Board Media Background on Annual Report Readability: Evidence from Indonesia

This study aims to examine the impact of board members with media backgrounds (MBD) on the readability of annual reports. It further tests the effect of MBD in the sub-samples of companies with and without Risk Management Committees (RMC) and those audited by BIG 4 and non-BIG 4 firms. This study utilized a sample of companies listed on the Indonesia Stock Exchange (IDX). Ordinary Least Squares (OLS) regression with clustering by firm was performed in STATA 17.0 to predict the relationship between MBD and annual report readability. Robustness checks were conducted using Coarsened Exact Matching (CEM) analysis. The results indicate that the presence of board members with media backgrounds significantly improves the readability of annual reports. In companies without Risk Management Committees, the positive impact of MBD on readability was significant. However, in companies with an RMC, this effect was less pronounced. Furthermore, the positive relationship between MBD and readability was more significant in companies audited by BIG 4 firms compared to those audited by non-BIG 4 firms. This study offers new insights into the role of board members with media backgrounds in enhancing corporate communication. It examines how MBD affects the readability of annual reports in different sub-samples, including companies with and without Risk Management Committees (RMC), and those audited by BIG 4 firms versus non-BIG 4 firms. The findings highlight the strategic value of MBD in improving the readability of annual reports.