Digitalization Disclosure and Accounting Information Quality

Purpose – The quality of accounting information is a very important part for the company because it will have an impact on internal and external parties. However, in Indonesia this is still a problem, therefore this research was conducted to reduce this problem by making digitization as variable that can affect the quality of accounting information. Digitalization is able to increase transparency and accuracy through automation in the financial reporting process so that can support the quality of financial reporting.

Design/methodology/approach – The sample in this research are companies engaged in the food and beverage, textile, and chemical sectors which focus on these three sectors because they are in line with a development initiative called "Making Indonesia 4.0". Research on this topic is still in the exploratory stage. The hypothesis of this research was rejected because the measurement of digitization used in this research was measured through voluntary disclosures by companies in the company's annual report, where in this case not all companies implementing digitization disclose their digitalization efforts.

Findings – The results of this research analysis show that the application of digitalization in companies has not been maximized However, this study shows that the application of digitalization has a negative but insignificant effect on absolute discretionary accruals which describes the behavior of accrual earnings management.

Originality/value – Further research on the effect of digitalization disclosure on the quality of accounting information is still rare and is still in the exploratory stage and this research is also supported by the Indonesian government's initiatives in order to encourage the implementation of digitalization of Indonesian companies called "Making Indonesia 4.0" which is in line with this research.

Research limitations/implications – For further researchers, they can increase the number of samples, extend the year of observation, use other perspectives from the quality of accounting information and use other digitization measurements.