Research Framework LITERATURE REVIEW

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F. Research Framework

From the hypotheses gathered above, research framework can be set as seen as the figure 1 below: Figure 1 Research Framework Local government financial reporting is a means to account for financial management by local governments in the stakeholder. Financial statements should be reported as a form of local government accountability related to financial performance within a period or one year. Financial performance information is expressed in the financial statements can be used by users of financial statements in making economic decisions as mentioned in government accounting standard. This study aims to test the influence of financial performance with financial ratios represented in Profitability ratio measured by Return on Equity ROE, Return on Assets ROA, Profit Margin PM. Liquidity ratio measuring Independent Variables : Dependent Variable : Quality of Accountability Disclosure Profitability Ratios Liquidity Ratios Capital Structure Ratios Efficiency Ratios Control Variable : Size 38 with the current ratio CR. Capital structure ratio measured with the Debt to Equity DER, Long Term Liabilities to Assets LTTA. Efficiency ratio measured with Assets Turnover AT, Operating Revenues to Total Revenues ORTR, Operating Revenues to Operating Expenses OROE as used by Cohen 2006 to the level of disclosure of accountability in local government financial reports in Indonesia. The level of disclosure accountability of local government financial reports in this study using the LGA index used in the study Ryan et al. 2002, which has been modified due to Indonesia’s standard, rules and environment. Tetclock 1984 defined accountability as a form of psychological impulse that makes someone trying to account for all actions and decisions taken to the environment. Disclosure means supplying information in the financial statements, including the statements themselves, the notes to the statements, and the supplementary disclosures associated with the statements. 39 CHAPTER 3 RESEARCH METHODS Chapter 3 describes the research methodology which research design; population, sample and sampling techniques; data and data resources; definition and variable measurement and data analysis method is included in the description of this chapter.

A. Research Design