Enterprise Risk Management Disclosure and Investment Efficiency: A Moderation Role Of CEO Power
Keywords:
Enterprise Risk Management, Investment Efficiency, CEO Power, Agency Theory
Abstract
This study aims to provide empirical evidence regarding enterprise risk management disclosure’s effect on investment efficiency and also the moderation role of CEO power on enterprise risk management disclosure’s effect on investment efficiency. This is quantitative research. Investment efficiency is measured as deviations from expected investment using a model that predicts investment as a function of growth opportunities, while enterprise risk management disclosure is measured through the risk management disclosure index carried out by the company, and CEO power is measured by the CEO Power Index. The data source is annual report of a public company, and the sample is a company listing at Index LQ 45. The research results show that enterprise risk management disclosure has a positive effect on investment efficiency, but CEO power cannot moderate enterprise risk management disclosure’s effect on investment efficiency. Based on the result, CEO Power as a predictor variable has a positive effect on investment efficiency. This research contributes to the agency theory that reducing information asymmetry can increase investment efficiency by providing broader ERM disclosures and greater CEO power.
Keywords: Enterprise Risk Management, Investment Efficiency, CEO Power, Agency Theory
References
Biddle, G. C., Hilary, G., & Verdi, R. S. (2009). How does financial reporting quality relate to investment efficiency? Journal of Accounting and Economics, 48(2–3), 112–131. https://doi.org/10.1016/j.jacceco.2009.09.001
Campbell, J. L., Chen, H., Dhaliwal, D. S., Lu, H. min, & Steele, L. B. (2014). The Information Content of Mandatory Risk Factor Disclosures in Corporate Filings. Review of Accounting Studies, 19(1), 396–455. https://doi.org/10.1007/s11142-013-9258-3
Chen, F., Hope, O. K., Li, Q., & Wang, X. (2011). Financial Reporting Quality and Investment Efficiency of Private Firms in Emerging Markets. Accounting Review, 86(4), 1255–1288. https://doi.org/10.2308/accr-10040
Fakhriyyah, D. D., & Hidayati, I. (2021). Pengungkapan Kuantitatif dan Kualitatif Segmen Operasi Berdasarkan PSAK 5 Revisi 2009 (Penyesuaian 2015) di Indonesia. Organum: Jurnal Saintifik Manajemen Dan Akuntansi, 4(2), 175–191. https://doi.org/10.35138/organum.v4i2.163
Fakhriyyah, D. D., & Mawardi, M. C. (2020). Model Penerapan Good Corporate Governance dalam Praktik Tunneling di Indonesia. Jurnal Riset Akuntansi Aksioma, 19(2), 245–265. https://doi.org/10.29303/aksioma.v19i2.100
Gao, R., & Yu, X. (2020). How to measure capital investment efficiency: a literature synthesis. Accounting and Finance, 60(1), 299–334. https://doi.org/10.1111/acfi.12343
Gonidakis, F. K., Koutoupis, A. G., Tsamis, A. D., & Agoraki, M. E. K. (2020). Risk disclosure in listed Greek companies: the effects of the financial crisis. Accounting Research Journal, 33(4–5), 615–633. https://doi.org/10.1108/ARJ-03-2020-0050
Gunawan, B. (2020). Pengaruh Mekanisme Corporate Governance Dan Struktur Kepemilikan Publik Terhadap Luas Pengungkapan Enterprise Risk Management |. KRISNA: Kumpulan Riset Akuntansi, 12(1), 21–34. https://www.ejournal.warmadewa.ac.id/index.php/krisna/article/view/1287
Horvey, S. S., & Ankamah, J. (2020). Enterprise risk management and firm performance: Empirical evidence from Ghana equity market. Cogent Economics and Finance, 8(1). https://doi.org/10.1080/23322039.2020.1840102
Hoyt, R. E., & Liebenberg, A. P. (2011). The Value of Enterprise Risk Management. Journal of Risk and Insurance, 78(4), 795–822. https://doi.org/10.1111/J.1539-6975.2011.01413.X
Jannah, H. R., & Rahmawati, I. P. (2020). Corporate Governance dan Efisiensi Investasi pada Perusahaan yang Terdaftar di Jakarta Islamic Index. Jurnal Akuntansi Dan BBsnis, 20(2), 159–172.
Javeed, M., Hossain, M., & Khan, M. (2021). The influence of corporate social responsibility on organizational performance. International Journal of Business Administration, 12(2), 33-41.
Jensen, M. C., & Meckling, W. H. (1976). Theory of The Firm: Managerial Behavior, Cgency Costs and Ownership Structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
Kusumaningrum, S. A., & Arifin, Z. (2022). Determinan Pengungkapan Manajemen Risiko dan Pengaruhnya terhadap Return Saham (Studi pada Perusahaan Manufaktur Go Public yang Terdaftar di BEI). Selekta Manajemen: Jurnal Mahasiswa Bisnis Dan Manajemen, 01(04), 30–46. https://journal.uii.ac.id/selma/index
Li, Y., He, J., & Xiao, M. (2019). Risk disclosure in annual reports and corporate investment efficiency. International Review of Economics and Finance, 63(1970), 138–151. https://doi.org/10.1016/j.iref.2018.08.021
Majeed, M. A., & Ullah, I. (2022). Impact of CEO Power on Investment Efficiency: Evidence from China. SSRN Electronic Journal, October 2020, 1–46. https://doi.org/10.2139/ssrn.4120396
Moradi, M., Yazdifar, H., Eskandar, H., & Namazi, N. R. (2022). Institutional Ownership and Investment Efficiency: Evidence from Iran. Journal of Risk and Financial Management 2022, Vol. 15, Page 290, 15(7), 290. https://doi.org/10.3390/JRFM15070290
Nathaniel, A. S., & Butar, S. (2019). Determinan Efisiensi Investasi Perusahaan Publik di Indonesia. Jurnal Akuntansi Bisnis, 17(2), 192–205.
Prasetio, D. A., & Suryono, B. (2016). PENGARUH PROFITABILITAS, FREE CASH FLOW, INVESTMENT OPPORTUNITY SET TERHADAP DIVIDEND PAYOUT RATIO. Jurnal Ilmu Dan Riset Akuntansi, 5(1), 1–19. https://doi.org/10.1007/s001860100128
Purba, I. A. C., & Suaryana, I. G. N. A. (2018). Kualitas Laporan Keuangan, Asimetri Informasi dan Efisiensi Investasi pada Perusahaan Pertambangan. Jurnal Ilmiah Akuntansi Dan Bisnis, 13(1), 42–53.
Salehi, M., Zimon, G., Arianpoor, A., & Gholezoo, F. E. (2022). The Impact of Investment Efficiency on Firm Value and Moderating Role of Institutional Ownership and Board Independence. Journal of Risk and Financial Management, 15(4). https://doi.org/10.3390/jrfm15040170
Saputra, A. A. D., & Wardhani, R. (2017). Pengaruh Efektivitas Dewan Komisaris, Komite Audit dan Kepemilikan Institusional terhadap Efisiensi Investasi. Jurnal Akuntansi & Auditing Indonesia, 21(1), 24–36. https://doi.org/10.20885/jaai.vol21.iss1.art3
Sari, L. I. N., & Suaryana, I. G. N. A. (2014). Pengaruh Kualitas Laporan Keuangan pada Efisiensi Investasi Perusahaan Pertambangan. E-Jurnal Akuntansi Universitas Udayana, 3(8), 524–537.
Sharma, S., Durand, R. M., & Gur-arie, O. (1981). Identification and Analysis of Moderator Variables. Journal of Marketing Research, XVIII(August), 291–300.
Siregar, H. O., & Amalia, N. (2020). Manajemen Resiko Dan Efisiensi Investasi Pada Perusahaan Bumn Di Indonesia Bumn Non Keuangan Risk Management And Investmen Efficiency Of Indonesia State-Owned Enterprises. Jurnal MONEX, 9(1), 97–108.
Sugiono. (2004). Konsep, Identifikasi, Alat Analisis dan Masalah Penggunaan Variabel Moderator. Jurnal Studi Manajemen & Organisasi, 1(2), 61–70.
Sulistyaningsih, & Gunawan, B. (2018). ANALISIS FAKTOR-FAKTOR YANG MEMENGARUHI RISK MANAGEMENT DISCLOSURE (Studi Empiris Pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia Tahun 2012-2014). Riset Akuntansi Dan Keuangan Indonesia, 1(1), 1–11. https://doi.org/10.23917/REAKSI.V1I1.1973
Sulistyawati, S. N., & Suryani, A. W. (2022). Achieving Operational Efficiency through Risk Disclosure. Asian Journal of Business and Accounting, 15(1), 149–178. https://doi.org/10.22452/ajba.vol15no1.5
Tarantika, R. A., & Solikhah, B. (2019). Pengaruh Karakteristik Perusahaan, Karakteristik Dewan Komisaris dan Reputasi Auditor Terhadap Pengungkapan Manajemen Risiko. Journal of Economic, Management, Accounting and Technology (JEMATech), 2(2), 142–155. https://ojs.unsiq.ac.id/index.php/jematech/article/view/722/412
Tarus, J. K. (2023). Board Capital, CEO Power and Investment Efficiency of Firms listed in Nairobi Securities Exchange in Kenya. Business Management Analysis Journal (BMAJ), 6(1), 1–21. https://doi.org/10.24176/bmaj.v6i1.9648
Yang, S.-L., & Liu, X.-F. (2017). The Empirical Study on CEO Power and Investment Efficiency. Advance in Economics, Business and Management Research, 21(Icmesd), 40–45. https://doi.org/10.2991/icmesd-17.2017.8
Campbell, J. L., Chen, H., Dhaliwal, D. S., Lu, H. min, & Steele, L. B. (2014). The Information Content of Mandatory Risk Factor Disclosures in Corporate Filings. Review of Accounting Studies, 19(1), 396–455. https://doi.org/10.1007/s11142-013-9258-3
Chen, F., Hope, O. K., Li, Q., & Wang, X. (2011). Financial Reporting Quality and Investment Efficiency of Private Firms in Emerging Markets. Accounting Review, 86(4), 1255–1288. https://doi.org/10.2308/accr-10040
Fakhriyyah, D. D., & Hidayati, I. (2021). Pengungkapan Kuantitatif dan Kualitatif Segmen Operasi Berdasarkan PSAK 5 Revisi 2009 (Penyesuaian 2015) di Indonesia. Organum: Jurnal Saintifik Manajemen Dan Akuntansi, 4(2), 175–191. https://doi.org/10.35138/organum.v4i2.163
Fakhriyyah, D. D., & Mawardi, M. C. (2020). Model Penerapan Good Corporate Governance dalam Praktik Tunneling di Indonesia. Jurnal Riset Akuntansi Aksioma, 19(2), 245–265. https://doi.org/10.29303/aksioma.v19i2.100
Gao, R., & Yu, X. (2020). How to measure capital investment efficiency: a literature synthesis. Accounting and Finance, 60(1), 299–334. https://doi.org/10.1111/acfi.12343
Gonidakis, F. K., Koutoupis, A. G., Tsamis, A. D., & Agoraki, M. E. K. (2020). Risk disclosure in listed Greek companies: the effects of the financial crisis. Accounting Research Journal, 33(4–5), 615–633. https://doi.org/10.1108/ARJ-03-2020-0050
Gunawan, B. (2020). Pengaruh Mekanisme Corporate Governance Dan Struktur Kepemilikan Publik Terhadap Luas Pengungkapan Enterprise Risk Management |. KRISNA: Kumpulan Riset Akuntansi, 12(1), 21–34. https://www.ejournal.warmadewa.ac.id/index.php/krisna/article/view/1287
Horvey, S. S., & Ankamah, J. (2020). Enterprise risk management and firm performance: Empirical evidence from Ghana equity market. Cogent Economics and Finance, 8(1). https://doi.org/10.1080/23322039.2020.1840102
Hoyt, R. E., & Liebenberg, A. P. (2011). The Value of Enterprise Risk Management. Journal of Risk and Insurance, 78(4), 795–822. https://doi.org/10.1111/J.1539-6975.2011.01413.X
Jannah, H. R., & Rahmawati, I. P. (2020). Corporate Governance dan Efisiensi Investasi pada Perusahaan yang Terdaftar di Jakarta Islamic Index. Jurnal Akuntansi Dan BBsnis, 20(2), 159–172.
Javeed, M., Hossain, M., & Khan, M. (2021). The influence of corporate social responsibility on organizational performance. International Journal of Business Administration, 12(2), 33-41.
Jensen, M. C., & Meckling, W. H. (1976). Theory of The Firm: Managerial Behavior, Cgency Costs and Ownership Structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
Kusumaningrum, S. A., & Arifin, Z. (2022). Determinan Pengungkapan Manajemen Risiko dan Pengaruhnya terhadap Return Saham (Studi pada Perusahaan Manufaktur Go Public yang Terdaftar di BEI). Selekta Manajemen: Jurnal Mahasiswa Bisnis Dan Manajemen, 01(04), 30–46. https://journal.uii.ac.id/selma/index
Li, Y., He, J., & Xiao, M. (2019). Risk disclosure in annual reports and corporate investment efficiency. International Review of Economics and Finance, 63(1970), 138–151. https://doi.org/10.1016/j.iref.2018.08.021
Majeed, M. A., & Ullah, I. (2022). Impact of CEO Power on Investment Efficiency: Evidence from China. SSRN Electronic Journal, October 2020, 1–46. https://doi.org/10.2139/ssrn.4120396
Moradi, M., Yazdifar, H., Eskandar, H., & Namazi, N. R. (2022). Institutional Ownership and Investment Efficiency: Evidence from Iran. Journal of Risk and Financial Management 2022, Vol. 15, Page 290, 15(7), 290. https://doi.org/10.3390/JRFM15070290
Nathaniel, A. S., & Butar, S. (2019). Determinan Efisiensi Investasi Perusahaan Publik di Indonesia. Jurnal Akuntansi Bisnis, 17(2), 192–205.
Prasetio, D. A., & Suryono, B. (2016). PENGARUH PROFITABILITAS, FREE CASH FLOW, INVESTMENT OPPORTUNITY SET TERHADAP DIVIDEND PAYOUT RATIO. Jurnal Ilmu Dan Riset Akuntansi, 5(1), 1–19. https://doi.org/10.1007/s001860100128
Purba, I. A. C., & Suaryana, I. G. N. A. (2018). Kualitas Laporan Keuangan, Asimetri Informasi dan Efisiensi Investasi pada Perusahaan Pertambangan. Jurnal Ilmiah Akuntansi Dan Bisnis, 13(1), 42–53.
Salehi, M., Zimon, G., Arianpoor, A., & Gholezoo, F. E. (2022). The Impact of Investment Efficiency on Firm Value and Moderating Role of Institutional Ownership and Board Independence. Journal of Risk and Financial Management, 15(4). https://doi.org/10.3390/jrfm15040170
Saputra, A. A. D., & Wardhani, R. (2017). Pengaruh Efektivitas Dewan Komisaris, Komite Audit dan Kepemilikan Institusional terhadap Efisiensi Investasi. Jurnal Akuntansi & Auditing Indonesia, 21(1), 24–36. https://doi.org/10.20885/jaai.vol21.iss1.art3
Sari, L. I. N., & Suaryana, I. G. N. A. (2014). Pengaruh Kualitas Laporan Keuangan pada Efisiensi Investasi Perusahaan Pertambangan. E-Jurnal Akuntansi Universitas Udayana, 3(8), 524–537.
Sharma, S., Durand, R. M., & Gur-arie, O. (1981). Identification and Analysis of Moderator Variables. Journal of Marketing Research, XVIII(August), 291–300.
Siregar, H. O., & Amalia, N. (2020). Manajemen Resiko Dan Efisiensi Investasi Pada Perusahaan Bumn Di Indonesia Bumn Non Keuangan Risk Management And Investmen Efficiency Of Indonesia State-Owned Enterprises. Jurnal MONEX, 9(1), 97–108.
Sugiono. (2004). Konsep, Identifikasi, Alat Analisis dan Masalah Penggunaan Variabel Moderator. Jurnal Studi Manajemen & Organisasi, 1(2), 61–70.
Sulistyaningsih, & Gunawan, B. (2018). ANALISIS FAKTOR-FAKTOR YANG MEMENGARUHI RISK MANAGEMENT DISCLOSURE (Studi Empiris Pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia Tahun 2012-2014). Riset Akuntansi Dan Keuangan Indonesia, 1(1), 1–11. https://doi.org/10.23917/REAKSI.V1I1.1973
Sulistyawati, S. N., & Suryani, A. W. (2022). Achieving Operational Efficiency through Risk Disclosure. Asian Journal of Business and Accounting, 15(1), 149–178. https://doi.org/10.22452/ajba.vol15no1.5
Tarantika, R. A., & Solikhah, B. (2019). Pengaruh Karakteristik Perusahaan, Karakteristik Dewan Komisaris dan Reputasi Auditor Terhadap Pengungkapan Manajemen Risiko. Journal of Economic, Management, Accounting and Technology (JEMATech), 2(2), 142–155. https://ojs.unsiq.ac.id/index.php/jematech/article/view/722/412
Tarus, J. K. (2023). Board Capital, CEO Power and Investment Efficiency of Firms listed in Nairobi Securities Exchange in Kenya. Business Management Analysis Journal (BMAJ), 6(1), 1–21. https://doi.org/10.24176/bmaj.v6i1.9648
Yang, S.-L., & Liu, X.-F. (2017). The Empirical Study on CEO Power and Investment Efficiency. Advance in Economics, Business and Management Research, 21(Icmesd), 40–45. https://doi.org/10.2991/icmesd-17.2017.8
Published
2023-07-30
How to Cite
Fakhriyyah, D. D., Junaidi, J., & Nabila Maharani. (2023). Enterprise Risk Management Disclosure and Investment Efficiency: A Moderation Role Of CEO Power. Asian Journal of Management, Entrepreneurship and Social Science, 3(03), 901-917. Retrieved from https://mail.ajmesc.com/index.php/ajmesc/article/view/480
.png)
.jpg)
Contact Person +6282139474255
Email : editor.ajmesc@gmail.com
