Firm Characteristics, Corporate Governance and Management Compensation Disclosure: Evidence from Indonesia

Read the full paper from a group of researchers from Padjadjaran University and Bina Nusantara University in Indonesia on Firm Characteristics, Corporate Governance and Management Compensation Disclosure: Evidence from Indonesia, which was published in Pertanika Journal of Social Sciences & Humanities. The study aimed to examine the effect of firm characteristics and corporate governance on the quality of management compensation disclosure in Indonesia. The adoption of International Accounting Standards (IAS) 24 “Related Party Disclosures” in Indonesia in 2011 had required disclosures about key management compensation, which was not required by the previous standard. The research was conducted by examining the top 100 listed companies’ data that ranged between 2011 and 2014. The findings suggest that institutional ownership and firm size are positively associated with the disclosure level of management compensation. In addition, the proportion of independent audit committee was negatively associated with the level of management compensation disclosure. Finally, no evidence was found that the audit quality had affected the level of management compensation disclosure. This research has shed light on the determinants of management compensation disclosure in an emerging country with a two-tier board system where arguably the financial reporting environment is opaquer than the more developed countries.

Full paper can be accessed here