The Relationship Between Financial Report Quality (FRQ) and Sustainability Report Quality (SRQ) and Determinant Factors Sabar Warsini 1,a), Titi Suhartati1,b), Yusep Friya1,c), Rida Ratna Jelita2,a), Muhammad Dzikri Alfajri2,b)
Politeknik Negeri Jakarta. Jl. Prof. Dr. G.A Siwabessy, Kampus Baru UI Depok 16424 Jakarta DKI Jakarta
Abstract
This study explores the factors influencing Financial Reporting Quality (FRQ) and Sustainability Reporting Quality (SRQ) in Indonesian publicly listed companies. High-quality financial reporting is crucial for supporting decision-making by investors, creditors, and other stakeholders. However, earnings Management and financial statement manipulation remain significant challenges, as demonstrated in the cases of PT Kimia Farma and PT Garuda Indonesia. Concurrently, sustainability reporting is gaining more attention as businesses shift towards environmentally, socially, and governance (ESG) responsible practices. This research utilizes data from financial reports, annual reports, and sustainability reports of companies listed on the Indonesia Stock Exchange (IDX) for the 2019-2022 period. Through multiple linear regression analysis and Two-Stage Least Squares (2SLS) methods, the study finds that independent board supervision and institution ownership positively and significantly impact financial reporting quality. Additionally, industry classification, company size, and sustainability committees are key determinants of sustainability reporting quality. These findings emphasize the importance of strong corporate governance in enhancing corporate transparency and accountability.
Keywords: Financial Reporting Quality (FRQ), Sustainability Reporting Quality (SRQ), Two-Stage Least Squares (2SLS), Multiple Linear Regression
