Determinants of Financial Statement Integrity: Size, Governance, and Leverage
DOI:
https://doi.org/10.26623/ebsj.v10i1.13935Keywords:
Financial Statement Integrity, Company Size, Independent Commissioners, Institutional Ownership, LeverageAbstract
This study examines the effect of company size, independent commissioners, institutional ownership, and leverage on financial statement integrity in infrastructure sector companies listed on the Indonesia Stock Exchange during the 2020–2024 period. Financial statement integrity is a critical issue due to recurring cases of financial reporting manipulation, particularly in capital intensive sectors such as infrastructure, where large scale projects and complex financing structures increase reporting risks. Financial statement integrity in this study is measured using the Market To Book Ratio as a proxy, reflecting the reliability and credibility of reported financial information. This study employs a quantitative explanatory approach using multiple linear regression analysis. The sample consists of 36 companies, resulting in 180 firm-year observations selected through purposive sampling. The results show that company size has a positive and significant effect on financial statement integrity, while independent commissioners, institutional ownership, and leverage do not have significant effects. However, the model’s explanatory power is relatively low, with an adjusted R² of 0.033, indicating that most variations in financial statement integrity are explained by factors outside the model. These findings suggest that while firm size plays an important role in enhancing reporting integrity through stronger monitoring and reputational concerns, formal corporate governance mechanisms alone may not be sufficient to ensure high quality financial reporting. Therefore, future research is recommended to incorporate additional variables to better explain financial statement integrity.
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