Effect Of Board Of Commissioners' Size, Independent Commissioner, Auditor's Reputation, Leverage, And Corporate Size Of The Existence Of Risk Management Committee (Empirical Study Of Financial Sector Companies Listed On The Indonesia Stock Exchange Period 2017-2020)

Feb 28, 2025 by ADMIN 267 views

Effect of Board of Commissioners' Size, Independent Commissioner, Auditor's Reputation, Leverage, and Corporate Size of the Existence of Risk Management Committee (Empirical Study of Financial Sector Companies Listed on the Indonesia Stock Exchange Period 2017-2020)

Reveals Factors Affecting the Existence of Risk Management Committee in Financial Sector Companies in Indonesia

Introduction

The existence of a Risk Management Committee (KMR) is crucial for financial sector companies to manage risks effectively and maintain stability in the financial market. However, the factors that influence the existence of KMR in these companies are not well understood. This study aims to reveal the effect of the size of the board of commissioners, independent commissioners, auditor's reputation, leverage, and company size on the existence of KMR in financial sector companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2020 period.

Methodology

This study uses a causal associative approach with the research population covering all financial sector companies listed on the IDX in the 2017-2020 period. As many as 79 companies were chosen as research samples using the purposive sampling method. Data analysis was carried out using descriptive statistical analysis and logistics regression with the help of SPSS software.

Results

The results showed that the size of the Board of Commissioners, Independent Commissioners, and Leverage had a positive and significant influence on the existence of KMR. That is, the greater the size of the Board of Commissioners, the more independent commissioners, and the higher the leverage of a company, the more likely the company has KMR.

However, the auditor's reputation variable and company size do not show a significant effect on the existence of KMR. This indicates that auditor's reputation and company size are not the main determinants in the formation of KMR in financial sector companies in Indonesia.

Deeper Analysis

This research reveals some interesting things:

The Role of the Board of Commissioners and Independent Commissioners: The Board of Commissioners and Independent Commissioners has an important role in overseeing and directing management in managing company risks. The greater the size of the Board of Commissioners and the more independent commissioners, the stronger supervision and independence in decision making related to risk management.

Effect of Leverage: High leverage shows the company has a high level of debt, which increases financial risk. This condition encourages companies to form KMR to minimize the risks faced.

Auditor's reputation: The results of this study indicate that the auditor's reputation has no significant influence on the existence of KMR. This is probably because the company is more focused on aspects of supervision and internal decision making in the formation of KMR.

Company Size: Company size also does not show a significant effect on the existence of KMR. Possibly, small and medium companies have more limited resources to form KMR than large companies.

Implications and Recommendations

The Importance of the Role of the Board of Commissioners: The Board of Commissioners and Independent Commissioners has an important role in encouraging the formation of KMR. The company needs to ensure the appropriate composition of the Board of Commissioners to increase the effectiveness of risk supervision and management.

Better risk management: Companies need to realize the importance of good risk management, especially with increased leverage. Forming KMR can assist companies in identifying, measuring, and managing risk effectively.

Development of Resources: Small and medium companies need to be given support and guidance to develop the resources needed in the formation of KMR.

Conclusion

This research provides an important contribution in understanding the factors that influence the existence of KMR in the financial sector company in Indonesia. The results of this study can be used as a basis for regulators and companies to improve corporate governance practices and risk management in the financial sector.

Limitations and Future Research Directions

This study has some limitations, including the use of a purposive sampling method and the limited number of research samples. Future research can use a more representative sampling method and a larger number of research samples to increase the generalizability of the results. Additionally, future research can explore other factors that influence the existence of KMR, such as the role of the CEO and the company's risk culture.

References

[List of references cited in the study]

Appendix

[Appendix materials, including additional tables and figures]

Abstract

This study aims to reveal the effect of the size of the board of commissioners, independent commissioners, auditor's reputation, leverage, and company size on the existence of Risk Management Committee (KMR) in financial sector companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2020 period. The results showed that the size of the Board of Commissioners, Independent Commissioners, and Leverage had a positive and significant influence on the existence of KMR. However, the auditor's reputation variable and company size do not show a significant effect on the existence of KMR. This study provides an important contribution in understanding the factors that influence the existence of KMR in the financial sector company in Indonesia.
Frequently Asked Questions (FAQs) about the Effect of Board of Commissioners' Size, Independent Commissioner, Auditor's Reputation, Leverage, and Corporate Size of the Existence of Risk Management Committee

Q: What is the purpose of this study?

A: The purpose of this study is to reveal the effect of the size of the board of commissioners, independent commissioners, auditor's reputation, leverage, and company size on the existence of Risk Management Committee (KMR) in financial sector companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2020 period.

Q: What is the significance of this study?

A: This study provides an important contribution in understanding the factors that influence the existence of KMR in the financial sector company in Indonesia. The results of this study can be used as a basis for regulators and companies to improve corporate governance practices and risk management in the financial sector.

Q: What are the main findings of this study?

A: The main findings of this study are that the size of the Board of Commissioners, Independent Commissioners, and Leverage have a positive and significant influence on the existence of KMR. However, the auditor's reputation variable and company size do not show a significant effect on the existence of KMR.

Q: What are the implications of this study?

A: The implications of this study are that companies need to ensure the appropriate composition of the Board of Commissioners to increase the effectiveness of risk supervision and management. Companies also need to realize the importance of good risk management, especially with increased leverage. Forming KMR can assist companies in identifying, measuring, and managing risk effectively.

Q: What are the limitations of this study?

A: The limitations of this study are that it uses a purposive sampling method and the limited number of research samples. Future research can use a more representative sampling method and a larger number of research samples to increase the generalizability of the results.

Q: What are the future research directions?

A: Future research can explore other factors that influence the existence of KMR, such as the role of the CEO and the company's risk culture. Additionally, future research can use a more representative sampling method and a larger number of research samples to increase the generalizability of the results.

Q: What are the practical implications of this study?

A: The practical implications of this study are that regulators and companies can use the results of this study to improve corporate governance practices and risk management in the financial sector. Companies can also use the results of this study to identify the factors that influence the existence of KMR and to develop strategies to improve risk management.

Q: What are the theoretical implications of this study?

A: The theoretical implications of this study are that it contributes to the understanding of the factors that influence the existence of KMR in the financial sector company in Indonesia. The study also contributes to the development of theories related to corporate governance and risk management.

Q: What are the policy implications of this study?

A: The policy implications of this study are that regulators can use the results of this study to develop policies that promote good corporate governance practices and risk management in the financial sector. Companies can also use the results of this study to develop strategies to improve risk management and to comply with regulatory requirements.

Q: What are the future research opportunities?

A: Future research opportunities include exploring other factors that influence the existence of KMR, such as the role of the CEO and the company's risk culture. Additionally, future research can use a more representative sampling method and a larger number of research samples to increase the generalizability of the results.