The Effect of Corporate Risk Disclosure toward Firm Value in Indonesia Sharia Stock Index

Abstract

Abstract This study aims to examine the factors that influence corporate risk disclosure which consist of company type, size and profitability, as well as the impact of corporate risk disclosure itself on the firm value. Every company has different risk. Investors need to know the risks faced by the company and the strategies used to deal with them. The companies listed on the ISSI are required to conduct their business based on sharia principles. Risk disclosure is a form of applying sharia principles in business ethics. The population of this research is 265 non-financial companies listed on ISSI and published the annual report for 2015-2017. The study samples are 73 non-financial companies which are chosen by applying Slovin’s formula. The data analysis techniques are path analysis and multiple group analysis. The results show that the company type, size, and profitability have a significant impact on the corporate risk disclosure, while the corporate risk disclosure itself has a positive and significant impact on firm value. This research results can be used as a consideration for the company’s management to increase the corporate risk disclosures in the annual report as it can be a positive signal to encourage the increase in company value.