The Effect of Readability of Annual Reports and Value Relevance of Financial Information on Agency Costs with Analyst Coverage as Moderating Variable
Keywords:Readability, value relevance, agency cost
This study aims to determine the effect of readability based on the length of the annual report and the value relevance of the financial information on agency costs. The sample used in this study were 263 firm-year from Kompas100 index. Data were analyzed using multiple linear regression method. The result of this study indicate that the higher the number of pages, words and characters, which reflects the poor readability of the annual report, has a negative effect on the asset turnover ratio, which is an inverse proxy for agency costs. Furthermore, the presence of the analyst coverage variable is able to moderate the positive effect between the number of pages, words and characters in the annual report on the asset turnover ratio. However, no significant effect was found during both test between value relevance to asset turnover ratio and that are moderated by analyst coverage.
Azzali, S., Fornaciari, L., dan Mazza, T. (2013). The value Relevance of Earning Management in Manufacturing Industries Before and During the Financial Crisis. European Journal of Accounting Finance & Business, 1(2013), 3-55.
Chang, X., Dasgupta, S., dan Hilary, G. (2006). Analyst Coverage and Financing Decisions. The Journal of Finance, 61(6), 3009-3048.
Dalwai, T., Chinnasamy, G., dan Mohammadi, S. S. (2021). Annual report readability, agency costs, firm performance: an investigations of Oman’s financial sector. Journal of Accounting in Emerging Economies, 11(2), 247-277.
Degeroge, F., Ding, Y., Jeanjean, T., and Sto¬lowy, H. (2013). Analyst coverage, earnings management and financial development: An international study. Journal of Accounting and Public Policy, 32(1),1-25.
Harian Kompas. (2021). Apa itu Kompas 100? Diakses dari: Tentang – Kompas100 CEO Forum , diakses tanggal 2 September 2021 pukul 21.00 WIB.
Henry, D. (2010). Agency costs, ownership structure and corporate governance compliance: A private contracting perspective. Pacific-Basin Finance Journal, 18(2010), 24-46.
Ikatan Akuntan Indonesia. (2019). Pernyataan Standar Akuntansi Keuangan PSAK 1 tentang Penyajian Laporan Keuangan. Jakarta: IAI.
Irani, R. M., and Oesch, D. (2016). Analyst Coverage and Real Earnings Management: Quasi-Experimental Evidencen. Journal of Financial and Quantitative Analysis, 51(2), 589-627.
Juniarti, Helena, F., Novitasari, K., and Tjamdinata, W. (2018). The Value Relevance of IFRS Adoption in Indonesia. Jurnal Akuntansi dan Keuangan, 20(1), 13-19.
Kieso, D. E., Weygandt, J. J., dan Warfield, T. D. (2020). Intermediate Accounting, IFRS Fourth Edition. Hoboken, New Jersey: John Wiley & Sons, Inc.
Luo, J., Li, X., dan Chen, H. (2018). Annual Report Readibility and Corporate Agency Costs. China Journal of Accounting Research, 11(3), 187-212.
Murtini, H. dan Lusiana. (2016). Earning Management and Value Relevance Before and After the Adoption of IFRS in Manufacturing Company in Indonesia. Review of Integrative Business & Economics Research, 5(1), 241-250.
Namazi, M. (2013). Role of the Agency Theory in Implementing Management’s Control. Journal of Accounting and Taxation, 5(2), 38-47.
Namazi, M., dan Rezaei, G. R. (2016). The Effects of Earnings Quality Criteria on The Agency Costs: (Evidence from Tehran Stock Exchange Market). Procedia – Social and Behavioral Sciences, 230 (2016), 67-75.
Narullia, D., dan Subroto, B. (2018). Value Relevance of Accounting Information and Corporate Social Responsibility in Indonesia and Singapore. Journal of Applied Management, 16 (2018), 9-19.
Otoritas Jasa Keuangan. (2021). Bentuk dan Isi Laporan Tahunan Emiten atau Perusahaan Publik. Jakarta: Kepala Eksekutif Penga¬was Pasar Modal Otoritas Jasa Keuangan Republik Indonesia
Ohlson, J. A. (1995). Earnings, Book Values and Dividens in Security Valuation. Contemporary Accounting Research, 11(2), 661-687.
Palepu, K. G., dan Healy, P. M. (2013). Business Analysis & Valuation. Mason, OH 45040 : Cengage Learning.
Prasadhita, C. (2018). Manajemen Laba dan Keterbacaan (Readability) Laporan Tahunan Perusahaan Consumer Goods Yang Terdaftar di Bursa Efek Indonesia. Buletin Ekonomi, 16(2), 137-261.
Xu, Q., Fernando, G. D., dan Tam, K. (2018). Executive age and the readability of financial reports. Advances in Accounting, 43(2018), 70-81.
Yegon, C., Sang, J., dan Kirui, J. (2014). The Impact of Corporate Governance on Agency Cost : Empirical Analysis of Quoted Service Firms in Kenya. Research Journal of Finance and Accounting, 5(12), 145-154.
Authors who publish with this journal agree to the following terms:
- Authors retain the copyright and publishing right, and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) followingthe publication of the article, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).<a href="http://creativecommons.org/lice