The The Impact of Annual Report Readability on Agency Costs: Internal Control as Moderating Variable
The Impact of Annual Report Readability on Agency Costs
Abstract
This examination looks at the impact of yearly report comprehensibility on organization costs with inward control as a directing variable. This examination was directed at assembling organizations recorded on the Indonesia Stock Exchange in the 2014-2017 period. The populace utilized in this investigation added up to 142 organizations, and after the determination of tests with purposive examining methods got, 44 assembling organizations would be utilized as tests in this examination. The insightful technique in this examination utilizes the different straight relapse test with Moderate Regression Analysis (MRA). The aftereffects of this investigation show the clarity of yearly reports influence office costs, which implies the higher the degree of yearly report coherence, the higher organization costs looked by investors, the inward control reinforces the impact of yearly report lucidness on office costs, which implies that with inner control can diminish the impact of report intelligibility yearly along these lines lessening office costs.
Downloads
Download data is not yet available.
References
Ajina, A., Laouiti, M., & Msolli, B. (2016). Guiding Through the Fog: Does Annual Report Readability Reveal Earnings Management? Research in International Business and Finance, 38, 509–516. https://doi.org/10.1016/j.ribaf.2016.07.021
Akbar, D. A. (2014). Website-Based Company Report Disclosure. Diponegoro Journal of Accounting, 3(3).
Ang, J. S., Cole, R. A., & Lin, J. W. U. H. (2000). Agency Costs and Ownership Structure. The Journal Of Finance, LV(1).
Bogert, J. (1985). In Defense of the Fog Index. The Bulletin of the Association for Business,9–12. https://doi.org/10.1177/108056998504800203
Deumes, R. (2000). Voluntary Reporting on Internal Control by Listed Dutch Companies. Working Paper, Maastricht University, Maastricht, Faculty of Economics and Business Administration.
Elliott, B., & Elliott, J. (2009). Financial Accounting and Reporting (13th ed.). Pearson Higher Education.
Ghozali, I. (2018). SPSS Multivariate Analysis (9th ed.). Diponegoro University Publishing Board.
Hadiprajitno, P.B. (2012). Ownership Structure, Corporate Governance Mechanism and Agency Costs in Indonesia (Empirical Study on Companies on the Indonesia Stock Exchange). Journal of Accounting & Auditing, 9(2), 97–127.
Hassan, M. K. (2014). Risk Narrative Disclosure Strategies to Enhance Organizational Legitimacy: Evidence from UAE Financial Institutions. International Journal of Disclosure and Governance, 11(1), 1–17. https://doi.org/10.1057/jdg.2012.11
Hassan, M. K., Abu Abbas, B., & Garas, S. N. (2019). Readability, Governance and Performance: a test of the Obfuscation Hypothesis in Qatari Listed Firms. The International Journal of Business in Society, 19(2), 270–298. https://doi.org/10.1108/CG-05-2018-0182
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
Jensen, M.C., & Meckling, W. H. (1976). Theory of the Firm: Managerial. Journal of Financial Economics, 3, 305–360. https://doi.org/http://dx.doi.org/10.1016/0304-405X(76)90026-X
Jones, M., & Smith, M. (2014). Traditional and Alternative Methods of Measuring the Understandability of Accounting Narratives. Accounting, Auditing and Accountability Journal, 27(1), 183–208. https://doi.org/10.1108/AAAJ-04-2013-1314
Kaikova, T. G. E. (2016). Corporate Governance Mechanisms and Agency Costs: Cross-Country Analysis. The International Journal of Business in Society, 16(2), 334–348.
Klare, G. R. (1974). Assessing Readability. Reading Research Quarterly, 10(1), 62102. https://doi.org/10.2307/747086
Leng, J., & Ding, Y. (2011). Internal Control Disclosure and Corporate Governance: Empirical Research from Chinese Listed Companies. Technology and Investment, 02(04), 286–294. https://doi.org/10.4236/ti.2011.24029
Li, F. (2008). Annual Report Readability, Current Earnings, and Earnings Persistence. Journal of Accounting and Economics, 45(2–3), 221–247. https://doi.org/10.1016/j.jacceco.2008.02.003
Lo, K., Ramos, F., & Rogo, R. (2017). Earnings Management and Annual Report Readability. In Journal of Accounting and Economics (Vol. 63). https://doi.org/10.1016/j.jacceco.2016.09.002
Loughran, T., & Mcdonald, B. (2014). Measuring Readability in Financial Disclosures. Journal of Finance, 69(4), 1643–1671. https://doi.org/10.1111/jofi.12162
Luo, J. hui, Li, X., & Chen, H. (2018). Annual Report Readability and Corporate Agency Costs. China Journal of Accounting Research, 11(3), 187–212. https://doi.org/10.1016/j.cjar.2018.04.001
Oktadella, D., & Zulaikha. (2011). Corporate Governance Analysis on The Integrity of Dewanti Financial Statements.
Prasadhita, C. (2018). Profit and Readability Management Annual Report of Consumer Goods Companies Listed on the Indonesia Stock Exchange. EconomicBulletin, 16(2), 137–261.
Rennekamp, K. (2012). Processing Fluency and Investors' Reactions to Disclosure Readability. Journal of Accounting Research, 50(5), 1319–1354. https://doi.org/10.1111/j.1475-679X.2012.00460.x
Siallagan, H., & Machfoedz, M. (2006). Corporate Governance Mechanism, Profit Quality and Company Value. National Symposium on Accounting 9 Padang,(61), 23–26.
Smith, M., & Taffler, R. (1992). Readability and Understandability: Different Measures of the Textual Complexity of Accounting Narrative. Accounting, Auditing & Accountability Journal, 5(4), 84–84. https://doi.org/10.1179/str.2006.53.4.005
Subramanian, R., Insley, R. G., & Blackwell, R. D. (1993). Performance and Readability: A Comparison of Annual Reports of Profitable and Unprofitable Corporations. Journal of Business Communication, 30(1), 49–61. https://doi.org/10.1177/002194369303000103
Uyar, A., & Kiliç, M. (2012). The Influence of Firm Characteristics on Disclosure of Financial Ratios in Annual Reports of Turkish Firms Listed in the Istanbul Stock Exchange. International Journal of Accounting, Auditing and Performance Evaluation, 8(2), 137–156. https://doi.org/10.1504/IJAAPE.2012.046603
Akbar, D. A. (2014). Website-Based Company Report Disclosure. Diponegoro Journal of Accounting, 3(3).
Ang, J. S., Cole, R. A., & Lin, J. W. U. H. (2000). Agency Costs and Ownership Structure. The Journal Of Finance, LV(1).
Bogert, J. (1985). In Defense of the Fog Index. The Bulletin of the Association for Business,9–12. https://doi.org/10.1177/108056998504800203
Deumes, R. (2000). Voluntary Reporting on Internal Control by Listed Dutch Companies. Working Paper, Maastricht University, Maastricht, Faculty of Economics and Business Administration.
Elliott, B., & Elliott, J. (2009). Financial Accounting and Reporting (13th ed.). Pearson Higher Education.
Ghozali, I. (2018). SPSS Multivariate Analysis (9th ed.). Diponegoro University Publishing Board.
Hadiprajitno, P.B. (2012). Ownership Structure, Corporate Governance Mechanism and Agency Costs in Indonesia (Empirical Study on Companies on the Indonesia Stock Exchange). Journal of Accounting & Auditing, 9(2), 97–127.
Hassan, M. K. (2014). Risk Narrative Disclosure Strategies to Enhance Organizational Legitimacy: Evidence from UAE Financial Institutions. International Journal of Disclosure and Governance, 11(1), 1–17. https://doi.org/10.1057/jdg.2012.11
Hassan, M. K., Abu Abbas, B., & Garas, S. N. (2019). Readability, Governance and Performance: a test of the Obfuscation Hypothesis in Qatari Listed Firms. The International Journal of Business in Society, 19(2), 270–298. https://doi.org/10.1108/CG-05-2018-0182
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
Jensen, M.C., & Meckling, W. H. (1976). Theory of the Firm: Managerial. Journal of Financial Economics, 3, 305–360. https://doi.org/http://dx.doi.org/10.1016/0304-405X(76)90026-X
Jones, M., & Smith, M. (2014). Traditional and Alternative Methods of Measuring the Understandability of Accounting Narratives. Accounting, Auditing and Accountability Journal, 27(1), 183–208. https://doi.org/10.1108/AAAJ-04-2013-1314
Kaikova, T. G. E. (2016). Corporate Governance Mechanisms and Agency Costs: Cross-Country Analysis. The International Journal of Business in Society, 16(2), 334–348.
Klare, G. R. (1974). Assessing Readability. Reading Research Quarterly, 10(1), 62102. https://doi.org/10.2307/747086
Leng, J., & Ding, Y. (2011). Internal Control Disclosure and Corporate Governance: Empirical Research from Chinese Listed Companies. Technology and Investment, 02(04), 286–294. https://doi.org/10.4236/ti.2011.24029
Li, F. (2008). Annual Report Readability, Current Earnings, and Earnings Persistence. Journal of Accounting and Economics, 45(2–3), 221–247. https://doi.org/10.1016/j.jacceco.2008.02.003
Lo, K., Ramos, F., & Rogo, R. (2017). Earnings Management and Annual Report Readability. In Journal of Accounting and Economics (Vol. 63). https://doi.org/10.1016/j.jacceco.2016.09.002
Loughran, T., & Mcdonald, B. (2014). Measuring Readability in Financial Disclosures. Journal of Finance, 69(4), 1643–1671. https://doi.org/10.1111/jofi.12162
Luo, J. hui, Li, X., & Chen, H. (2018). Annual Report Readability and Corporate Agency Costs. China Journal of Accounting Research, 11(3), 187–212. https://doi.org/10.1016/j.cjar.2018.04.001
Oktadella, D., & Zulaikha. (2011). Corporate Governance Analysis on The Integrity of Dewanti Financial Statements.
Prasadhita, C. (2018). Profit and Readability Management Annual Report of Consumer Goods Companies Listed on the Indonesia Stock Exchange. EconomicBulletin, 16(2), 137–261.
Rennekamp, K. (2012). Processing Fluency and Investors' Reactions to Disclosure Readability. Journal of Accounting Research, 50(5), 1319–1354. https://doi.org/10.1111/j.1475-679X.2012.00460.x
Siallagan, H., & Machfoedz, M. (2006). Corporate Governance Mechanism, Profit Quality and Company Value. National Symposium on Accounting 9 Padang,(61), 23–26.
Smith, M., & Taffler, R. (1992). Readability and Understandability: Different Measures of the Textual Complexity of Accounting Narrative. Accounting, Auditing & Accountability Journal, 5(4), 84–84. https://doi.org/10.1179/str.2006.53.4.005
Subramanian, R., Insley, R. G., & Blackwell, R. D. (1993). Performance and Readability: A Comparison of Annual Reports of Profitable and Unprofitable Corporations. Journal of Business Communication, 30(1), 49–61. https://doi.org/10.1177/002194369303000103
Uyar, A., & Kiliç, M. (2012). The Influence of Firm Characteristics on Disclosure of Financial Ratios in Annual Reports of Turkish Firms Listed in the Istanbul Stock Exchange. International Journal of Accounting, Auditing and Performance Evaluation, 8(2), 137–156. https://doi.org/10.1504/IJAAPE.2012.046603
Published
2022-06-03
How to Cite
TARJO, Tarjo.
The The Impact of Annual Report Readability on Agency Costs: Internal Control as Moderating Variable.
Journal of Accounting, Business and Management (JABM), [S.l.], v. 29, n. 1, p. 96-106, june 2022.
ISSN 2622-2167.
Available at: <https://journal.stie-mce.ac.id/index.php/jabminternational/article/view/831>. Date accessed: 19 apr. 2024.
doi: https://doi.org/10.31966/jabminternational.v29i1.831.
Section
Articles
