IDEAS home Printed from https://ideas.repec.org/a/ahd/journl/v6y2025i6p54-65.html
   My bibliography  Save this article

Corporate Governance, Political Connection and Corporate Risk Disclosure: The Case of State-Owned Enterprises in Indonesia

Author

Listed:
  • Anggita Langgeng WIJAYA

    (Universitas PGRI Madiun, Indonesia)

Abstract

Corporate risk disclosure is one of the strategic issues in efforts to optimize the role of corporate governance in state-owned enterprises in Indonesia. This study will examine the factors that influence the level of corporate risk disclosure in state-owned enterprises in Indonesia, namely corporate governance and political connections. This study uses data from the annual report of state-owned enterprises in Indonesia for 2015-2022. The sampling technique used is purposive sampling. Hypothesis testing in this study uses moderated regression analysis. The results indicate that, in state-owned enterprises in Indonesia, corporate governance has a positive effect on corporate risk disclosure. This research also found that political connections strengthen the influence of corporate governance on corporate risk disclosure. This study implies that if investors want more comprehensive corporate risk disclosure, investors must ensure that management has adequately implemented all corporate governance mechanisms. In implementing good corporate governance, political connections can convince stateowned management to improve the quality and quantity of corporate risk disclosure.

Suggested Citation

  • Anggita Langgeng WIJAYA, 2025. "Corporate Governance, Political Connection and Corporate Risk Disclosure: The Case of State-Owned Enterprises in Indonesia," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 6(6), pages 54-65, June.
    • Handle: RePEc:ahd:journl:v:6:y:2025:i:6:p:54-65
    DOI: 10.37945/cbr.2025.06.06
    as

    Download full text from publisher

    File URL: https://www.ceccarbusinessreview.ro/corporate-governance-political-connection-and-corporate-risk-disclosure-the-case-of-state-owned-enterprises-in-indonesia-a485d/download-PDF/
    Download Restriction: no
    File URL: https://www.ceccarbusinessreview.ro/corporate-governance-political-connection-and-corporate-risk-disclosure-the-case-of-state-owned-enterprises-in-indonesia-a485a/abstract/
    Download Restriction: no
    File URL: https://libkey.io/10.37945/cbr.2025.06.06?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Onong Junus & Iman Harymawan & Mohammad Nasih & Muslich Anshori, 2022. "Politically Connected Independent Commissioners and Independent Directors on the Cost of Debt," IJFS, MDPI, vol. 10(2), pages 1-21, June.
    2. Issal Haj-Salem & Khaled Hussainey, 2021. "Risk Disclosure and Corporate Cash Holdings," JRFM, MDPI, vol. 14(7), pages 1-15, July.
    3. Mara Faccio, 2006. "Politically Connected Firms," American Economic Review, American Economic Association, vol. 96(1), pages 369-386, March.
    4. Ben Kwame Agyei-Mensah & Samuel Buertey, 2019. "Do culture and governance structure influence extent of corporate risk disclosure?," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 15(3), pages 315-334, May.
    5. Issal Haj-Salem & Salma Damak Ayadi & Khaled Hussainey, 2020. "The joint effect of corporate risk disclosure and corporate governance on firm value," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 17(2), pages 123-140, September.
    6. Husam Ananzeh & Mohannad Obeid Shbail & Hamzeh Amosh & Saleh F. A. Khatib & Shadi Habis Abualoush, 2023. "Political connection, ownership concentration, and corporate social responsibility disclosure quality (CSRD): empirical evidence from Jordan," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 20(1), pages 83-98, March.
    7. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    8. Siti Aisyah Kamaruzaman & Mazurina Mohd Ali & Erlane K. Ghani & Ardi Gunardi, 2019. "Ownership structure, corporate risk disclosure and firm value: a Malaysian perspective," International Journal of Managerial and Financial Accounting, Inderscience Enterprises Ltd, vol. 11(2), pages 113-131.
    9. DeAngelo, Linda Elizabeth, 1981. "Auditor size and audit quality," Journal of Accounting and Economics, Elsevier, vol. 3(3), pages 183-199, December.
    10. Issal Haj Salem & Salma Damak Ayadi & Khaled Hussainey, 2019. "Corporate governance and risk disclosure quality: Tunisian evidence," Journal of Accounting in Emerging Economies, Emerald Group Publishing Limited, vol. 9(4), pages 567-602, August.
    11. Kusnadi, Yuanto, 2019. "Political connections and the value of cash holdings," Finance Research Letters, Elsevier, vol. 30(C), pages 96-102.
    12. repec:eme:maj000:maj-07-2017-1602 is not listed on IDEAS
    13. Linsley, Philip M. & Shrives, Philip J., 2006. "Risk reporting: A study of risk disclosures in the annual reports of UK companies," The British Accounting Review, Elsevier, vol. 38(4), pages 387-404.
    14. Faisal Faisal & Rizki Ridhasyah & Haryanto Haryanto, 2021. "Political connections and firm performance in an emerging market context: the mediating effect of sustainability disclosure," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 18(10), pages 3935-3953, December.
    15. Marianne Bertrand & Francis Kramarz & Antoinette Schoar & David Thesmar, 2018. "The Cost of Political Connections," Review of Finance, European Finance Association, vol. 22(3), pages 849-876.
    16. Abdallah, Abed Al-Nasser & Hassan, Mostafa Kamal & McClelland, Patrick L., 2015. "Islamic financial institutions, corporate governance, and corporate risk disclosure in Gulf Cooperation Council countries," Journal of Multinational Financial Management, Elsevier, vol. 31(C), pages 63-82.
    17. Moataz El-Helaly, 2018. "Related-party transactions: a review of the regulation, governance and auditing literature," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 33(8/9), pages 779-806, October.
    18. Ben Kwame Agyei-Mensah & Samuel Buertey, 2019. "Do culture and governance structure influence extent of corporate risk disclosure?," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 15(3), pages 315-334, May.
    19. Kaouthar Lajili, 2009. "Corporate Risk Disclosure and Corporate Governance," JRFM, MDPI, vol. 2(1), pages 1-24, December.
    20. Tariq H. Ismail & Mohamed El-Deeb & Yasser Tawfik Halim, 2022. "Do related party transactions affect the relationship between political connections and firm value? Evidence from Egypt," Future Business Journal, Springer, vol. 8(1), pages 1-12, December.
    21. Ararat, Melsa & Black, Bernard S. & Yurtoglu, B. Burcin, 2017. "The effect of corporate governance on firm value and profitability: Time-series evidence from Turkey," Emerging Markets Review, Elsevier, vol. 30(C), pages 113-132.
    22. Mónica Hernández Madrigal & Beatriz Aibar Guzmán & Cristina Aibar Guzmán, 2015. "Determinants of corporate risk disclosure in large Spanish companies: a snapshot," Contaduría y Administración, Accounting and Management, vol. 60(4), pages 757-775, Octubre-D.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vitolla, Filippo & Raimo, Nicola & Campobasso, Francesco & Giakoumelou, Anastasia, 2023. "Risk disclosure in sustainability reports: Empirical evidence from the energy sector," Utilities Policy, Elsevier, vol. 82(C).
    2. AlKhawaldeh Afaf Mohammed & Saaydah Mansour Ibrahim, 2022. "Determinants of Corporate Risk Disclosure for Non- Financial Companies Listed on Amman Stock Exchange," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 152-177.
    3. Mohamed Samy El-Deeb & Mohamed Fathy Allam, 2024. "The moderating effect of dividend policy on the relationship between the corporate risk disclosure and firm value: evidence from Egypt," Future Business Journal, Springer, vol. 10(1), pages 1-15, December.
    4. Moumen, Néjia & Ben Othman, Hakim & Hussainey, Khaled, 2016. "Board structure and the informativeness of risk disclosure: Evidence from MENA emerging markets," Advances in accounting, Elsevier, vol. 35(C), pages 82-97.
    5. Hyun, Jeong-Hoon & Kim, Natalie Kyung Won & Shin, Jae Yong, 2024. "Politically connected outside directors and the value of cash holdings," Finance Research Letters, Elsevier, vol. 62(PA).
    6. Rihab Grassa & Nejia Moumen & M. Kabir Hassan & Khaled Hussainey, 2022. "Market discipline and capital buffers in Islamic and conventional banks in the MENA region," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 139-167, March.
    7. Engy Elsayed Abdelhak & Khaled Hussainey, 2025. "The Impact of Audit Quality and Corporate Governance on Financial Segment Disclosure in Egypt," IJFS, MDPI, vol. 13(2), pages 1-24, April.
    8. Sabri Boubaker & Florence Labégorre, 2006. "L’environnement informationnel et la structure de propriété et de contrôle des sociétés cotées françaises," Revue Finance Contrôle Stratégie, revues.org, vol. 9(3), pages 5-38, September.
    9. Ikhlass Amous & Ahmed Chabchoub, 2025. "Ownership Concentration and Risk Disclosure Quality in The Tunisian Context: Evidence from The Pre- and During COVID19 Periods," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 24(2), pages 272-297, June.
    10. Mohammed Adel Elzahaby, 2023. "Corporate narrative disclosure practices in the Middle East and North Africa (MENA) region: a systematic literature review," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 20(3), pages 296-315, September.
    11. Ibrahim, Awad Elsayed Awad & Hussainey, Khaled & Nawaz, Tasawar & Ntim, Collins & Elamer, Ahmed, 2022. "A systematic literature review on risk disclosure research: State-of-the-art and future research agenda," International Review of Financial Analysis, Elsevier, vol. 82(C).
    12. Rocca, Maurizio La & Fasano, Francesco & Cappa, Francesco & Neha, Neha, 2022. "The relationship between political connections and firm performance: An empirical analysis in Europe," Finance Research Letters, Elsevier, vol. 49(C).
    13. Tariq H. Ismail & Yousra R. Obiedallah, 2022. "Firm performance and cost of equity capital: the moderating role of narrative risk disclosure quality in Egypt," Future Business Journal, Springer, vol. 8(1), pages 1-19, December.
    14. Kyriacou, Kyriacos & Liu, Siming & Mase, Bryan, 2024. "Corruption and insider trading," Journal of Corporate Finance, Elsevier, vol. 89(C).
    15. Chandni Khandelwal & Satish Kumar & Riya Sureka, 2022. "Mapping the intellectual structure of corporate risk reporting research: a bibliometric analysis," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 19(2), pages 129-143, June.
    16. Nyoman Triaryati & Ubud Salim & Risna Wijayanti & Andarwati, 2025. "Risk Disclosure and Debt Policy as Value Determinants of Small and Mid-Cap Firms," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 45-62.
    17. Nadezda Gulko & Catriona Hyde & Nina Seppala, 2017. "Disclosure of corporate risks and governance before, during and after the global financial crisis: case study in the UK construction industry in 2006–2009," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 14(3), pages 207-223, August.
    18. Awais Akbar & Shumaila Zeb & Hassan Zada, 2025. "Impact of audit committee characteristics on risk disclosure: evidence from the banking sector of Pakistan," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 22(3), pages 706-721, September.
    19. Al-Hadi, Ahmed & Taylor, Grantley & Al-Yahyaee, Khamis Hamed, 2016. "Ruling Family Political Connections and Risk Reporting: Evidence from the GCC," The International Journal of Accounting, Elsevier, vol. 51(4), pages 504-524.
    20. Ridhima Saggar & Balwinder Singh, 2019. "Drivers of Corporate Risk Disclosure in Indian Non-financial Companies: A Longitudinal Approach," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 44(3), pages 303-325, August.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ahd:journl:v:6:y:2025:i:6:p:54-65. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Radu CIOBANU (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.