Manager Characteristics and Internal Control Disclosure: The Moderating Role of Manager Incentives
DOI:
https://doi.org/10.22219/jrak.v15i2.35620Keywords:
Convergent Interest, Internal Control, Managerial Entrenchment, Managerial IncentivesAbstract
Purpose: This study examines whether manager incentives strengthen the influence of managerial entrenchment and concurrent interest in internal control disclosure.
Methodology/approach: The sample comprises 633 non-financial companies on the Indonesia Stock Exchange in 2020 - 2022. It was selected using the purposive sampling technique, with the criteria that the internal control system be described in the Corporate Governance section. The analysis technique used is Moderating Regression Analysis.
Findings: The study results indicate that managerial entrenchment and convergent interest affect internal control disclosure. Managerial incentives strengthen the effect of concurrent interest on internal control disclosure. However, managerial incentives do not enhance the impact of managerial entrenchment on internal control disclosure. The results of this study provide implications that can be the basis for the government, through the Financial Services Authority (OJK), to create mandatory regulations for public companies to disclose internal control in annual financial reports.
Practical implications: Companies must pay attention to manager incentives and manager characteristics, such as managerial entrenchment and convergent interests, to support public disclosure of internal control.
Originality/value: This study is the first to examine the moderating effect of manager incentives in strengthening the influence of managerial entrenchment and convergent interest on internal control disclosure in non-financial companies on the Indonesia Stock Exchange.
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