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

Ersa Tri Wahyuni, Asangki Nindya, Gatot Soepriyanto, Ilya Avianti and Zubir Azhar

Pertanika Journal of Social Science and Humanities, Volume 28, Issue 2, June 2020

Published: 26 June 2020

This 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. Our findings suggest that institutional ownership and firm size are positively associated with the disclosure level of management compensation. We also found that the proportion of independent audit committee was negatively associated with the level of management compensation disclosure. Finally, we found no evidence that the audit quality had affected the level of management compensation disclosure. Our 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.

ISSN 0128-7702

e-ISSN 2231-8534

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