Pengaruh Struktur Kepemilikan, Kinerja Keuangan, dan Ukuran Perusahaan terhadap Financial Restatement

Laporan keuangan berisi informasi yang berguna bagi pemangku kepentingan mengenai kondisi keuangan perusahaan dan digunakan sebagai dasar pengambilan keputusan. Oleh karena itu, laporan keuangan harus disusun dengan tepat, berkualitas, dan mencerminkan kondisi perusahaan yang sebenarnya sehingga dapat diandalkan bagi para pengguna laporan keuangan. Financial restatement disajikan dalam basis akrual sehingga dapat meningkatkan fleksibilitas manajer dalam mencatat peristiwa ekonomi. Fleksibilitas ini dapat menyebabkan salah saji informasi dalam laporan keuangan yang disebabkan oleh perubahan akuntansi yang dipersyaratkan oleh standar akuntansi dan indikasi adanya kecurangan manajemen untuk bertindak secara oportunistik sehingga menyebabkan perusahaan melakukan financial restatement. Oleh karena itu, tujuan dari penelitian ini adalah untuk menguji dan menganalisis pengaruh struktur kepemilikan, kinerja keuangan, dan ukuran perusahaan terhadap financial restatement. Objek penelitian adalah perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia (BEI) dengan periode penelitian 2014-2018. Hasil penelitian menunjukkan bahwa struktur kepemilikan berupa kepemilikan manajerial dan kepemilikan institusional tidak berpengaruh terhadap financial restatement, sedangkan kepemilikan asing berpengaruh negatif terhadap financial restatement. Kinerja keuangan dalam bentuk profitabilitas, leverage, dan aktivitas tidak berpengaruh terhadap financial restatement. Ukuran perusahaan berpengaruh positif terhadap financial restatement.

Board Characteristic and Financial Restatement

This study explores the role of board characteristics, namely the Board of Directors (BoD) and the Board of Commissioners (BoC), on the possibility of financial restatement. BoD characteristics were analyzed based on BoD size, female, and overconfidence. Meanwhile, BoC characteristics were analyzed based on BoC size and independent BoC. The population is all manufacturing companies on the Indonesia Stock Exchange for the 2017- 2019 period. Determination of the sample using the purposive sampling method. The number of samples used is 32 manufacturing companies or 96 observational data. This study using logistic regression to hypotheses testing. The results showed that two variables, namely female of BoD and independent of BoC, reduced the possibility of financial restatement. However, three other variables, including BoD overconfidence, BoD size, and BoC size, do not affect the possibility of financial restatement.DOI: 10.26905/jkdp.v25i3.5883

A financial restatement, media attention and stock idiosyncratic risk in the Chinese stock market

PurposeThis paper aims to enrich the scope of the influence of media reports on the stock risk, and it also provides a path to support the research on the relationship between media reports and idiosyncratic risks in the stock market.Design/methodology/approachThe authors select financial restatement samples of listed companies in China from Jan 2015 to Dec 2017 to explore the impact of the financial restatement on the idiosyncratic risk of stocks. Further, the financial restatement that has more media attention may play a more significant role in promoting the idiosyncratic risk.FindingsThe authors found that the financial restatement of listed companies has a significant positive effect on the idiosyncratic risk of stocks. Specifically, the idiosyncratic risk changed five months before the restatement. After the restatement, the idiosyncratic risk increased by 83.47 in five days then decreased slowly, which lasted about one year. The restatement caused by sensitive issues and legal issues has a greater impact on the idiosyncratic risk. Both current restatement and delayed restatements will increase the idiosyncratic risk of stocks, but the impact of the latter is higher than the former.Research limitations/implicationsPossible deficiencies in the paper are that the number of restatements caused by major accounting errors is low. Therefore, no regular conclusions were drawn on the impact of the financial restatement caused by major accounting errors.Practical implicationsThe conclusions provide a basis for targeted supervisory measures on the restatements of listed companies. The increase in financial restatements is closely related to the lack of governance mechanisms in the stock market. For investors, although the mystery of idiosyncratic volatility exists significantly in the market, the company's valuation level will affect the relationship between the idiosyncratic risk and expected return. Investors should pay attention to the intrinsic value of the company and should not blindly pursue stocks with a low idiosyncratic risk.Originality/valueThese conclusions may enrich the scope of the influence of media reports on the stock risk and also provide a path to support the research on the relationship between media reports and idiosyncratic risks in the capital market.

The Effect of Audit Committee Characteristics and Auditor Changes on Financial Restatement in Iran

The present study aims to realize and become more familiar with the impact and the functions of audit committee and its characteristics, including the expertise and independence of members, related experiences, and change of auditor on the quality of financial reporting in companies listed on the Tehran Stock Exchange (TSE). The required data are gathered from 105 listed companies on the TSE during 2012-2016 and logistic regression model is used for the hypothesis testing. The findings of the study indicate a positive and significant impact of audit committee characteristics, except audit independency which represents a negative association, and changes of auditor on financial restatement. The innovation of the present study relative to other conducted studies lies in the simultaneous evaluation of audit committee characteristics and change of auditor on the quality of financial reporting. Such results could be appropriate for Stocks and Securities practitioners to comply with the chart of the audit committee, to necessitate the use of corporate governance principles, and to voluntarily provide a corporate governance report.

The Likelihood of Forced Financial Restatement: The Case of Malaysia

Forced restatement is the corrections made to published financial statements as prompted by the auditors or regulators due to non-compliance with the Generally Accepted Accounting Practices (GAAP) (Palmrose and Scholz, 2004). Forced restatements that are due to aggressive financial irregularities, lead to the impairment of investors' confidence on the quality of financial reporting, increase investors' concerns on managerial opportunistic decision-making, and cause substantial losses to shareholders. Forced restatement creates great concern, not only in developed countries, but also in developing countries, thus threatening local and foreign investments in these markets. The effort to determine early warning signals of firms that warrant investigation, specifically in the emerging country of Malaysia remain significant. The review from this study would be beneficial to the auditors and regulators to intervene earlier in terms of formulating plans and strategies to minimize aggressive managerial behaviour, and investors, customers, and suppliers to identify and avoid firms at risk of requiring a forced restatement. Keywords: Forced restatement, earnings management, corporate governance, Malaysia.

The effect of corporate governance and firm-specific characteristics on the incidence of financial restatement

Purpose This paper aims to examine the effects of corporate governance and firm-specific characteristics on the incidence of financial restatement among Malaysian public listed firms. Design/methodology/approach The elements of corporate governance consist of board size, board independence, multiple directorships, audit committee expertise, external audit quality and executive compensation. Meanwhile, the firm-specific characteristics consist of firm age, firm performance, firm leverage and firm liquidity. The agency theory has been used to guide the study. This study used a matched-pair sample that consisted of a sample of 49 restatement firms and 98 non-restatement firms between the years 2011 and 2016. Univariate (t-test and Pearson correlation) and multivariate (logistic regression) statistical techniques were used to test the hypotheses. Findings The results show that there is a negative and significant relationship between executive compensation and firm performance, and the incidence of financial restatement. In addition, there is a positive and significant relationship between firm leverage and the incidence of financial restatement. However, the other corporate governance and firm-specific characteristic variables included in the study were found to be insignificant with the incidence of financial restatement. This paper provides evidence that some form of corporate governance mechanisms and firm-specific characteristics, particularly executive compensation, firm performance and firm leverage, may influence the direction and magnitude of the incidence of financial restatement. The findings indicate that optimal executive incentives may align management interests with those of shareholders. In addition, greater performance and lower leverage levels minimise firms’ financial pressure and debt covenant violation risk, which may reduce the management tendency to misstate the financial statement, and consequently, minimise the likelihood of financial restatement. Originality/value The main value of this paper is the effect of corporate governance and firm-specific characteristics on the likelihood of financial restatement in Malaysia. The findings of this study provide useful insights for regulators to improve and reconsider the current regulations on corporate governance mechanisms.