Soni Agus Irwandi

Accounting Study Program,

STIE Perbanas, Indonesia

soni_irwandi@perbanas.ac.id

Determinants of financial reporting quality: Evidence from Indonesia

Imang Dapit Pamungkas

Faculty of Economics and Business,

Dian Nuswantoro University, Indonesia

Imangdapit.pamungkas@dsn.dinus.ac.id

Abstract. This research aims to investigate the determinants of financial reporting quality, which is a very complex issue in the manufacturing industry and a significant contributor to a company's finance. This research is therefore aimed to examine the effect of litigation risk, investor’s distrust, and legal expertise of the audit committee. The data were obtained from the annual reports of the manufacturing companies listed at the Indonesia Stock Exchange during 2015-2018. The research sample consists of 287 public companies, with moderated regression analysis used to examine the hypotheses. The results show that the risk of investor distrust affects financial reporting quality, while legal expertise of the audit committee is a moderating variable that strengthens the relationship between the risk of investor distrust and financial reporting quality.

Received: December, 2019

1st Revision: March, 2020

Accepted: May, 2020

DOI: 10.14254/2071-8330.2020/13-2/2

JEL Classification: G30, G32, M41

Keywords: litigation risk, investor distrust, legal expertise, financial reporting quality, Indonesia Stock Exchange