The Effect Of Profitability, Liquidity, Leverage, Company Size And KAP's Reputation On The Timeliness Of Financial Reporting On Property And Realstate Companies Listed On The Indonesia Stock Exchange In 2017-2021
The Effect of Profitability, Liquidity, Leverage, Company Size, and KAP's Reputation on the Timeliness of Financial Reporting on Property and Real Estate Companies Listed on the Indonesia Stock Exchange in 2017-2021
Introduction
In the business world, timely financial reporting is crucial, especially for companies listed on the Stock Exchange. The timeliness of financial reporting is essential for investors, stakeholders, and regulatory bodies to make informed decisions. This article discusses the effect of several factors, including profitability, liquidity, leverage, company size, and the reputation of the Public Accountant Firm (KAP), on the timeliness of financial reporting on property and real estate companies listed on the Indonesia Stock Exchange during the 2017 to 2021 period.
Research Methodology
This study employed the Purposive Sampling method and successfully collected data from 42 of the 66 companies that meet the specified criteria. Data analysis was carried out using logistic regression analysis techniques through SPSS software. This method was chosen to assess the relationship between independent and dependent variables more accurately.
Analysis of Factors Affecting the Timeliness of Financial Reporting
Profitability
In the context of the company, profitability is often considered an indicator of financial health. Although in theory, more profitable companies are more likely to report finances in a timely manner, the results show that profitability does not have a significant effect. This could be caused by management that is more focused on increasing profit than on time reporting. Profitable companies may prioritize their financial performance over the timeliness of financial reporting, which can lead to delays in submitting financial statements.
Liquidity
Liquidity reflects the company's ability to fulfill short-term obligations. Although high liquidity should support the timeliness in reporting, the results show that liquidity does not significantly affect the timeliness of financial reporting. This may be caused by a management strategy that prioritizes liquidity for operational activities rather than time reporting. Companies with high liquidity may focus on maintaining their financial stability rather than adhering to the reporting deadlines.
Leverage
Leverage measures how much the company uses debt in its capital structure. This study found that leverage had a significant effect on the timeliness of reporting. Companies with a high level of debt may be more encouraged to fulfill financial reporting obligations in order to continue to meet the demands of the creditor. The pressure from creditors can motivate companies to submit their financial statements on time, ensuring that they comply with the regulatory requirements.
Company Size
Company size, often measured based on total assets, also proven to affect the timeliness of reporting. Larger companies tend to have a better internal control system, so that it can meet the deadline for financial reporting better. The internal control system of larger companies is more robust, which enables them to manage their financial reporting processes more efficiently and effectively.
KAP's Reputation
However, the results showed that the KAP's reputation did not have a significant influence on the timeliness of financial reporting. This may occur because other factors are more dominating in decision making for timely reporting. The reputation of the KAP may not be a critical factor in determining the timeliness of financial reporting, as other factors such as leverage and company size may have a more significant impact.
Conclusion
From the analysis above, we can conclude that the timeliness of financial reporting on property and real estate companies on the Indonesia Stock Exchange is influenced by several factors. Leverage and company size are two key factors that have a significant influence. Meanwhile, profitability, liquidity, and KAP reputation do not have a significant impact on the timeliness of reporting. This study provides valuable insights for stakeholders in the property and real estate industry regarding the factors that need to be considered to increase timeliness in financial reporting. By understanding these factors, companies can take more strategic steps to ensure their financial statements can be submitted on time and according to investor expectations.
Recommendations
Based on the findings of this study, the following recommendations can be made:
- Companies should prioritize their financial reporting processes: Companies should focus on maintaining a robust internal control system to ensure that their financial reporting processes are efficient and effective.
- Companies should manage their leverage effectively: Companies should manage their debt levels carefully to avoid the pressure from creditors that can motivate them to submit their financial statements on time.
- Companies should consider the size of their company: Larger companies should leverage their size to their advantage by implementing a robust internal control system to ensure that their financial reporting processes are efficient and effective.
- KAP's should focus on building their reputation: KAP's should focus on building their reputation by providing high-quality services to their clients to increase their influence on the timeliness of financial reporting.
By implementing these recommendations, companies can increase the timeliness of their financial reporting and comply with the regulatory requirements.
Frequently Asked Questions (FAQs) on the Effect of Profitability, Liquidity, Leverage, Company Size, and KAP's Reputation on the Timeliness of Financial Reporting
Q: What is the significance of timely financial reporting for companies listed on the Stock Exchange?
A: Timely financial reporting is crucial for companies listed on the Stock Exchange as it provides stakeholders with accurate and reliable information about the company's financial performance. This enables stakeholders to make informed decisions about investing in the company.
Q: What are the factors that affect the timeliness of financial reporting?
A: The factors that affect the timeliness of financial reporting include profitability, liquidity, leverage, company size, and the reputation of the Public Accountant Firm (KAP).
Q: How does profitability affect the timeliness of financial reporting?
A: Profitability does not have a significant effect on the timeliness of financial reporting. This may be caused by management that is more focused on increasing profit than on time reporting.
Q: How does liquidity affect the timeliness of financial reporting?
A: Liquidity does not significantly affect the timeliness of financial reporting. This may be caused by a management strategy that prioritizes liquidity for operational activities rather than time reporting.
Q: How does leverage affect the timeliness of financial reporting?
A: Leverage has a significant effect on the timeliness of reporting. Companies with a high level of debt may be more encouraged to fulfill financial reporting obligations in order to continue to meet the demands of the creditor.
Q: How does company size affect the timeliness of financial reporting?
A: Company size has a significant effect on the timeliness of reporting. Larger companies tend to have a better internal control system, so that it can meet the deadline for financial reporting better.
Q: How does KAP's reputation affect the timeliness of financial reporting?
A: KAP's reputation does not have a significant influence on the timeliness of financial reporting. This may occur because other factors are more dominating in decision making for timely reporting.
Q: What are the implications of the findings of this study?
A: The findings of this study have implications for companies listed on the Stock Exchange, particularly in the property and real estate industry. Companies should prioritize their financial reporting processes, manage their leverage effectively, and consider the size of their company to increase the timeliness of their financial reporting.
Q: What are the recommendations for companies and KAP's based on the findings of this study?
A: Based on the findings of this study, the following recommendations can be made:
- Companies should prioritize their financial reporting processes: Companies should focus on maintaining a robust internal control system to ensure that their financial reporting processes are efficient and effective.
- Companies should manage their leverage effectively: Companies should manage their debt levels carefully to avoid the pressure from creditors that can motivate them to submit their financial statements on time.
- Companies should consider the size of their company: Larger companies should leverage their size to their advantage by implementing a robust internal control system to ensure that their financial reporting processes are efficient and effective.
- KAP's should focus on building their reputation: KAP's should focus on building their reputation by providing high-quality services to their clients to increase their influence on the timeliness of financial reporting.
Q: What are the limitations of this study?
A: The limitations of this study include the use of a specific sample of companies listed on the Stock Exchange, the reliance on secondary data, and the use of a single research method.
Q: What are the future research directions based on the findings of this study?
A: Future research directions include investigating the effect of other factors on the timeliness of financial reporting, such as corporate governance and audit quality, and conducting a longitudinal study to examine the changes in the factors affecting the timeliness of financial reporting over time.