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Measurement vs. disclosure of accounting compliance in Indonesia

Author

Listed:
  • Agus Setyadi
  • Rusmin Rusmin
  • Greg Tower
  • Alistair Brown

Abstract

This study examines Indonesian Accounting Regulatory Compliance measurement (IARCm) and Indonesian Accounting Regulatory Compliance disclosure (IARCd) through an agency theory-based analysis of 220 Indonesian listed companies' 2006 annual reports. To measure the level of regulatory compliance of Indonesian listed companies, this study uses a 29 item index derived from Indonesian accounting standards on inventory, fixed assets and depreciation. Analysis reveals a moderate level of 69.70% measurement and 54.20% disclosure compliance with accounting rules. Statistical analysis shows that firm size is the best predictor of compliance. Surprisingly, corporate governance factors fail to explain compliance. However, more profitable firms do demonstrate increased measurement compliance. Although Indonesian firms may have complied with more than 50% of the key accounting rule provisions, regulatory intervention is still strongly advocated for making Indonesian firms fully comply with Indonesian accounting regulations.

Suggested Citation

  • Agus Setyadi & Rusmin Rusmin & Greg Tower & Alistair Brown, 2011. "Measurement vs. disclosure of accounting compliance in Indonesia," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 7(1/2), pages 94-119.
    • Handle: RePEc:ids:ijaape:v:7:y:2011:i:1/2:p:94-119
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    Citations

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    Cited by:

    1. Apostolos Ballas & Vaia Panagiotou & Christos Tzovas, 2014. "Accounting Choices for Tangible Assets: A Study of Greek Firms," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 64(4), pages 18-38, October-D.
    2. Ross Taplin & Yafang Zhao & Alistair Brown, 2014. "Failure of auditors: The lack of compliance for business combinations in China," Regulation & Governance, John Wiley & Sons, vol. 8(3), pages 310-331, September.
    3. Abdullah, Wan Amalina Wan & Percy, Majella & Stewart, Jenny, 2015. "Determinants of voluntary corporate governance disclosure: Evidence from Islamic banks in the Southeast Asian and the Gulf Cooperation Council regions," Journal of Contemporary Accounting and Economics, Elsevier, vol. 11(3), pages 262-279.

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