Article Sidebar

Submitted
March 27, 2024
Accepted
July 31, 2024
Published
July 31, 2024
Download
PDF
Statistic
Read Counter : 58 Download : 33

Downloads

Download data is not yet available.

Main Article Content

Abstract

This research aims to evaluate how the characteristics of the audit committee contribute to the enhancement of environmental, social, and governance (ESG) reporting standards. The audit committee's contribution is assessed through financial acumen, scope, autonomy, and the regularity of its meetings. This study does not only focus on certain industries but all industries with ESG scores that are routinely assessed by Bloomberg for the 2017-2021 period in Indonesia except the financial industry. The sample comprises of 67 companies, so that the total observations used are 335 firm-years with fixed effect model data panel analysis. The findings imply that the independence of the audit committee's independence has a notably positive impact on the quality of ESG disclosures. Meanwhile, the frequency of audit committee meetings has a notably negative impact on the quality of ESG disclosures. However, financial expertise and the size of audit committee do not correlate to the quality of ESG disclosures. The sensitivity analysis supports the entire result of the hypothesis test. Sensitivity tests were carried out on each of the ESG components, namely Environmental, Social and Governance.

Article Details

License

Copyright (c) 2024 Ni Made Ari Cahyani, Ketut Redita, Rinaningsih Rinaningsih

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Hak Cipta (Copyright)

Penulis yang mempublikasikan naskahnya pada Jurnal ini menyetujui ketentuan berikut:

Hak cipta pada setiap artikel adalah milik penulis.

  1. Penulis mengakui bahwa Jurnal  Current : Jurnal Kajian Akuntansi dan Bisnis Terkini berhak sebagai yang mempublikasikan pertama kali dengan lisensi Creative Commons Attribution 4.0 International License.
  2. Penulis dapat memasukan tulisan secara terpisah, mengatur distribusi non-ekskulif  dari naskah yang telah terbit di jurnal ini kedalam versi yang lain (misal: dikirim ke respository institusi penulis, publikasi kedalam buku, dll), dengan mengakui bahwa naskah telah terbit pertama kali pada Jurnal  Current :Jurnal Kajian Akuntansi dan Bisnis Terkini.
How to Cite
Cahyani, N. M. A., Redita, K., & Rinaningsih, R. (2024). THE ROLE OF AUDIT COMMITTEE ATTRIBUTES IN ENHANCING OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE DISCLOSURE STANDARDS. CURRENT: Jurnal Kajian Akuntansi Dan Bisnis Terkini, 5(2), 338–353. https://doi.org/10.31258/current.5.2.338-353
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Adegboye, A., Ojeka, S., Alabi, O., Alo, U., & Aina, A. (2020). Audit Committee Characteristics And Sustainability Performance In Nigerian Listed Banks. Business: Theory and Practice, 21(2), 469–476. https://doi.org/10.3846/btp.2020.10463
  2. Agyei-Mensah, B. K. (2019). The effect of audit committee effectiveness and audit quality on corporate voluntary disclosure quality. African Journal of Economic and Management Studies, 10(1), 17–31. https://doi.org/10.1108/AJEMS-04-2018-0102
  3. Akhtaruddin, M., & Haron, H. (2010). Board ownership, audit committees’ effectiveness, and corporate voluntary disclosures. Asian Review of Accounting, 18(3), 245–259. https://doi.org/10.1108/13217341011089649
  4. Allegrini, M., & Greco, G. (2011). Corporate boards, audit committees and voluntary disclosure: Evidence from Italian Listed Companies. Journal of Management & Governance, 17(1), 187–216. https://doi.org/10.1007/s10997-011-9168-3
  5. Almeyda, R., & Darmansya, A. (2019). The Influence of Environmental, Social, and Governance (ESG) Disclosure on Firm Financial Performance. IPTEK Journal of Proceedings Series, 0(5), 278. https://doi.org/10.12962/j23546026.y2019i5.6340
  6. Al-Shaer, H., & Zaman, M. (2018). Credibility of sustainability reports: The contribution of audit committees. Business Strategy and the Environment, 27(7), 973–986. https://doi.org/10.1002/bse.2046
  7. Anggraeni, D. Y., & Djakman, C. D. (2018). Pengujian Terhadap Kualitas Pengungkapan Csr Di Indonesia. Akuntansi Akrual: Ekuitas: Jurnal Ekonomi Dan Keuangan, 2(1), 22–41. https://doi.org/DOI: 10.24034/j25485024.y2018.v2.i1.2457
  8. Appuhami, R., & Tashakor, S. (2017). The Impact of Audit Committee Characteristics on CSR Disclosure: An Analysis of Australian Firms: An Analysis of Australian Firms. Australian Accounting Review, 27(4), 400–420. https://doi.org/10.1111/auar.12170
  9. Aprianti, S., Susetyo, D., Meutia, I., & Fuadah, L. L. (2021). Audit Committee Characteristics and Sustainability Reporting in Indonesia. Proceedings of the 7th Sriwijaya Economics, Accounting, and Business Conference (SEABC 2021). https://doi.org/10.2991/aebmr.k.220304.006
  10. Arif, M., Sajjad, A., Farooq, S., Abrar, M., & Joyo, A. S. (2020). The impact of audit committee attributes on the quality and quantity of environmental, social and governance (ESG) disclosures. Corporate Governance: The International Journal of Business in Society, 21(3), 497–514. https://doi.org/10.1108/CG-06-2020-0243
  11. Azlan Annuar, H. (2012). Are There Barriers To Independent Non‐Executive Directors’ Effectiveness In Performing Their Roles?. International Journal of Commerce and Management, 22 (4), 258-271. https://www.emerald.com/insight/content/doi/10.1108/10569211211284476/full/html
  12. Badolato, P. G., Donelson, D. C., & Ege, M. (2014). Audit committee financial expertise and earnings management: The role of status. Journal of Accounting and Economics, 58(2–3), 208–230. https://doi.org/10.1016/j.jacceco.2014.08.006
  13. Bahk, B.-H., & Gort, M. (1993). Decomposing Learning by Doing in New Plants. Journal of Political Economy, 101(4), 561–583. https://doi.org/10.1086/261888
  14. Biçer, A. A., & Feneir, I. M. (2019). The Impact of Audit Committee Characteristics on Environmental and Social Disclosures: Evidence from Turkey. International Journal of Research in Business and Social Science (2147- 4478), 8(3), 111–121. https://doi.org/10.20525/ijrbs.v8i3.262
  15. Bloomberg. (2020). Transforming ESG: A roadmap for creating global standards | Insights. Bloomberg Professional Services. https://www.bloomberg.com/professional/blog/transforming-esg-a-roadmap-for-creating-global-standards/
  16. Broadstock, D. C., Managi, S., Matousek, R., & Tzeremes, N. G. (2019). Does doing “good” always translate into doing “well”? An eco‐efficiency perspective. Business Strategy and Environment, 1–19. https://doi.org/DOI: 10.1002/bse.2311
  17. Brown, N., & Deegan, C. (1998). The public disclosure of environmental performance information—A dual test of media agenda setting theory and legitimacy theory. Accounting and Business Research, 29(1), 21–41. https://doi.org/10.1080/00014788.1998.9729564
  18. Buallay, A., & Al-Ajmi, J. (2018). The role of audit committee attributes in corporate sustainability reporting: Evidence from banks in the Gulf Cooperation Council. Journal of Applied Accounting Research, 21(2), 249–264. https://doi.org/10.1108/JAAR-06-2018-0085
  19. Chadha, S., & Sharma, A. K. (2015). Determinants of capital structure: An empirical evaluation from India. Journal of Advances in Management Research, 12(1), 3–14. https://doi.org/10.1108/JAMR-08-2014-0051
  20. Cheng, B., Ioannou, I., & Serafeim, G. (2014). Corporate social responsibility and access to finance: CSR and Access to Finance. Strategic Management Journal, 35(1), 1–23. https://doi.org/10.1002/smj.2131
  21. Coad, A., Segarra, A., & Teruel, M. (2013). Like milk or wine: Does firm performance improve with age? Structural Change and Economic Dynamics, 24, 173–189. https://doi.org/10.1016/j.strueco.2012.07.002
  22. Crişan, A. R., & Fülöp, M. T. (2014). The Role of the Audit Committee in Corporate Governance – Case Study for a Sample of Companies Listed on BSE and the London Stock Exchange—FTSE 100. Procedia Economics and Finance, 15, 1033–1041. https://doi.org/10.1016/S2212-5671(14)00666-2
  23. Dhaliwal, D., Naiker, V., & Navissi, F. (2010). The Association Between Accruals Quality and the Characteristics of Accounting Experts and Mix of Expertise on Audit Committees*: Accruals Quality and Financial Expertise. Contemporary Accounting Research, 27(3), 787–827. https://doi.org/10.1111/j.1911-3846.2010.01027.x
  24. Djamil, N. (2023). Pelanggaran Prinsip Etika Audit dalam Dysfunctional Audit Behavior: Violation of Audit Ethics Principles in Dysfunctional Audit Behavior. JAAMTER: Jurnal Audit Akuntansi Manajemen Terintegrasi, 1 (3), 164–177.
  25. Djamil, N. (2023). Trading in Influence: Modus Baru dalam Korupsi Indonesia Tahun 2022 dan Paradoks Kriminalisasi. JAAMTER: Jurnal Audit Akuntansi Manajemen Terintegrasi, 1 (4), 294–304.
  26. Endrawes, M., Feng, Z., Lu, M., & Shan, Y. (2020). Audit committee characteristics and financial statement comparability. Accounting & Finance, 60(3), 2361–2395. https://doi.org/10.1111/acfi.12354
  27. Ezeoha, A., & Botha, F. (2012). Firm age, collateral value, and access to debt financing in an emerging economy: Evidence from South Africa. South African Journal of Economic and Management Sciences, 15(1), 72–93. https://doi.org/10.4102/sajems.v15i1.138
  28. Fama, E. F., & Jensen, M. C. (1983). Separation of Ownership and Control. Journal of Law and Economics, 26(2,), 301–325.
  29. Fatima, A. H., Abdullah, N., & Sulaiman, M. (2015). Environmental disclosure quality: Examining the impact of the stock exchange of Malaysia’s listing requirements. Social Responsibility Journal, 11(4), 904–922. https://doi.org/10.1108/SRJ-03-2014-0041
  30. Gerwanski, J. (2020). Does it pay off? Integrated reporting and cost of debt: European evidence. Corporate Social Responsibility and Environmental Management, 27(5), 2299–2319. https://doi.org/10.1002/csr.1965
  31. Ghozali, Imam. 2009. Aplikasi Analisis Multivariate dengan Program SPSS. Semarang .UNDIP.
  32. Gujarati, D. N., & Porter, D. C. (2009). Basic econometrics (5th ed). McGraw-Hill Irwin.
  33. Harvard Law School forum on Corporate Governance. (2017). ESG Reports and Ratings : What They Are, Why The Matter. Retrieved July 15, 2023, from https://corpgov.law.harvard.edu/2017/07/27/esg-reports-and-ratings-what-they-are-why-they-matter/
  34. Ilaboya, Ofuan. J., & Ohiokha, Izien. F. (2016). Firm Age, Size and Profitability Dynamics: A Test of Learning by Doing and Structural Inertia Hypotheses. Business and Management Research, 5(1), p29. https://doi.org/10.5430/bmr.v5n1p29
  35. Indonesia Stock Exchange. (2023). Tata Kelola Perusahaan. https://www.idx.co.id/id/tentang-bei/tata-kelola-perusahaan
  36. Iswara, A.J. (2022). Apakah Indonesia Negara Berkembang atau Maju?. Indonesia all. KOMPAS.com. https://internasional.kompas.com/read/2022/08/18/175700170/apakah-indonesia-negara-berkembang-atau-maju-?page=all#:~:text=Indonesia%20negara%20maju
  37. Jizi, M. I., Salama, A., Dixon, R., & Stratling, R. (2014). Corporate Governance and Corporate Social Responsibility Disclosure: Evidence from the US Banking Sector. Journal of Business Ethics, 125(4), 601–615. https://doi.org/10.1007/s10551-013-1929-2
  38. Josua, R., & Septiani, A. (2020). Analisis Pengaruh Karakteristik Komite Audit Terhadap Pengungkapan Laporan Keberlanjutan. Diponegoro Journal Of Accounting, 9(3). http://ejournal-s1.undip.ac.id/index.php/accounting
  39. Juliandi, A., Irfan, I., & Manurung, S. (2014). Metodologi Penelitian Bisnis. Medan. UMSU PRESS.
  40. Kang, W. S., Kilgore, A., & Wright, S. (2011). The effectiveness of audit committees for low‐ and mid‐cap firms. Managerial Auditing Journal, 26(7), 623–650. https://doi.org/10.1108/02686901111151341
  41. Karamanou, I., & Vafeas, N. (2005). The Association between Corporate Boards, Audit Committees, and Management Earnings Forecasts: An Empirical Analysis. Journal of Accounting Research, 43(3), 453–486. https://doi.org/10.1111/j.1475-679X.2005.00177.x
  42. Kenton, W. (2020). Sensitivity Analysis. Investopedia. https://www.investopedia.com/terms/s/sensitivityanalysis.asp#:~:text=Sensitivity%20analysis%20is%20a%20financial
  43. Khoiriyah, M., Zarefar, A., Afifah, U., & Oktari, V. (2022). The Role Of Audit Committee In Corporate Sustainability Disclosure. Akurasi : Jurnal Studi Akuntansi Dan Keuangan, 5(2), 167–179. https://doi.org/10.29303/akurasi.v5i2.243
  44. KPMG. (2017). Audit Committee Handbook – KPMG 2017 Edition. https://assets.kpmg.com/content/dam/kpmg/ie/pdf/2017/10/ie-aci-handbook-2017.pdf.
  45. KPMG. (2019). Impact of ESG disclosures. https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2019/09/impact-of-esg-disclosures.pdf
  46. Lee, M. T., & Suh, I. (2022). Understanding the effects of Environment, Social, and Governance conduct on financial performance: Arguments for a process and integrated modelling approach. Sustainable Technology and Entrepreneurship, 1(1), 100004. https://doi.org/10.1016/j.stae.2022.100004
  47. Lin, Z. J., Xiao, J. Z., & Tang, Q. (2008). The roles, responsibilities and characteristics of Audit committee in China. Accounting, Auditing & Accountability Journal, 21(5), 721–751. https://doi.org/10.1108/09513570810872987
  48. Lisic, L. L., Neal, T. L., Zhang, I. X., & Zhang, Y. (2016). CEO Power, Internal Control Quality, and Audit Committee Effectiveness in Substance Versus in Form. Contemporary Accounting Research, 33(3), 1199–1237. https://doi.org/10.1111/1911-3846.12177
  49. Maama, H., & Appiah, K. O. (2019). Green accounting practices: Lesson from an emerging economy. Qualitative Research in Financial Markets, 11(4), 456–478. https://doi.org/10.1108/QRFM-02-2017-0013
  50. Madi, H. K., Ishak, Z., & Manaf, N. A. A. (2014). The Impact of Audit Committee Characteristics on Corporate Voluntary Disclosure. Procedia - Social and Behavioral Sciences, 164, 486–492. https://doi.org/10.1016/j.sbspro.2014.11.106
  51. Meiryani. (2021). Memahami Uji Autokorelasi Dalam model Regresi. https://accounting.binus.ac.id/2021/08/06/memahami-uji-autokorelasi-dalam-model-regresi/
  52. Mohammadi, S., Saeidi, H., & Naghshbandi, N. (2020). The impact of board and audit committee characteristics on corporate social responsibility: Evidence from the Iranian stock exchange. International Journal of Productivity and Performance Management, 70(8), 2207–2236. https://doi.org/10.1108/IJPPM-10-2019-0506
  53. Momchilov, G. (2022). Sustainability reporting by companies: reasons and financial benefits. VUZF Review, 7(1). https://media.neliti.com/media/publications/549566-sustainability-reporting-by-companies-re-80fa3464.pdf
  54. Mudiyanselage, N. C. S. R. (2018). Board involvement in corporate sustainability reporting: Evidence from Sri Lanka. Corporate Governance: The International Journal of Business in Society, 18(6), 1042–1056. https://doi.org/10.1108/CG-10-2017-0252
  55. Musallam, S. R. M. (2018). The direct and indirect effect of the existence of risk management on the relationship between audit committee and corporate social responsibility disclosure. Benchmarking: An International Journal, 25(9), 4125–4138. https://doi.org/10.1108/BIJ-03-2018-0050
  56. Nurmawati, N., & Mary, H. (2018). The Effect Of Audit Committee Independence, Financial Expertise, And Corporate Social Responsibility Disclosure To Corporate Value. Jurnal Apresiasi Ekonomi, 6(2), 143–151. https://doi.org/10.31846/jae.v6i2.69
  57. OJK. (2014). Peraturan Otoritas Jasa Keuangan Nomor 33 /Pojk.04/2014 Tentang Direksi Dan Dewan Komisaris Emiten Atau Perusahaan Publik. Retrieved from https://www.ojk.go.id/id/regulasi/otoritas-jasa-keuangan/peraturan-ojk/Documents/POJK33DireksidanDewanKomisarisEmitenAtauPerusahaanPublik_1419319443.pdf
  58. OJK. (2015). Peraturan Otoritas Jasa Keuangan Nomor 55 /Pojk.04/2015 Tentang Pembentukan Dan Pedoman Pelaksanaan Kerja Komite Audit. Retrieved from https://ojk.go.id/id/kanal/pasar-modal/regulasi/peraturan-ojk/Documents/Pages/POJK-Nomor-55.POJK.04.2015/SALINAN-POJK%20%2055.%20Pembentukan%20dan%20Pedoman%20Pelaksanaan%20Kerja%20Komite%20Audit.pdf
  59. OJK. (2017). Peraturan Ojk Nomor 51/Pojk.03/2017 Tentang Penerapan Keuangan Berkelanjutan Bagi Lembaga Jasa Keuangan, Emiten, Dan Perusahaan Publik. Retrieved from https://ojk.go.id/id/regulasi/Documents/Pages/Penerapan-Keuangan-Berkelanjutan-bagi-Lembaga-Jasa-Keuangan,-Emiten,-dan-Perusahaan-Publik/SAL%20POJK%2051%20-%20keuangan%20berkelanjutan.pdf
  60. Olayinka, O. M. (2019). Audit Committee and Firms Performance in Nigeria: Case Study of selected Nigerian Banks. International Journal of Scientific and Research Publications (IJSRP), 9(9), p9315. https://doi.org/10.29322/IJSRP.9.09.2019.p9315
  61. Orazalin, N., & Mahmood, M. (2018). Economic, environmental, and social performance indicators of sustainability reporting: Evidence from the Russian oil and gas industry. Energy Policy, 121, 70–79. https://doi.org/10.1016/j.enpol.2018.06.015
  62. Oussii, A. A., & Boulila, N. (2020). Evidence on the relation between audit committee financial expertise and internal audit function effectiveness. Journal of Economic and Administrative Sciences, 37(4), 659–676. https://doi.org/10.1108/JEAS-04-2020-0041
  63. Oussii, A. A., Klibi, M. F., & Ouertani, I. (2019). Audit committee role: Formal rituals or effective oversight process? Managerial Auditing Journal, 34(6), 673–695. https://doi.org/10.1108/MAJ-11-2017-1708
  64. Parpia, S., Morris, T. P., Phillips, M. R., Wykoff, C. C., Steel, D. H., Thabane, L., Bhandari, M., & Chaudhary, V. (2022). Sensitivity analysis in clinical trials: three criteria for a valid sensitivity analysis. Eye, 1–2. https://doi.org/10.1038/s41433-022-02108-0
  65. Persons, O. S. (2009). Audit committee characteristics and earlier voluntary ethics disclosure among fraud and no-fraud firms. International Journal of Disclosure and Governance, 6(4), 284–297. https://doi.org/10.1057/jdg.2008.29
  66. Pozzoli, M., Pagani, A., & Paolone, F. (2022). The impact of audit committee characteristics on ESG performance in the European Union member states: Empirical evidence before and during the COVID-19 pandemic. Journal of Cleaner Production, 371, 133411. https://doi.org/10.1016/j.jclepro.2022.133411
  67. Pucheta‐Martínez, M. C., Gallego‐Álvarez, I., & Bel‐Oms, I. (2021). Corporate social and environmental disclosure as a sustainable development tool provided by board sub‐committees: Do women directors play a relevant moderating role? Business Strategy and the Environment, 30(8), 3485–3501. https://doi.org/10.1002/bse.2815
  68. Raghunandan, K., & Rama, D. V. (2007). Determinants of Audit Committee Diligence. Accounting Horizons, 21(3), 265–279. https://doi.org/10.2308/acch.2007.21.3.265
  69. Rahman, R. A., & Ali, F. H. M. (2006). Board, audit committee, culture and earnings management: Malaysian evidence. Managerial Auditing Journal, 21(7), 783–804. https://doi.org/10.1108/02686900610680549
  70. Raimo, N., Vitolla, F., Marrone, A., & Rubino, M. (2020). Do audit committee attributes influence integrated reporting quality? An agency theory viewpoint. Business Strategy and the Environment, 30(1), 522–534. https://doi.org/10.1002/bse.2635
  71. Rawi, R., & Muchlish, M. (2022). Audit quality, audit committee, media exposure, and Corporate Social Responsibility. Jurnal Siasat Bisnis, 26(1), 85–96. https://doi.org/10.20885/jsb.vol26.iss1.art6
  72. Sajjad, A., Eweje, G., & Tappin, D. (2019). Managerial perspectives on drivers for and barriers to sustainable supply chain management implementation: Evidence from New Zealand. Business Strategy and the Environment, 29(2), 592–604. https://doi.org/10.1002/bse.2389
  73. Samaha, K., Khlif, H., & Hussainey, K. (2015). The impact of board and audit committee characteristics on voluntary disclosure: A meta-analysis. Journal of International Accounting, Auditing and Taxation, 24, 13–28. https://doi.org/10.1016/j.intaccaudtax.2014.11.001
  74. Setiawan, E. M., & Ridaryanto, P. (2022). Analisis Pengaruh Efektifitas Dewan Komisaris Dan Komite Audit Terhadap Kualitas Sustainability Report. BALANCE: Jurnal Akuntansi, Auditing dan Keuangan, 19(1), 126–149. https://doi.org/10.25170/balance.v19i1.3510
  75. Shahveisi, F., Khairollahi, F., & Alipour, M. (2017). Does ownership structure matter for corporate intellectual capital performance? An empirical test in the Iranian context. Eurasian Business Review, 7(1), 67–91. https://doi.org/10.1007/s40821-016-0050-8
  76. Sovey, S., Osman, K., & Effendi, M. (2022). Exploratory and Confirmatory Factor Analysis for Disposition Levels of Computational Thinking Instrument Among Secondary School Students. European Journal of Educational Research, 11(2), 639–652. https://doi.org/10.12973/eu-jer.11.2.639
  77. Suastha, R. D. (2016, July 21). Riset Temukan Kualitas CSR Perusahaan Indonesia Rendah. Nasional. CNN Indonesia. https://www.cnnindonesia.com/nasional/20160721074144-20-146030/riset-temukan-kualitas-csr-perusahaan-indonesia-rendah
  78. Suchman, M. C. (1995). Managing Legitimacy: Strategic and Institutional Approaches. The Academy of Management Review, 20(3), 571. https://doi.org/10.2307/258788
  79. United Nations and Swiss Federal Department of Foreign Affairs. (2005). Who Cares Wins — Connecting Financial Markets to a Changing World. Retrieved from https://www.unepfi.org/fileadmin/events/2004/stocks/who_cares_wins_global_compact_2004.pdf
  80. Uyar, A., Elbardan, H., Kuzey, C., & Karaman, A. S. (2022). Audit and CSR committees: Are they complements or substitutes in CSR reporting, assurance and GRI framework adoption? International Journal of Accounting & Information Management, 31(1), 1–36. https://doi.org/10.1108/IJAIM-04-2022-0086
  81. Yu, E. P., Guo, C. Q., & Luu, B. V. (2018). Environmental, Social and Governance Transparency and Firm Value. Business Strategy and Environment. 27(7), 987–1004. https://onlinelibrary.wiley.com/doi/10.1002/bse.2047