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that this research is not only to see the level of accountability disclosure but also to see the influence of financial performance to the index. Moreover, the
disclosure index used in this research is LGA that based on SAP has been modified. The index becomes dependent variable that reflects the quality of
accountability disclosure, while financial information reflected in financial performance ratios becomes independent variable that influences the dependent
variable. Based on SAP, reporting entity has a responsibility to report all the activity they’ve done complete with the result of those activity on a systematically
and structurally realization activities in certain period of time to show the accountability, to ease the management, to show the transparency and to make
intergenerational equity Keseimbangan Antar generasi of the government. Therefore, the research is focusing on disclosure study to see accountability of the
government institution as an impact of diversification issue in Indonesia. The research title is “The Influence of Financial Performance to the Level of
Accountability Disclosure of Indonesia’s Local Government”.
B. Research Questions
The questions appear in the research are about:
1.
To what extent profitability ratios ROA, ROE, PM influence the level of accountability disclosure of Indonesia’s local government
?
2. To what extent liquidity ratio CR influence the level of accountability disclosure of Indonesia’s local government?
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3. To what extent capital structure ratios DER, LTTA influence the level of accountability disclosure of Indonesia’s local government?
4. To what extent efficiency ratios AT, OROE, ORTR influence the level of accountability disclosure of Indonesia’s local government?
C. Research Objectives
Research about financial performance in conducting to see its influence in the level of accountability disclosure in Indonesia has an objective to find
empirical evidence: 1. Whether profitability ratios ROA, ROE, PM influence the level of
accountability disclosure of Indonesia’s local government. 2. Whether liquidity ratio CR influence the level of accountability
disclosure of Indonesia’s local government. 3. Whether capital structure ratios DER, LTTA influence the level of
accountability disclosure of Indonesia’s local government. 4. Whether efficiency ratios AT, ORTR, OROE influence the level of
accountability disclosure of Indonesia’s local government.
D. Research Contribution
The research result hopefully can give mutual benefit to people such as: 1. Indonesia Government
Hopefully the research result will contribute to the Indonesia’s government in implementing government accounting based on accrual accounting system and
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by giving empirical evidence related to how much information should be disclosed as a form of government accountability.
2. Society Society individually or as represented with DPRDPRD will get the
information of local government nation financial usage through publicly published financial statement so that the nation finance is controllable.
3. Standard Setter The research can be used as basic information in arranging government
accounting standard focusing on mandatory disclosure of local government financial statement so that the objective of reporting financial statement to give
relevant information to its user is accomplished so that the government accountability is met.
4. Funding, investment and donation institution The research can be useful as a basic information in economical in decision
making related to investment, donation and funding especially related to financial and non-financial information and its disclosure that is made by the
government to assure the institution about government financial performance. 5. Future Research
The research can be useful as a reference in doing the next research related to disclosure studies especially disclosure research of governmental financial
statement.
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CHAPTER 2 LITERATURE REVIEW
