The Impact of Voluntary Risk Management Disclosure, The Composition of the Board of Independent Commissioners Toward Firm Value on Indonesian Property ,Real Estate and Building Construction Companies

This study aims to examine the impact of voluntary disclosure of non financial risk management, and the composition of the board of independent commissioners toward firm value. The population of this study is the property, real estate and building construction sector companies listed on the Indonesia Stock Exchange (IDX) using Purposive Sampling. Data analysis method is multiple regression methods. The results of the study are voluntary non financial risk management disclosure has negatively significant impact to firm value while the composition of independent commissioners does not affect the value of the Company.


Firm Value
Firm is an organization that seeks profit, the purpose of the company is usually expressed in the form of money. There are two main objectives of the company, namely maximizing profits and maximizing prosperity. The goal of maximizing prosperity is to maximize the value of the company. Understanding the value of the company according to Martono and Harjito (2005: 13), namely "the value of the company is reflected in the stock market value if the company has gone public if it has not gone public, the company value is the value that occurs when the company is sold".
The value of the company according to Keown, et al. (2010: 46) is "the market value of outstanding debt and equity securities of the company. The price that the prospective buyer is willing to pay is defined as the market price of the company itself. Company value can be achieved to the maximum if the shareholders hand over the business management matters to people who are competent in their fields, such as managers and commissioners. " Tobin's Q or Q ratio or Q Theory is a ratio or theory which in 1969 was first introduced by James Tobin. James Tobin is an American economist who successfully won a Nobel in economics with his hypothesis, the market value of a company should be the same as the cost of replacing the company's assets so that an equilibrium condition is created.
Tobin's Q formula is the sum of MVE and DEBT divided by the TA where MVE can be searched by multiplying the number of ordinary shares of the company circulating at the end of the year with the closing price at the end of the year, DEBT calculated by means (Total Debt + Inventory -Assets Current) and TA are the book value of the company's total assets.
The above formula has been adjusted to the conditions of financial transactions of company companies in Indonesia. Tobin's q <1 Describes that shares are undervalued. In this condition means management has failed to manage company assets, causing low potential investment growth. Tobin's q = 1 Describes that stocks are in average condition. Means management is stagnant in managing their assets and potential investment growth does not develop. Tobin's q> 1 describes that the stock is overvalued. Management is successful in managing their company assets.
Previous research also used Tobin Q (TOBIN) as another measurement for FV (Chen et al., 2014;Chi, 2009). TOBIN measures the ratio of market value and reimbursement of company assets. A lower ratio value (between 0 and 1) means that the cost of replacing a company's assets is greater than the value of its shares. This means that the company's shares are undervalued. On the other hand, a ratio greater than 1 indicates that the company's stock is more expensive than the cost of replacing assets, implying that the stock is overvalued. Tobin's value is measured based on equity market value plus liability book value, divided by book value of total assets (Pathan and Faff, 2013;Orenset al., 2009;Chi, 2009;Baek et al., 2004).
Another tool for assessing how the Company Value is market capitalization (MCAP); the background of why using MCAP because it is more accurate in measuring FV. It is because MCAP takes into account the overall market value of a company, while stock prices only measure the value of a company based solely on the price of one stock (Uyar and Kilic, 2012;Anam et al., 2011). We calculate the MCAP by multiplying the total company's shares at the market price. Hassan et al. (2009) stated that the company's stock price after six months at the end of the financial year can ensure that stock prices have captured all accounting information disclosed by the company's annual report. For this study we use two different periode of reporting to ensure that the market stock price capturing all of accounting information disclosed in the company's annual report and economic factors that might affect the company's stock price.
In addition, previous research found that among many macroeconomic factors, changes in world oil prices were one of the factors that did not significantly affect changes in the share of company prices (Apergis and Miller, 2009;Al-Fayoumi, 2009). Therefore, the assumption that the company's share price at the end of six months after the end of the year has been considered all the economic changes that occur during that period and will provide a fair reflection of FV.
With regard to the book value of equity, taken at the end of the accounting year. Stock price data comes from the IDX database while other financial data comes from financial statements in the company's annual report.

Independent Board of Commissioners
The commissioner of an organization is a member of the supervisory board. Some specific terms are used to explain the existence or absence of relations with the organization. The Commissioner (or internal commissioner, internal director) is a commissioner who is also an employee, officer, major shareholder, or someone related to the organization (company). Commissioners in representing the interests of shareholders, and sometimes having deep knowledge of performance, finance, mastery of market share of the organization.
External Commissioners (independent commissioners) are members of the board of commissioners who are not employed or people who deal directly with the organization, and do not represent shareholders. An example is an appointed commissioner who is currently or has held the position of president of a company from a different industrial sector. The independent commissioner was appointed because his experience was deemed useful for the organization. They can supervise commissioners in and monitor how the organization is run. Independent Commissioners are usually useful in resolving disputes between internal commissioners, or between shareholders and the board of commissioners. The independent commissioner is considered useful because they can be objective and have a small risk of conflict of interest. On the other hand, independent commissioners may lack experience in dealing with specific problems faced by the organization.
The relationship between the proportion of independent board and reaction of stock markets is investigated, where the findings of a study show a positive link between the two (Brickleyet al.,1994). On the other hand, it is noticed that there is no significant relationship between outside directors of a board and firmperformance (Yermack, 1996). Induction of independent directors in corporations is done to improve their performance; therefore, we are expecting a positive effect of board independence on firm value:

Factors Affecting Disclosure of Corporate Risk Leverage level
Leverage that has been used as a proxy for risk related disclosures, in research and findings shows mixed results (Ahn andLee, 2004 in Amran et al, 2009). Based on the theory of stakeholders, companies are expected to be able to provide risk disclosures in order to provide justification and explanation for what happened at the company. When companies have a higher level of debt risk in the capital structure, creditors can force the company to disclose further information (Ahn and Lee, 2004 in Amran et al, 2009).
Several measures to measure company leverage are debt to equity ratio, debt to asset ratio, debt service coverage, and long term debt to total equity. In this study used debt to asset ratio as an assessment of the level of risk of the company. The debt to asset ratio shows the proportion of a company's assets financed through debt. The greater the debt to asset ratio raises the high level of dependence of companies with creditors (external parties) so that the company may have more financial risks.

Level of Profitability
There is a positive relationship between the level of profitability and risk assessment because company managers can provide greater information to increase investor confidence and thus to increase their compensation (Aljifri and Husainney, 2007). Several measures for calculating the level of profitability include, ROE, ROA and Net Profit Margin. This study uses a net profit (Uyar and Kilic, 2012;Anam et al., 2011;Orens et al., 2009)to measure the level of profitability of a company.

Company Size
The size of the company can be expressed in total assets, sales and market capitalization. Large companies have many stakeholders, therefore the greater the company, the greater the disclosure of information to meet the needs of stakeholders (Amran et al., 2009) This study uses total assets as a tool for assessing company size. The use of total assets in this study is based on Alsaeed's (2006) research, total assets are proxy of company size found to be significantly associated with the level of voluntary disclosure in Saudi Arabia.

Hypotheses Development
Based on signaling and agency theory, companies have an incentive to voluntarily disclose further information to investors about risk management in order to signal the quality of underlying risk management to others and to signal that the company is able to protect and create value for investors (Beasley et al., 2005;Connelly et al., 2011). For example, the KNKG guideline CG 20016 states that, "The Board of Directors must develop and implement a company risk management system that covers all aspects of the company's activities" "To ensure proper risk management, the company needs to have a work unit or person in charge of risk control" for companies, investors do not have information about whether company management truly understands the main risks faced by the company.
Thus, providing risk management information to outside parties can help the company management to signify a clear understanding of company risk and therefore increase investor confidence in the company's prospects and performance.

H1 = There Are Positive Effects on Voluntary Disclosure of Risk Management on Firm Values
Previous research on mandatory and discretionary disclosures by public companies provides considerable evidence of the relationship between board characteristics and the level and voluntary quality of disclosures -such as RM disclosures (Cormier et al., 2010;Eng and Mak, 2003). So that the level of monitoring by the board seems to have a significant impact on the intensity and transparency of disclosure (Fama, 1980). Independent commissioners are considered to improve the quality of the board because they are expected to be more impartial shareholder representatives because it is assumed that there is no conflict of interest between owners and agents (Mallin et al., 2005;O'Sullivan, 2000;Ismail and Rahman, 2011;Probohudono et al ., 2013;Sekome and Lemma, 2014).
The relationship between the ratio of independent board and reaction of stock markets is investigated, where the findings of a study show a positive link between the two (Brickley et al.,1994). On the other hand, it is noticed that there is no significant relationship between outside directors of a board and firmperformance (Yermack, 1996). Induction of independent directors in corporations is done to improve their performance; therefore, we are expecting a positive effect of board independence on firm value: H2 = There is a Positive Effect the composition of the board of independent commissioners of Firm Value

Research methodology 5.1 Sample selection and data source
The population of the study are Property, Real Estate and Building Construction firm listed on the Bursa Efek Indonesia since 2013. The consideration why we choose the Property , Real Estate and Building Construction Firm because the risk they are facing and the the contribution of the construction sector to national economic growth is partly due to the large allocation of the Government's budget for infrastructure development in the 2017 State Budget, which is Rp. 387.3 trillion or 19% higher than the 2016 State Budget.
A number of issuers in the construction and infrastructure sectors received good financial performance during the first semester of 2017. The growth of issuers' profit in the construction sector was inseparable from the massive infrastructure development in Indonesia with a fairly expansive development of the property business. The budget for infrastructure continues to increase significantly because the Government places infrastructure development as a fundamental factor to encourage equitable distribution and equitable economic growth.
From total 49 firms selected only 31 firms to testing the hypotheses. The VRMD taken form 2017 annual report and variable control taken form 2016 & 2017 annual report. The reason why we use one year data of VRMD instead of longitudinal basis is because prior literatures (such as Abraham and Shrives, 2014;Miihkinen, 2013;Zaini, 2014) found that VRMD is not significantly different between years. Based on the content analysis done by Abraham and Shrives (2014), they found risk management disclosure remain unchanged over time, indicating disclosure inertia. Miihkinen (2013) also found the same pattern of risk disclosures from 2006 until 2009. This study uses a purposive sampling method that is the sample is selected based on the availability of information and conformity with the criteria specified in this study.

Measurement of variables and data collection methods 6.1 Dependent variable: Firm Value
This study utilizes two measurements for FV, that is, market capitalization (MCAP) and Tobin's Q (TOBIN). Some prior studies used share price to measure the value of a firm (including Chakhovich, 2013;Vafaei et al., 2011;Oliveira et al., 2010;Core et al., 2002). However, MCAP has been argued to be more accurate in measuring FV. The reason is, MCAP takes into account the market value of a firm as a whole, while share price only measures the value of a firm based only on the price of one share (Uyar and Kilic, 2012;Anam et al., 2011). We calculate MCAP by multiplying firm's outstanding shares with firm's market price per share. Hassan et al. (2009) stated that the company's stock price six months after the end of the financial year can ensure that stock prices have captured all accounting information disclosed by the company's annual report. For this study using two dates to ensure that the capture of accounting information is disclosed in the company's annual report as well as economic factors that might influence the company's stock price.
In addition, previous research found that among many macroeconomic factors, changes in world oil prices were one of the factors that did not significantly affect changes in the share of company prices (Apergis and Miller, 2009;Al-Fayoumi, 2009). Therefore, the assumption that the company's share price at the end of six months after the end of the year has been considered all the economic changes that occur during that period and will provide a fair reflection of FV. With regard to the book value of equity, taken at the end of the accounting year. Stock price data comes from the IDX database while other financial data comes from financial statements in the company's annual report. (2006), we used content analysis method to collect the data of VRMD. Data was collected from three sections of the narrative parts of the Annual Report, namely, Chairman's Statement (CS), Operations Review (OR) and Management Discussion and Analysis (MD&A). This study uses the number of "sentences" for the text encoding unit. Past studies (such as Abraham and Cox, 2007;Linsley and Shrives, 2006;Azlan et al., 2009) also used the number of "sentences" as the coding unit in their studies. Linsley and Shrives (2006) suggest, sentences are to be coded as risk disclosure if the reader is informed of any opportunity or prospect, or of any hazard, danger, harm, threat or exposure, that has already impacted upon the firm or may impact upon the firm in the future or of the management of any such opportunity, prospect, hazard, harm, threat or exposure. One (1) mark is to be given to each sentence that contains VRMD.

Independent variable: BOARD
In particular, independent commissioner are considered to enhance the quality of the board as they are expected to be more unbiased representatives of shareholders due to an assumed absence of conflicts of interest between the principal and the agent (Mallin et al., 2005;O'Sullivan, 2000;Ismail and Rahman, 2011;Probohudono et al., 2013;Sekome and Lemma, 2014). Thus, the greater the number of independent commissioners on the board, the more likely the board will identify relevant risks and promote quality RM disclosures to inform shareholders

Control variables
Based on previous studies, control variables used in this study include firm size, leverage & proft (Uyar and Kilic, 2012;Anam et al., 2011;Al-Akra and Ali, 2012;Hassan et al., 2009;Orens et al., 2009). Past studies control firm size because large firmoften voluntarily disclose more information to investors (Gul and Leung, 2004;Eng and Mak, 2003) and this facilitates large-sized firms to get more investment. Therefore large firms tend to have a much higher value than small firms (Al-Akra and Ali, 2012). Hassanet al., 2009). Hence, a positive relationship between Firm Size and FV is expected. Prior literature also found that leverage usually has a negative and significant relationship with FV because leverage serves as a proxy for financial risk (Orens et al., 2009;Klein et al., 2005;Chen et al., 2006). In terms of profits, previous studies found profit usually have positive and significant relationship with FV because firms with high profits tend to have high performance and prospects, as well as being less risky (Orens et al., 2009;Chen et al., 2006).

. Result and Finding 7.1 Test Results of Descriptive Statistics
Data collected for the research is from the financial statements of construction companies listed on the Indonesian Stock Exchange for the 2017 and 2016 reporting periods . Based on the results of the research conducted, the following are the results of recapitulation of data based on descriptive statistics. Independent variables uses in this study consisted of leverage, profitability, and firm size as independent variables, risk management disclosures and the composition of independent commissioners as independent variables, Firm Value represented by Market Capitalization and Tobin's Q as the dependent variable. Table 2.A shows descriptive statistics for FV variables. It shows an average market capitalization (MCAP) decreases from 2016 to 2017. On the other hand Tobin Q average value shows good performance (mean value = 1). The average value above 1 means that the company's market value exceeds the book value of the assets owned by the company. Based on kurtosis and the slope of MCAP and TOBIN it was found that data from these variables were not normal. Thus, similar to prior studies (such as Uyar and Kilic, 2012;Hassan et al., 2009 andAli, 2012), we changed the MCAP and TOBIN variables into natural logarithms (Ln). Descriptive statistics after data transformation are shown in Table 2  Based on 31 sample of companies from the construction industry, the minimum value of TOBIN is 0.01 with a maximum value of 5.28 and the average value of TOBIN in range 0.69-1.03 means that the company is rated lower than the actual book value. A high TOBIN level indicates that the company is valued by the market higher than the actual value of the company (book value). Table 3.A shows descriptive statistics for company size, leverage, profitability, and growth. In terms of company size, on average, the sample company is found to have IDR 18.3 trillion of total assets. The average leverage level is 0.4 which indicates that the company has a moderate level of financial risk. The average level of profitability is decreased in 2017 (IDR 652 billion) compared to profit in 2016 (DIR 924 Billion). The composition of the board of commissioners is on average 40% and the average risk management disclosure is 47%.  Table 4.A shows the results of the Pearson correlation test for VRMD, LnMCAP and LnTOBIN. LnSIZE and PROFIT show that there is no multicollinearity between independent variables because almost all variables have correlations below 0.9 (Gujarati and Porter, 2009 Vol.10, No.8, 2019 From table 5.A and table 5.B, the results of VRMD are negative and significant related to FV on both proxy Tobin's Q and MCAP thus H1 is not accepted, similar with the test results between BOARD and FV show results that are not significant so H2 is not accepted. While other independent variable shows that firm size has a positive relationship with FV on both proxy either Tobin's Q and MCAP. The finding from ERM disclosure of the property, real estate and building construction industry stated that the most influence factor of their risk is the unstable economic conditions the upcoming political year in 2018 and 2019. In this uncertain economic situation investors are waiting better economic situation and stable politic environment. While on control variables , only Firm Size has positive significant effect toward Firm Value, this result is in line with has expected. Tabel 5.A Multiple Regresion for TOBIN'Q

Tabel 5.B Multiple Regresion for MCAP
The findings might be different if the sample industry were more than one industry , we suggest that the results of this study can be caused by unbalance disclosure of negative risk management disclosures or 'bad news' than positive risk management disclosures or 'good news'. This findings supported by prior empirical studies such as Ajinkya and Gift (1984) and Rikhardsson and Holm (2008) found disclosing bad news give negative effects to the firm, where Ajinkya and Gift (1984) found that disclosing bad news is associated with a downward price revision; and Rikhardsson and Holm (2008) found that stock returns react negatively to negative environmental news.

Discussion and conclusion
This study examined the effects of VRMD on FV. Univariate results and multivariate tests show that VRMD tends to be negative and significantly related to FV. Our findings support the signaling theory in that argument VRMD can influence FV and also support the previous literature argument about the importance of disclosing potential risks and prospect information that will provide the right signal and hence can help investors make better decisions about their investment in the company (Linsley and Shrives, 2006;Beretta and Bozzolan, 2004;Solomon et al., 2000). The proportion of the Independent Board of Commissioners does not show a significant effect on Company Values, however this study is limited to only the proportion of the number of board of commissioners regardless of the level of expertise possessed by each board of commissioners. Further research needs to be done on the characteristics of the board of commissioners that influence the increase on Firm Value.

Limitation and Future Research
Levels of risk management disclosure at a moderate level indicate that the company's awareness of the risks faced by the company in the future increases sufficient levels, but because companies engaged in the property, real estate and building construction sector are very dependent on how companies can identify opportunities and risks in their operations, the disclosure of risk management suggested would be increased to the minimum high level The research conducted by Maizatulakma Abdullah, Zaleha Abdul Shukor, Zakiah Muhammadun Mohamed, Azlina Ahmad, (2015) Risk management disclosure: A study of the effect of voluntary risk management disclosures on company value, separating risk management disclosures that are "good news" and "bad news ", So it can be more clearly examined the types of disclosures that should be disclosed in the company's annual report. Therefore, the researcher suggests for further research the risk management disclosure category of companies is divided into two categories, namely risk management disclosures which are good news and risk management disclosures that is not good news.
Independent board of commissioners in this study shows insignificant results related to Firm Values, in this study the researcher did not include the expertise variables of each member of the independent board of commissioners as a variable that affects the value of the Company. It is expected that further research can include another corporate governance variables such as the proportion of independent director and the expertise in accounting of independent director so that it can become a clearer reference for companies in determining board members who can provide value added to the company.