The purpose of this study is to examine corporate governance (CG) disclosure, particularly audit committee and internal audit disclosure, of listed firms in Indonesia. To the best of the researcher's knowledge, no previous studies have specifically examined the compliance level of listed firms in Indonesia with prevailing CG regulations, specifically related to audit committee and internal audit disclosures. We compared annual reports of 443 listed firms between 2012 and 2013 based on the regulations that govern disclosures set by the Indonesian Capital Market Authority. It was found that the level of disclosure 2012 and 2013 on CG, particularly with regards to audit committees and internal audits, was relatively low. Specifically, the level of disclosure was only 39.5% and 43.9% in 2012 and 2013 respectively. The old regulation lacked detailed requirements, meaning that the level of disclosure varied greatly across firms. The revised regulations announced in 2012 were stricter and more detailed, meaning annual reports for 2013 were expected to have richer information on the firms' CG practices. However, the level of disclosure in 2013 increased by only 4.4%. This result shows that the revised regulations did not automatically increase the level of disclosure possibly due to the fact that enforcement was not yet in place. The findings of this paper have implications for capital market regulators in particular the need to enforce the regulations with the ultimate objective of ensuring full compliance with mandatory disclosures.
|Number of pages||14|
|Journal||Pertanika Journal of Social Sciences and Humanities|
|Publication status||Published - Dec 2017|
- Audit committee
- Corporate governance
- Internal audit