Risk Model and Quality of Audit Committee towards Quality of Financial Reporting in Indonesia - Volume 6, No. 1, March 2018 - Journal of Advanced Management Science (JOAMS)

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Risk Model and Quality of Audit Committee towards Quality of Financial Reporting in Indonesia

Nanang Shonhadji
STIE Perbanas Surabaya/Accounting, Surabaya, Indonesia
Abstract—Accounting scandal has become a very complex problem in the manufacturing industry. This study aims to determine the effect of the litigation risk, the risk of distrust of investors, the risk of default and the effect of legal expertise of the audit committee on the quality of financial reporting. Data taken from the population of manufacturing companies listed in Indonesia Stock Exchange (BEI). Test Moderated Regression Analysis (MRA) was used to test the research hypothesis. The results of the study informed that the risk of investor distrust affects the quality of financial reporting, while the litigation risk, default risk and audit committee of legal knowledge does not affect the quality of financial reporting. The results also informed that the legal knowledge of the audit committee as moderating variables that influence the risk of strengthening relations investor distrust of the quality of financial reporting. This study contributes to the regulator in Indonesia to make regulations that protect and guarantee investor confidence in the quality of financial information company.

Index Terms—the risk of litigation, the distrust of investors, leverage, legal knowledge and the quality of financial reporting.

Cite: Nanang Shonhadji, "Risk Model and Quality of Audit Committee towards Quality of Financial Reporting in Indonesia" Journal of Advanced Management Science, Vol. 6, No. 1, pp. 54-57, March 2018. doi: 10.18178/joams.6.1.54-57
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