Khanagha (2011) defines the relevance of value as the explanatory power of accounting information for the price or performance of shares. The relevance value is a reflection of accounting information, in this case the annual financial statements to explain the state of the company, which is seen in the price or performance of the shares issued by the company. To see the explanation, in this case, the manager as the manufacturer of financial statements containing accounting information of the company, plays an important role in presenting the thinking and the actual state of the company. This is done with the aim that stakeholders, especially investors, are not trapped in information that is not consistent with the actual circumstances of the company. Disclosure means providing useful data to those who need it. In financial reports, disclosure means that financial reports must contain sufficient information and explanations about the results of a business unit`s activities. The information disclosed must be useful and must not confuse users of the financial statements in order to support economic decision-making (Chariri, 2001). Evans (2003) defines disclosure as the provision of information necessary for the financial statements, records and evidence in support of those financial statements. Management statements in newspapers and other media reports are not included in the disclosure category. Wolk et al. (2001) describe the information contained in the financial reports, notes, supporting documents, segment financial statements and financial statements that reflect price changes in the information to be provided, including business analysis for the coming year, financial projections and supplementary financial statements. Meek et al. Show (1995) has shown that voluntary disclosure of information is disclosure that goes beyond what is necessary because it is considered relevant to the needs of users of financial statements. Credit cards represent a debt: Notes to the financial statements may contain information about debt, going concern criteria, accounts, contingent liabilities, or contextual information that explains the financial statements (p. . B to indicate a prosecution). The information provided provides additional information on the specific data contained in the company`s annual financial statements. Other items subject to disclosure include significant events and transactions. These events are rare, but have a significant impact on the current fiscal year. Regardless of the content of a disclosure, the decision to disclose or not to disclose also creates impressions. Opponents of 2012 presidential candidate Mitt Romney have slammed him for refusing to disclose tax information beyond the minimum required by law, thinking he could evade tax or claim tax havens used by wealthy individuals. Romney decided not to voluntarily disclose previous tax records because he believed they would form the basis of the opposition`s research. Changes in insurance contracts affect a company`s balance sheet. Because companies use the balance sheet to determine the total economic value added through their company`s operations. Financial disclosure is necessary to explain why the insurance contract has been amended and what current or future effects may occur. Examples of insurance contracts are entrepreneur`s life insurance or general liability insurance for the operation of the business. The results of the examination of the first hypothesis suggest that voluntary disclosure has a positive and significant effect on the quality of financial information. This suggests that the higher the level of disclosure, the more information the company discloses and shows that there is nothing to hide in the company`s financial statements, this will reduce information asymmetry, thereby reducing the cost of capital. The results of this test support previous research by Pavlopoulos et al (2019), which indicates that the scope of disclosure will increase as the company increases the information contained in its financial statements. The results of this study also support the research of Mahboub (2017), which shows that the quality of financial reporting increases by expanding existing information. This study also supports previous research by Kribat and Crawford (2013) and Jalil and Tanewski (2015), which shows that the number of items disclosed affects the company`s financial statements. This study also examines the relationship between information asymmetry and the quality of financial information. Research by Moerman (2006) shows a link between information asymmetry and the quality of financial information. The lower the information asymmetry, the better the quality of financial information. Conversely, the higher the information asymmetry, the lower the quality of financial information). This study combines the measurement of information asymmetry with the proxy-bid-ask gap in Cohen`s (2003) study. Research by Behadili et al. (2019) shows the negative effect between information asymmetry and the quality of financial information. Research by Bushman and Smith (2001), Healy and Palepu (2001), Biddle and Hilary (2006) and Lambert et al. (2007) has shown a negative correlation between the quality of financial information and the problem of information asymmetry in investor decision-making. In general, companies only disclose mandatory information. The Corporation will consider the costs and benefits of the decision on full disclosure (full disclosure). Companies will only voluntarily disclose information if they are able to provide benefits greater than the costs incurred (Elliot and Jacobson, 1994). This often leads to information asymmetries because companies have more information about their company than shareholders or other stakeholders. The high condition of information aggregation means that shareholders do not have enough information to predict the levels of risk and return on their investments. If investors consider that a company is exposed to high risk due to the resulting financial statements, the return on investment expected by investors will also be high, resulting in a high cost of equity (cost of equity). Accounting errors can result from a variety of reasons, including the implementation, mathematical calculation and incorrect application of GAAP or the inability to revalue assets at fair market value. If an error is detected, it must be corrected. This often means that the financial statements of the previous period need to be corrected. This information must be noted in the disclosure. Keep in mind that significant accounting errors can lead to financial audits and possible bankruptcy of the company. The results of the examination of the third hypothesis suggest that information asymmetry has a negative and significant impact on the quality of financial information. The results of this test support previous research from Moerman`s (2006) study, which shows a link between information asymmetry and the quality of financial reporting. The lower the information asymmetry, the better the quality of financial information. Conversely, the higher the information asymmetry, the lower the quality of financial information. This study also supports previous research by Cohen (2003) that combines the measurement of information asymmetry with the proxy-bid-ask gap. Such disclosures allow users of financial statements to know why the company`s financial information may suddenly appear different. This study uses the Slovin formula and revealed a sample of 225 manufacturing companies listed on the Indonesian stock exchange from 2016 to 2018. This study uses the variable “voluntary disclosure” as the presentation of financial statements outside of what is required by regulation, including, in this case, supporting information relating to financial reports, notes to financial reports and other information within the enterprise that has a direct or indirect impact on the enterprise (Suwarjono, 2008; Riahi and Belkaoui, 2006). This study uses the information asymmetry variable to show the conditions that show that some investors have information and others do not, or management as the party that has more control over information than investors/creditors (Jogiyanto 2010; Suwarjono 2014; Hanafi 2014). This study uses the variable quality of financial reporting accordingly or an accountability process for companies` financial reporting, measured on the basis of existing standards and in-depth audits that comply with the rules. From understandable, relevant, reliable and comparative and consistent financial statements (Suharsono 2018; Arens, 2001). Disclosure of financial statements will disclose to a company`s stakeholders relevant information that is not included in the statement itself. Information may be required in accordance with generally accepted accounting principles or voluntarily pursuant to a decision of management […]. Please follow and like us: What is disclosure financial information?Financial disclosures, otherwise known as financial reports, are carefully-curated documents that present information about, you guessed it, a company's finances. These disclosures are shared with the government, the public, and a company's stakeholders such as investors, shareholders, and employees.
What are 4 different types of financial information?They show you where a company's money came from, where it went, and where it is now. There are four main financial statements. They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders' equity.
What are the disclosure requirement of financial statement?Auditors are required to express an opinion on the financial statements as a whole. This includes the notes to the financial statements which are an integral part of the accounts, providing additional information on balances and transactions and other relevant information.
What is an example of disclosure in accounting?Some examples to disclose include non-quantifiable items, a change in an accounting principle, substantial inventory losses, or goodwill impairment. Utilizing full disclosure allows individuals and entities to make informed decisions.
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