. Diponegoro Journal of Accounting, 9(3), 1–11.

Harris, M. S. (1998). The Association Between Competition and Managers’ Business Segment Reporting Decisions. Journal of Accounting Research, 36(1), 111–128.

IAI. (2017). Standar Akuntansi Keuangan Efektif Per 1 Januari 2017 (1st ed.). Ikatan Akuntan Indonesia.

Ibrahim, K. (2014). Firm Characteristics and Voluntary Segments Disclosure among the Largest Firms in Nigeria. International Journal of Trade, Economics and Finance, 5(4), 327–331. https://doi.org/10.7763/ijtef.2014.v5.392

Jensen, M., & Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1017/CBO9780511817410.023

Kobbi-Fakhfakh, S., Shabou, R. M., & Pigé, B. (2018). Determinants of segment reporting quality: evidence from EU. Journal of Financial Reporting and Accounting, 16(1), 84–107. https://doi.org/10.1108/JFRA-10-2016-0077

Lucas, S. M. R., & Lourenço, I. C. (2014). The effect of firm and country characteristics on mandatory disclosure compliance. International Journal of Managerial and Financial Accounting, 6(2), 87–116. https://doi.org/10.1504/IJMFA.2014.064516

Muhammad, F., & Siregar, S. V. (2014). Analisis Tingkat Pengungkapan Segmen : Faktor-Faktor Yang Mempengaruhi Dan Dampaknya Terhadap Biaya Ekuitas. Ekuitas: Jurnal Ekonomi Dan Keuangan, 18(80), 330–349.

Nayeri, N., & Salehi, M. (2013). Agency Costs in Islamic Countries: Evidence from Iran. IUP Journal of Accounting Research & Audit Practices, 12(2), 68–76.

Pisano, S., & Landriani, L. (2012). The determinants of segment disclosure : an empirical analysis on Italian listed companies *. Fiancial Reporting, 1, 113–132.

Pratiwi, M. W., & Palupi, A. F. (2017). Analisis Pengaruh Ukuran Perusahaan, Kualitas Audit, Umur Perusahaan, Difusi Kepemilikan, Profitabilitas, Leverage, dan Tingkat Pertumbuhan terhadap Tingkat Pengungkapan Segmen Operasi. Media Riset Akuntansi, 5(1), 1–11. http://journal.bakrie.ac.id/index.php/journal_MRA/article/view/1745

Prencipe, A. (2004). Proprietary costs and determinants of voluntary segment disclosure: evidence from Italian listed companies. European Accounting Review, 13(2), 319–340. https://doi.org/10.1080/0963818042000204742

Ruwanti, S., & Rambe, P. A. (2020). Are Financial Distress and Firm Characteristics Restrict The Operating Segment Disclosure in Marine Industry ? AFEBI Accounting Review, 4(02), 106–116.

Verrecchia, R. E. (1990). Information quality and discretionary disclosure. Journal of Accounting and Economics, 12(4), 365–380. https://doi.org/10.1016/0165-4101(90)90021-U

Downloads

Published

2020-12-17

How to Cite

Izzaty, K. N., & Pujiastuti, Y. (2020). FIRM CHARACTERISTICS AND COMPLIANCE WITH OPERATING SEGMENT DISCLOSURES BASED ON PSAK 5. International Journal of Economics, Business and Accounting Research (IJEBAR), 4(4). https://doi.org/10.29040/ijebar.v4i4.1488

Issue

Vol. 4 No. 4 (2020): IJEBAR, VOL. 4, ISSUE 04, DECEMBER 2020

Section

Articles

Citation Check

License

Authors who publish with IJEBAR agree to the following terms: Authors retain copyright and grant the IJEBAR right of first publication with the work simultaneously licensed under a Creative Commons Attribution License (CC BY-SA 4.0) that allows others to share (copy and redistribute the material in any medium or format) and adapt (remix, transform, and build upon the material) the work for any purpose, even commercially with an acknowledgement of the work's authorship and initial publication in IJEBAR. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in IJEBAR. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).