Accounting Analysis Journal 9(2) (2020) 81-82

Accounting Analysis Journal

https://journal.unnes.ac.id/sju/index.php/aaj

The Effect of Firm Size, Leverage, Profitability, Ownership Structure, and

Firm Age on Enterprise Risk Management Disclosures

Choiru Rujiin*1 and Sukirman2

Kantor Akuntan Publik Tasnim, Fardiman, Sapuan, Nuzuliana, Ramdan & Rekan Cabang Semarang
1

Accounting Department, Faculty of Economics, Universitas Negeri Semarang

2

ARTICLE INFO ABSTRACT

Article History: This study aims to examine the effect of firm size, leverage, profitability, domestic in-
Received August 18th, 2019 stitutional ownership structure, foreign ownership structure, local individual ownership
Accepted June 30th, 2020 structure, and firm age on enterprise risk management disclosure. The population in
Available July 30th, 2020 this study was a manufacturing firm registered on the IDX in 2013-2017 with a purpo-
sive sampling technique and produced 7 samples with 35 units of analysis. The data in
this study are secondary data in the form of annual reports with data collection tech-
Keywords:
niques in the form of documentation. This study uses multiple regression data analysis
firm size; leverage; technique. The results showed that firm size and firm age had a significant positive ef-
profitability; firm age fect on enterprise risk management disclosure, while leverage, profitability, domestic in-
stitutional ownership structure, foreign ownership structure, local individual ownership
structure had a significant negative effect towards enterprise risk management disclo-
sures. The conclusion of this study is that only firm size and firm age have a significant
positive effect on enterprise risk management disclosure, which means that the larger
the size of the firm and the longer the firm stands, the higher the disclosure.

© 2020 The Authors. Published by UNNES. This is an open access

article under the CC BY license (http://creativecommons.org/licenses/by/4.0/)

INTRODUCTION stability of company also to increase trust for external

groups of institutions.
Risk is an unexpected situation and can be at-
Risk management is an approach to minimize
tached to any activities carried out by a company. As
the consequences of problems that are experienced
in some of the following incidents including cases of
at anytime so that corporate goals will be more easily
financial engineering and accounting malpractice that
achieved. Risk management system is believed to be able
had shocked the business world at that time occurred
to help company achieve its business goals, assist finan-
in Enron (2001) and Worldcom (2002) companies be-
cial reporting and save corporate reputation effectively
cause the two companies are the largest companies in
(Ratnawati, 2012). According to Abdullah et al., (2017)
the world. In addition to the cases experienced by Enron
that disclosure of risk management is very important for
and Worldcom in Indonesia, it also felt the impact of
non-financial companies, because it can also be useful
the global crisis 2008 caused by the encouragement of
for regulatory body to develop more detailed guidelines
the people of the United States in the life of consum-
on disclosure of financial risk management in non-fi-
erism beyond their limits. Because of the global crisis,
nancial companies in the future. In the world, there are
Indonesia was also affected, especially by companies
two institutions that regulate or issue a standard in the
in Indonesia. In Indonesia, companies faced problems
process of risk management control that can be applied
in dealing with currency trading problems which cause
in all company characteristics, the first is COSO (Com-
institutions to have a refreshing system, reorganize, and
mittee of Sponsoring Organizations of the Treadway
have to close down (Endah & Diani, 2013). This means
Commission) in 2004 brought up a framework on risk
that the process of risk management is very important
management called Enterprise Risk Management Inte-
for companies, because in addition to maintaining the
grated Framework 2004. The framework is a develop-
ment of the COSO Internal Control Integrated Frame-
* E-mail: rujiinchoiru@gmail.com work that was released in 1992.
Address: Jalan Jati Raya Utama 2 No. 8, Banyumanik, The second is ISO (International Organization
Semarang, Central Java, Indonesia
for Standardization) 31000 which contains standards for
DOI 10.15294/aaj.v9i2.33025 p-ISSN 2252-6765 e-ISSN 2502-6216
 Accounting Analysis Journal 9(2) (2020) 81-87 82

the implementation of risk management of a company. a significant positive effect on the transparency of insti-
Both are standards that have been recognized by the tutional issue management. Sari (2013) explained that
world and can be applied in all types with varying risks. ownership centralization has a positive impact on the
In Indonesia, there is also Capital Market and Financial transparency of institutional issue management. Probo-
Institution Supervisory Agency (currently FSA), which hudono et al.(2013) firm age does not have an impact on
issued kep-347/BL/2012 regarding financial presenta- the institutional issue management.
tion and reporting, one of which regulates the disclosure Based on the phenomena listed, this research in-
of risk management. This rule does not replace PSAK tends to examine the effect of agency size, leverage, pro-
Number 50 (revised) that applies but only as a compan- fitability, structure of domestic institutional ownership,
ion that must also be obeyed by the issuer of the com- structure of foreign ownership, and structure of local
pany in the financial presentation and reporting. individual ownership. Since in current developments
The meaningful of the problem notification began foreigners are more in control of the stock market in
at the beginning of 1998 and the focus on risk disclosure Indonesia (CNBC Indonesia, 2019) and increasingly in-
has increased since the publication of IFRS 7, January tensive socialization to grow new domestic investors and
1, 2007 (Taufani et al., 2016) Submitting the problem can firm age towards transparency in managing institutio-
be stated in agency’s annual report. The implementation nal issues. This study illustrates expansion and merging
of risk management has now become a worldwide con- based on the previous studies with a longer time span
cern and has begun to be applied by companies in both of five years from 2013-2017 compared to the previous
Indonesia and the world. A survey carried out by Deloit- studies, with novelty on variables of foreign ownership
te (2009) showed 111 financial companies which have structure and local individual ownership structures.
been surveyed in Latin America 36% of companies have There is no research that examines the variables of firm
run risk management disclosures and 23% of companies size, leverage, profitability, structure of domestic insti-
have planned to run them. Desender (2009) found aver- tutional ownership, foreign ownership structure, owner-
age enterprise risk management result for 97 companies ship structure of local individuals and firm age together.
at 36%. The survey indicates that the risk management This research is based on two main theories
disclosure is still very low and proven that both surveys namely agency theory and signaling theory. Corporate
still show score below 50% (Sari, 2013). Risk manage- governance factors have the potency to influence the lev-
ment disclosure has benefits for internal and external in- el and quality of enterprise risk management openness
stitutions. With enterprise risk management disclosure, in the company (Buckby et al. 2015). By doing risk man-
the society can ease the problems experienced by institu- agement, manager will be more controlled in managing
tions both financial and operational problems. the company and shareholders will know the condition
Studies on institutional risk management disclo- of the company better.
sure still show uncertain results, such as research con- Company will give a signal to stakeholders be-
ducted by Sulistyaningsih & Gunawan (2016) & Razali cause there is information asymmetry about corporate
et al., (2012) show that firm size has no impact on the situation. Signaling theory explains the motivation of
transparency of institutional issue management. Sarwo- agencies in delivering financial statement information
no et al.(2018), Hasina et al.(2018), Jannah (2016), Neri to outside parties (Prayoga & Almilia, 2013). With the
et al, (2018), Jia et al.(2016), and Saidet al. (2018) ex- publication of a good annual report and high risk man-
plained that firm size has a positive impact on the trans- agement disclosures, investors will get a signal to assess
parency of institutional issue management. Whereas the company so that it can improve the quality of deci-
Tessema (2016) showed that firm size has a negative im- sions to be taken. The level of success of a company in
pact on the transparency of institutional issue manage- running its business is always related to how the com-
ment. Syifa (2013), Razali et al.(2012), and Probohudono pany handles the risks it faces. Rasidet al.(2014) argued
et al.(2013) explained that leverage does not have an im- that there is no profitable business if risks are managed
pact on the disclosure of institutional issue management separately, therefore risks must be managed with the
transparency. Kumalasari et al.(2014) and Sarwono et implementation of good risk management. Meanwhile,
al.(2018) explained that leverage has a positive impact Bogodistov & Veit (2017) defined risk management as a
on the transparency of institutional issue management. framework for resolving and managing risks for uncer-
Marhaeni & Yanto (2015), Jia et al.(2016), and Tesse- tain events that can provide benefits and advantages to
ma (2016) explained that leverage has a negative impact the institution.
on the transparency of institutional issue management. Firm age explains small or large an institution.
Sarwono et al.(2018), Razali et al.(2012), & Probohu- Agency theory explains that the larger size of an insti-
dono et al.(2013) explained that profit does not affect tution, the wider the transparency of problem manage-
the transparency of of institutional issue management. ment, because the size of a large company allows a lot
Kumalasari et al.(2014), Jannah (2016) explained that of risk to occur and there are a number of investors who
profitability has an impact on the transparency of insti- play a role in the acquisition of institutional assets, so
tutional issue management. Prayoga & Almilia (2013) companies need to make risk management disclosure as
the result of the study shows that domestic institutional a form of accountability to investors that the companies
ownership has an impact on the transparency of insti- are able to manage the capital and risks faced and vice
tutional issue management. Taufani et al.(2016) showed versa. The studies conducted by Neri et al. (2018), Jia et
that the domestic institutional ownership does not have al. (2016), and Said et al.(2018) show that firm size has a
83 Choiru Rujiin and Sukirman,The Effect of Firm Size, Leverage, Profitability, Ownership Structure, and Firm Age on Enterprise...

significant positive effect on risk management. H4: Structure of domestic institutional ownership
has a positive effect on the disclosure of Enter-
H1: Firm size has a positive effect on Enterprise
prise Risk Management
Risk Management disclosure
Structure of foreign ownership is the level of
Leverage calculates how much the institution
shares owned by institutions or individuals which are
uses its debt to finance corporate operations. A high
abroad that invest in certain companies. Foreign owner-
level of leverage indicates that the capital structure in an
ship according to Law No. 25 of 2007 concerning invest-
institution is derived more from debt than company eq-
ment in article 1 number 6 is individuals who are foreign
uity. Agencies that use debt have obligations for interest
citizens, foreign business institutions, and foreign lea-
expenses and debt principal expenses (Devi et al. 2017).
ders who invest domestically. Based on signaling theory,
Agency theory explains that the greater the leverage, the
it shows that the more ownership of foreign shares, the
smaller the enterprise risk management transparency
wider the transparency of institutional issue manage-
implemented by agency managers. This is because in-
ment implemented by institutional managers. This aims
stitutions with huge level of liability will be more risky
to signal a positive signal to investors to continue to be-
so that managers will try to cover up these risks by mak- lieve in the company that the company is responsible for
ing low disclosures to attract investors in order to keep the capital it manages which is disclosed in every report
investing in the institution. Thus, the costs that should issued by the company either quarterly, semester, or yea-
have been incurred to finance the ERM disclosure pro- rly and vice versa.
cess can be used to pay off corporate debt and vice versa.
Research conducted by Jia et al.(2016), Tessema (2016) H5: Structure of foreign ownership has a positive
and Marhaeni & Yanto (2015) explain that leverage has effect on disclosure of Enterprise Risk Manage-
a significant and negative effect related to transparency ment
in the management of instances. Local individual ownership is the level of ow-
H2: Leverage has a negative effect on disclosure of nership of a particular institution for individuals who
Enterprise Risk Management are Indonesian citizens. Based on signaling theory, it
shows that the more shares owned by local individuals,
Profit is the level of earning that can be gener- the higher the disclosure of enterprise risk management
ated by the company as an achievement of the business implemented by institutional managers. This aims to
activities of a company. Agency theory explains that signal a positive signal to investors to continue to believe
the more profit an institution gets, managers will reveal in the company that the company is responsible for the
more detailed enterprise risk management to attract in- capital it manages which is disclosed in every report or
vestors’ desire and trust to invest in institutions. This is positive news about the company’s condition and vice
because more and more profits are obtained by the insti- versa.
tution indicating that the institution has good prospects
for carrying out its business. With good conditions, the H6: Local individual ownership structure has a posi-
company makes transparency in problem management tive effect on the disclosure of Enterprise Risk
in detail in order to increase firm value in the eyes of in- Management
vestors. Research conducted by Kumalasari et al.(2014), Firm age is how long the institution has been
Jannah(2016), and Abdullah et al.(2017) explain that standing in running its business. Firm age is a matter
profitability has a positive effect on the transparency of of concern to investors in investing, firm age indicates
company issue management. that the institution continues to survive and is a testi-
H3: Profitability has a positive effect on disclosure mony that the agency is able to flank and can pick out
of Enterprise Risk Management the opportunities that exist in the economy (Bestivano,
2013). Signaling theory shows that the longer the insti-
Domestic institutional ownership is the propor- tution is established, the more extensive the disclosure
tion of shares ownership owned by institutions or enti- of enterprise risk management is carried out by agency
ties that are domiciled in Indonesia. This ownership can managers. This is related to the growing maturity of the
be owned by banks, insurance companies, cooperatives, agencies will certainly have more abundant experience
investment companies or other business entities in Indo- in dealing with risks by continuing to operate the com-
nesia. Based on signaling theory, it shows that the more pany until now. With this experience, of course, com-
shares owned by domestic institutions, the higher the pany managers already have the right strategy imple-
disclosure of enterprise risk management implemented mented in the company so as to maintain the stability of
by institutional managers. This aims to signal a positive the company and increase company profits. With such
signal to investors to keep trusting the company that the a good condition, the manager will reveal the enterprise
company is responsible for the capital managed, even risk management well to give a positive signal in order
though this is reflected in the reports disclosed by the to attract investors to invest in the institutions they run
company to investors and vice versa. Prayoga & Almilia and vice versa. Research conducted by Solomon et al.
(2013) the result which indicates that the variable of do- (2000), Marshall & Weetman (2002) and Abraham &
mestic institutional variable has an impact on the trans- Cox (2007) show that firm age has a positive impact on
parency of corporate issue management. the transparency of company issue management.
 Accounting Analysis Journal 9(2) (2020) 81-87 84

H7: Firm age has a positive effect on the disclosure 2013-2017 obtained by documentation on the Indonesi-
of Enterprise Risk Management an Stock Exchange website (www.idx.co.id). The infor-
mation study method used was the classical assumption
test (linearity test, normality test, multicollinearity test,
RESEARCH METHODS
autocorrelation test, and heteroscedasticity test) follo-
This type of research described quantitative rese- wed by multiple regression tests using IBM SPSS Statis-
arch using secondary information with a population of tics 23 and hypothesis testing (coefficient of determina-
172 companies. To maintain the unity of data, the rese- tion and t test) ) with a significance level of 5%.
archers only took manufacturing institutions to find out
the development of corporate risk management disclos- RESULTS AND DISCUSSIONS
ures in 2013-2017. The samples in this research were 7
The results of the classical assumption test that
institutions with 35 units of analysis in a span of five
is linearity test using scatter plot test show that all de-
years. The following is the sampling table presented in
pendent variables form a straight line to the independent
Table 1.
variable. The result of the normality test using Kolmo-
Variables of enterprise risk management, firm
gorov-Smirnov explains a number of 0.200 which shows
size, leverage, profitability, domestic institutional ow-
≥ 0.05 so that the data is spread normally. The result
nership structure, foreign ownership structure, local in-
of the multicollinearity test explains that all dependent
dividual ownership structure, and firm age are explained
variables have a tolerance value ≥ 0.10 so they are free
in Table 2.
from multicollinearity. The result of the autocorrelation
The data in this research was secondary informa-
test by using run test shows the result of 0.489 which
tion in the form of annual reports of institutions listed
shows ≥ 0.05 so that the data is free from autocorrelati-
on the Indonesia Stock Exchange (IDX) for the period
on. The result of the heteroscedasticity test using gletser

Table 1. Sampling with Purposive Sampling Technique

No Criteria Not Fulfilled Fulfilled
1. The population of manufacturing agencies listed on IDX 172
2. Companies that keep listing in the research year (5) 167
3. Companies publish annual reports on the IDX during the research period (24) 143
successively
4. Institutions that disclose the structure of share ownership according to the (114) 29
research criteria
5. Institutions that use rupiah in the financial statements (22) 7
Total Sample 2013 – 2017 (7 x 5) 35
Source : IDX and corporate official website (data processed 2019)

Table 2. Operational Definition of Research

Variables Definition Indicator Source
Disclosure of Enterprise How extent to which compa- Number of disclosure items of Aprilianto
Risk Management (ERM) ny disclose risk management ERM/108x100% (2017)
in annual reports (COSO 2004)
Firm Age (UKP) How large the company is Firm Size = Ln Total Asset Aprilianto,
seen from the total assets of (2017)
the company
Leverage (LEV) The ability of company to Leverage = total liabilities / total Aprilianto,
pay its obligations equityx100% (2017)
Profitability (PROF) The level of profits / profits Profitability = net profit / Aprilianto,
obtained by the company salesx100% (2017)
Domestic Institutional Own- Proportion of share owner- Ownership of domestic institutions Prayoga &
ership Structure (KID) ship by domestic institutions / total company shares x 100% Almilia
(2013)
Structure of Foreign Owner- Proportion of share owner- Foreign ownership / total company Prayoga
ship (KA) ship by foreigners shares x 100% & Almilia
(2013)
Local Individual Ownership Proportion of share owner- Local individual ownership / total Prayoga
Structure (KIL) ship by local individuals company shares x 100% & Almilia
(2013)
Firm Age (UMP) How long the company run Firm age Rohmaniyah
its business = Current year - year the company (2016)
was founded
85 Choiru Rujiin and Sukirman,The Effect of Firm Size, Leverage, Profitability, Ownership Structure, and Firm Age on Enterprise...

test shows that all variables in this research has sig va- carried out by Jia et al.(2016), Tessema (2016) and Mar-
lues ≥ 0.05 so that the data pass the test. The coefficient haeni & Yanto(2015).
of determination explains that the independent variable
is able to show the dependent variable by 95%. The re- The Effect of Profitability on Enterprise Risk Man-
sults of the multiple regression analysis can be shown in agement Disclosures
Table 3.
Profitability has a significant negative impact on
the transparency of agency problem management. Lar-
The Effect of Firm Size on Enterprise Risk Manage-
ge or small profit level can suggest broad transparency
ment Disclosures
of agency problem management. This is due to compa-
The size of the agency has a significant positive nies that have small profits will try to make disclosures
impact on the transparency of institutional issue ma- in detail. This is since there are a number of risks faced
nagement. Large scale firm allows many problems that by the company and to maintain the trust of corporate
arise in the firm, this will have an impact on the extent investors that managers have been responsible for the ca-
of disclosure applied by managers. This is in accordance pital they manage so that corporate investors can know
with the agency theory which explains that institutions the true state of the company from reports and news
that have large size are overseen by corporate investors about the corporate state and as a form of responsibility
because the amount of risk faced is also greater. To of managers to institutional stakeholders.
maintain the reputation and good name of the compa- This result contradicts agency theory which
ny, managers make transparency in the management of shows that the more profit the agency has, the wider the
institutional issues well to increase openness and keep enterprise risk management disclosure implemented by
maintaining the trust of institutional investors. The re- the institution. This can be experienced because basi-
sult of this study is consistent with studies conducted by cally agencies with a high level of profit tend to have
Jia et al. (2016),Sari (2013) and Jannah(2016). less risky faced so the company does not discuss these
risks in the annual report which causes the extent of dis-
The Effect of Leverage on Enterprise Risk Manage- closure to be low. This research is in accordance with
ment Disclosures research conducted by Jannah (2016) and Kumalasari
et al.(2014).
Leverage has a significant negative impact on the
transparency of agency problem management. The level
The Effect of Domestic Institutional Ownership
of leverage that is slender indicates that the capital struc-
Structure on Enterprise Risk Management Disclo-
ture within the agency is larger sourced from debt than
sures
company equity, so that if there are problems related
to corporate finance the company will be vulnerable to The structure of the domestic institutional ow-
bankruptcy. Thus, the institutions with a high degree of nership has a negative effect on the transparency of en-
leverage, managers will try to cover it up to keep getting terprise risk management. This is due to low ownership
capital from investors so that the agencies can get the eq- of shares by domestic institutions, allowing managers
uity for their business activities and can pay their debts. to disclose more detailed enterprise risk management in
This is in line with agency theory which shows that in- order to attract investors from domestic institutions to
stitutions which have a low leverage will carry out the invest in institutions thereby it is able to increase cor-
transparency of agency problem management well. This porate capital for operational activities. Conversely, if
is to lure investors to invest in institutions and vice versa. the ownership of domestic institutions is already high,
The result of this research is in line with the research managers feel that it is necessary to provide returns in

Table 3. Results of Multiple Linear Regression

No Hypothesis B sig α Results
Firm size has a positive effect on the disclosure of enterprise risk man- 0.380 0.002 0.05 Accepted
1
agement.
Leverage has a negative effect on the disclosure of enterprise risk man- -0.144 0.019 0.05 Accepted
2
agement.
Profitability has a positive effect on the disclosure of enterprise risk -0.126 0.007 0.05 Rejected
3
management.
The structure of domestic institutional ownership has a positive effect -0.588 0.000 0.05 Rejected
4
on the disclosure of enterprise risk management.
The structure of foreign ownership has a positive effect on the disclosure -0.917 0.000 0.05 Rejected
5
of enterprise risk management.
The structure of local individual ownership has a positive effect on the -0.291 0.000 0.05 Rejected
6
disclosure of enterprise risk management.
Firm age has a positive effect on the disclosure of enterprise risk man- 0.723 0.000 0.05 Accepted
7
agement.
Source: Secondary data processed data 2019
 Accounting Analysis Journal 9(2) (2020) 81-87 86

the form of dividends to maintain investor trust from by reducing the extent of enterprise risk management
domestic institutions. This is in line with agency theory disclosures so that the costs that should be incurred for
which shows that investors invest in institutions to get making disclosures can be allocated to dividends to be
returns from capital gains or dividends distributed by the distributed to the investors so that the agencies can get
agency. more power to carry out their business activities.
This result is not in accordance with signaling This is not in accordance with signaling theory
theory which shows that the more abundant the owner- which shows that the more abundant the ownership of
ship of domestic institutions, the higher the enterprise shares by local individuals, the more detailed the enter-
risk management disclosure. This can happen because prise risk management disclosure that is carried out by
not all facts are in accordance with existing theories, for the managers. This can happen to retail investors who
example, in this case there are sometimes investors who are looking for dividends to be distributed by the com-
are more looking for dividends for their investment, but pany, where they will invest their capital if companies
not infrequently also investors who do not pay attention often distribute dividends. Thus, when local individual
to the dividends they get. The result of this research is in investors are already high, to maintain their capital, the
line with the research conducted by Prayoga & Almilia company can distribute dividends both interim and at
(2013). the end of the year.

The Effect of Foreign Ownership Structure on Enter- The Effect of Firm Age on Enterprise Risk Manage-
prise Risk Management Disclosures ment Disclosures
The structure of foreign ownership has a negative Firm age has a positive impact on the transpar-
impact on the transparency of agency problem manage- ency of enterprise risk management. This shows that
ment. The direction of the hypothesis testing is negative, the longer the institution stands, the more it shows the
where the less foreign ownership; the more transparent maturity of the company in overcoming the risks faced,
the management of agency problems will be. This in- which is then outlined in extensive and detailed disclo-
tends to lure investors to invest in the institutions con- sure of enterprise risk management in the company’s
cerned. With high investor trust to the company, the ins- annual report. In addition, by doing this, it can increase
titution will obtain equity for the company to operate so company transparency which can increase the trust of
that it can provide high returns to investors in the form corporate investors that the agency has done good cor-
of capital gains and dividends. porate governance properly. This is in line with signaling
This is not in accordance with signaling theory theory which explains that the level of corporate matu-
which shows that the more abundant the ownership of rity is shown by how the company responds to each the
shares by foreigners, the more detailed is the enterprise risks it faces, the better the company in managing the
risk management disclosure carried out by managers. risks it faces, the signals given to investors will also be
This can be experienced because of a matter, for examp- better in this case is a positive signal and vice versa. The
le, with a high level of foreign ownership which is balan- result of this study is in line with the studies conducted
ced with a high level of profitability does not guarantee by Solomon et al. (2000), Marshall & Weetman (2002)
disclosure which is done also high as happened by PT and Abraham & Cox (2007).
Kalbe Farma Tbk. This is because maybe the relevant
institution has no risk included in the COSO disclosure CONCLUSIONS
items such as access risk to the capital market or other
This study examines scientifically the impact of
risks so the extent of disclosure to 2004 is as low.
firm size, leverage, profitability, the structure of domes-
tic institutional ownership, the structure of foreign ow-
The Effect of Local Individual Ownership Structure
nership, the structure of local individual ownership and
on Enterprise Risk Management Disclosures
firm age on the transparency of agency problem mana-
The structure of local individual ownership has a gement. The results of the study explain that the greater
negative impact on the transparency of agency problem the scale of the institution and the more mature the insti-
management. Less and less local individual ownership, tution established can have a significant positive impact
the transparency of agency issue problem management on the transparency of agency problem management.
will be more detailed. This intends to lure investors to While the greater the leverage, the level of profit
invest in the concerned institutions and vice versa. In proxied by NPM, the number of structure of domestic
the investment world, there are several types of investors institutional ownership, foreign ownership structure,
namely investors who pay attention to the fundamentals and local individual ownership structures can have a sig-
of the company and investors who are after dividends. nificant negative effect on the transparency of agency
When the local individual investors are still low, problem management. The disclosure of enterprise risk
then the company will disclose high enterprise risk ma- management in the digital era as it is now very important
nagement to attract investors who look at the company’s to do in addition to supporting company performance
fundamentals based on the annual reports published. can also increase transparency to corporate investors.
However, if the local individual ownership is already The limitation in this study is that too few com-
high, the company can distribute dividends to attract panies disclose ownership structures in detail, resulting
investors with the type of dividend hunter. This is done in fewer sample institutions. Suggestions for future rese-
87 Choiru Rujiin and Sukirman,The Effect of Firm Size, Leverage, Profitability, Ownership Structure, and Firm Age on Enterprise...

arch are expected to be able to add new variables such as pan Manajemen Risiko. Accounting Analysis Journal,
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536 https://doi.org/10.1108/JAAR-07-2016-0066
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