Strategic Management Accounting disclosure, ownership structure, and firm characteristics in Indonesia manufacturing companies

Abstract

Why managers should choose to disclose their information with investors is one of the major issues in accounting research. Because of information asymmetry and the agency problem, disclosure is an important aspect of the modern capital market. This study aims to measure the extent of Strategic Management Accounting (SMA) disclosure and the impact of ownership structure (managerial ownership, foreign ownership, government ownership) and firm characteristics (firm size, leverage, profitability) on SMA practices in annual reports of Indonesia manufacturing companies. The annual reports of 545 listed companies for 2012-2016 were examined to measure the extent of SMA disclosure and investigate potential determinant factors of SMA disclosure. This study used 42 items of weighted disclosure index, based on international guideline and SMA literature. This study used multiple regression analysis to examine the association between ownership structure, firm characteristics, and SMA disclosure. The results indicate a low extent of SMA disclosure in annual reports of Indonesia manufacturing companies. The average of SMA disclosure rate is only 39.4 percent, which indicates that SMA has not been commonly disclosed in annual reports. Further results indicate that only leverage that has an insignificant effect on the extent of SMA disclosure. The finding regarding SMA disclosure in annual reports should be on concern to regulatory authorities and standard-setters in Indonesia.

Determinants of Strategic Management Accounting Information Disclosure under a Multi-Theoretical Framework: Evidence of Listed Firms on Ghana Stock Exchange

“…The findings of this study are consistent with previous research that has shown a positive relationship between block ownership and disclosure of strategic management accounting information (e.g., Wang & Zang, 2009). Moreso, this study's results of a negative non-substantial effect of the current year's block ownership on SMAID partly disagree with the work of Honggowati et al (2019), who found a positive relation with SMAID. The apparent dichotomy is, however, contextual since this current study was conducted in Ghana (Africa) and that of Honggowati et al (2019) was done in Indonesia (Asia).…”

“…Moreso, this study's results of a negative non-substantial effect of the current year's block ownership on SMAID partly disagree with the work of Honggowati et al (2019), who found a positive relation with SMAID. The apparent dichotomy is, however, contextual since this current study was conducted in Ghana (Africa) and that of Honggowati et al (2019) was done in Indonesia (Asia).…”

Strategic Management Accounting for Village-Owned Enterprises in Indonesia

“…The application of SMA has a positive impact both financially and non-financially. Honggowati et. al.…”

The Practice Of Strategic Management Accounting In Public Sector Indonesia

“…The usage of this SMA provides both financial and non-financial benefits. (Honggowati et al, 2019) research shows how the firm's ownership structure, business size, and profitability will all be positively and significantly impacted by the disclosure of SMA. Companies that use management accounting practices perform better than those that do not apply them.…”