Factors Driving the Quality of Financial Reporting in Non-Financial Public Companies in Indonesia

General Background: Financial reporting quality (FRQ) is critical to stakeholders, as it supports making informed economic decisions based on reliable corporate financial statements. Specific Background: The cases of fraudulent reporting committed by PT Garuda Indonesia Tbk (2019) and PT Asuransi Jiwasraya (2021) underscore the urgency to ensure financial statements reflect a true and fair view. Knowledge Gaps: Existing literature lacks a comprehensive approach that integrates various models and non-financial determinants, such as Environmental, Social, and Governance (ESG) factors, in assessing FRQ. Objectives: This study aims to examine the effect of corporate governance mechanisms, financial leverage, audit quality, and ESG performance on FRQ, with firm size as a control variable. Methods: Using four regression models and multiple proxies for FRQ, this study adopts a robust empirical design. Results: Findings reveal mixed effects: corporate governance has a positive effect on FRQ in one model; audit quality shows no effect or is negative; financial leverage is insignificant; ESG performance varies from positive, negative, to no effect. Model 2 showed the highest explanatory power, supporting the relevance of ESG and governance to FRQs. Novelty: This study introduces a multi-model, multi-proxy framework and diversifies ESG measurement sources to enrich the depth of analysis. Implications: For practitioners, ESG engagement and governance compliance signal improved FRQ, guide investment and lending decisions and provide direction for future research.

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Publication Details

Journal
Journal of Accounting Science
Published
2025-07-30
DOI
https://doi.org/10.21070/jas.v9i2.1975
Primary Topic
Financial Reporting and XBRL
Type
article
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article

Factors Driving the Quality of Financial Reporting in Non-Financial Public Companies in Indonesia

Dyna Rachmawati, Kenny Irawan, Eindresvari A P Silvarajoo
Journal of Accounting Science
Financial Reporting and XBRL
article

Factors Driving the Quality of Financial Reporting in Non-Financial Public Companies in Indonesia

Dyna Rachmawati, Kenny Irawan, Eindresvari A P Silvarajoo
article en

Abstract

General Background: Financial reporting quality (FRQ) is critical to stakeholders, as it supports making informed economic decisions based on reliable corporate financial statements. Specific Background: The cases of fraudulent reporting committed by PT Garuda Indonesia Tbk (2019) and PT Asuransi Jiwasraya (2021) underscore the urgency to ensure financial statements reflect a true and fair view. Knowledge Gaps: Existing literature lacks a comprehensive approach that integrates various models and non-financial determinants, such as Environmental, Social, and Governance (ESG) factors, in assessing FRQ. Objectives: This study aims to examine the effect of corporate governance mechanisms, financial leverage, audit quality, and ESG performance on FRQ, with firm size as a control variable. Methods: Using four regression models and multiple proxies for FRQ, this study adopts a robust empirical design. Results: Findings reveal mixed effects: corporate governance has a positive effect on FRQ in one model; audit quality shows no effect or is negative; financial leverage is insignificant; ESG performance varies from positive, negative, to no effect. Model 2 showed the highest explanatory power, supporting the relevance of ESG and governance to FRQs. Novelty: This study introduces a multi-model, multi-proxy framework and diversifies ESG measurement sources to enrich the depth of analysis. Implications: For practitioners, ESG engagement and governance compliance signal improved FRQ, guide investment and lending decisions and provide direction for future research.

Journal of Accounting ScienceVol. 9(2)
Universitas Katolik Widya Mandala Surabaya (ID), Universiti Tunku Abdul Rahman (MY)
Openalex Percentile: Top 65%
Financial Reporting and XBRL
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Factors Driving the Quality of Financial Reporting in Non-Financial Public Companies in Indonesia — Dyna Rachmawati, Kenny Irawan, et al. · Journal of Accounting Science (2025) | TGRS Research Map | TGRS