The Role Corporate Governance on Financial Reporting’s Quality (Evidence from Indonesia Stock Exchange)

Abstract

After IFRS implementation in Indonesia on 2012, there is no significant evidence about improvement financial reporting quality. Many theories explained that the role of corporate governance mechanism in IFRS implementation improve financial reporting quality. This research aims to investigate the role of corporate governance mechanism on the improvement of financial reporting quality. Empirical analysis uses survey method with the site objects are 33 Non-Financial Sectors Emiten at Indonesia Stock Exchange.The descriptive analysis and path analysis have been used to analyze the data and tested the hypothesis by using Software Lisrel 8.70. The result of this research shows that the quality of audit committee and audit internal has significant effect on the financial reporting quality. The quality of audit committee and internal audit has big contribution to increase financial reporting quality. The result of this research confirmed with the corporate governance concept, that internalization of good corporate governance principles are proven in increasing transparency, accountability and timeliness of financial statement in corporations.

Keywords: corporate governance, financial reporting quality