THE DETERMINANTS OF CORPORATE GOVERNANCE DISCLOSURE THROUGH INTERNET FOR COMPANIES LISTING IN JAKARTA STOCK EXCHANGE
DJOKO SIGIT SAYOGO
UNIVERSITAS MUHAMMADIYAH MALANG
This research aims to examine the determinants of corporate governance disclosure published through Internet. Sample used in this research are companies listing in Jakarta Stock Exchange and are categorized into Liquid 45 (LQ-45) companies on the first semester of 2004.
Statistical analysis conducted through the use of multiple regression, chi-square and Kruskal-Wallis. Statistical analysis result on company’s size proxied by total assets and stock price, probability, independent board composition, industry classification, duality on internal position, and stock distribution shows a distinctive result.
On overall, simultaneously, it is found out that there is a relationship between company size, profitability, independent board composition and stock distribution on the corporate governance disclosure index shows, even if the R2 is low. However, all companies have similar possibility to disclose information through Internet. Examination concerning the relationship between duality position of board and executive officer on the corporate governance disclosure index can no be done due to the similar variant on the data collected. Thus, conclusively that in general both company characteristics and corporate governance characteristics influence the disclosure of corporate governance through Internet.
Keywords: corporate governance , Internet, corporate e-governance
Analysis on corporate governance has become key elements in understanding business administration and also as an indicators of investor’s level of trust regarding the decision took by manager or board of directors for companies listing in stock exchange market. This is mainly due to the use of corporate governance principles as a benchmark to evaluate company operation and transparency in operation (Gandia & Andres: 2004).
The rapid development of information and communication technology have change the channel and model used by companies to communicate with their stakeholders. One of the greatest technology invention that contribute most on the development of communication is Internet. The rapid development of Internet has altered the way of conducting business. Moreover, Internet is able to reduce the distortion in communication channel and diminish the trade off between reach and richness of information (Perera et.al.: 2003). Internet is immediately considered as complete instrument for conducting reporting activities and investor relations.
Based on the research conducted by Spaul (1997), once, Internet has connected more than 60 million users in more than 160 countries (Spaul as cited in Gowthorpe and Amat: 1999). Numerous researches (Lymer: 1999, Hedlin: 1999, Pirchegger & Wagenhofer: 1999, Deller et.al.:1999, Gowthorpe & Amat: 1999) attempt to examine the extent of Internet uses in disseminating companies financial information, those researches, especially conducted in England, Sweden, Spain, Austria, Germany, United States and Australia. Companies in Europe, United States and Australia utilizing their homepage as a platform to disclose their financial information, particularly annual report, press release, and other information (Lymer: 1999, Hedlin: 1999, Pirchegger & Wagenhofer: 1999, Deller et.al.:1999, Gowthorpe & Amat: 1999).