INTERLOCK DEWAN DIREKSI, INTERLOCK AUDITOR EKSTERNAL DAN PENGARUHNYA TERHADAP PENGUNGKAPAN SUKARELA

Abstract

This study aims to examine the effects of board of directors and the external auditor interlocks on the relationship between the levels of voluntary disclosures in the focal and related firms. Voluntary disclosure reduces the asymmetry information between managers and investors, reducing litigation costs and increasing management oversights. Board of directors interlock occurs when board of directors of a firm also sit on the board of directors in other firms. External auditor interlock occurs when external auditor of a firm also works for several other firms. This study is expected to give evidence that board of directors and external auditors interlocks have an important role for the company as a driver of information exchange between related companies and may encourage companies to enhance the voluntary disclosure practice in their annual reports. The population in this study are all non-financial publicly listed companies in the Indonesia Stock Exchange (IDX) 2014. Sample firms are selected based on predetermined criteria which include non-financial firms with boards of directors and external auditor interlocks and have complete data sets. The number of companies used as sample are 48 companies. Regression analysis is used as main analysis tool. The result of this study finds that the level of voluntary disclosure in related firms’ has a significant and positive effect on voluntary disclosure in focal firms that have board of directors interlock. When board of directors interlock between firms exists, there is higher probability for the firms to disclose similiar informations in their annual reports than firms without interlock ties. However, this research does not find evidence that the level of voluntary disclosure in related firms having external auditors interlocks affects voluntary disclosure in focal firms.