FINANCIAL REPORTING QUALITY AND LABOR INVESTMENT EFFICIENCY ON LISTED COMPANY IN INDONESIA

A large literature in finance provides evidence that agency conflicts and information asymmetry between managers and outsiders lead firms to undertake suboptimal levels of investment (Hubbard 1998 and Stein 2003 provide surveys of this literature). Recent accounting research builds on this notion in arguing that high-quality financial reporting can serve to mitigate such market imperfections and improve investment efficiency (e.g., Bushman and Smith 2001; Healy and Palepu 2001; Lambert, Leuz, and Verrecchia 2007). High-quality financial reporting can potentially mitigate such moral hazard problems by enabling more efficient contracting and enhancing the monitoring abilities of investors and other outsiders. The sample used in this study is public company listed on the Indonesia Stock Exchange between 2010 until 2015. The results of the regression test shows that there are influences between the financial reporting quality and labor intensity toward the abnormal net hire as the dependent variable. The result of significant value financial reporting quality is 0.012 (< 0.05), and the result of significant value labor intensity is 0.042 (<0.05). financial reporting quality is absolute value of et (Dechow et al., 2010). The smaller value of absolute et, the higher financial reporting quality (Dechow et al., 2010). Based on the result that abnormal net hire has been influenced by of those variables (P < .005); because labor investment efficiency is absolute value of abnormal net hiring (Jung et al., 2014). The smaller absolute value of abnormal net hiring, are the more efficient labor investment (Jung et al., 2014)