The Determinant Factors of Goodwill Disclosure Level: Survey at Companies Listed in Indonesia Stock Exchange

Abstract

The purpose of this research is to examine the determinant factors of goodwill disclosure level, as a result of the implementation of the new financial accounting standards i.e. PSAK 22: Business Combination and PSAK 48: Impaiment of asset, which is conducted effectively on January 1st, 2011. The determinant factors of goodwill disclosure level are contract motive and reputation motive. The research data are collected from 83 companies listed in Indonesia Stock Exchange based on specific criterion sampling procedure. The data are analized using multiple linear regression. The empirical results indicate that the contract motive and reputation motive have no significant effect to the goodwill disclosure level. Nevertheless, according to the result of stepwise method step, there is a better new regression equation model, which reflects that the contract motive in form of manager bonus scheme has a significant effect to the goodwill disclosure level. These findings contribute to explain that goodwill disclosure is a means for managers to signal that the bonus is appropriate with their current performance and the good prospect they would give for the company.

Keywords: Goodwill Disclosure Level, Contract Motive, Reputation Motive