Trust in business is not merely a moral tool; it is the currency that determines the direction of capital flow. Investors do not only invest money, they also invest belief: that the numbers they place will eventually yield profit. However, this trust is fragile.
A single manipulated financial report or one board of directors neglecting governance principles can destroy a reputation built over years in just a matter of weeks.
Once the public loses trust, even the best financial statements lose their meaning. Investors no longer see numbers, they see the motives behind those numbers. This is what happens when a company fails to maintain integrity in governance and transparency.
In a market increasingly sensitive to ethics and sustainability, corporate governance and financial transparency are no longer administrative symbols of compliance, but moral indicators and measures of investment worthiness.
The Role of Corporate Governance in Maintaining Investor Trust
Investor confidence is not born solely from financial statements, but also from the assurance that the system behind them is tested and trustworthy. This is where corporate governance comes in—to ensure that business decisions are made with integrity and that shareholders’ interests are protected through transparent and accountable mechanisms.
The key principles of Good Corporate Governance (GCG)—transparency, accountability, responsibility, independence, and fairness—form the foundation of long-term corporate reputation. When oversight structures function effectively, risks of data manipulation and conflicts of interest can be minimized, sending a positive signal to investors that management operates based on governance, not mere intuition.
Modern investors now assess corporate quality through governance quality, not just returns. An active board of commissioners, an independent audit committee, and a culture of openness are now the indicators of trust. In a market demanding ever-greater transparency, good governance is no longer a legal obligation—it is a business strategy that strengthens corporate value.
Ultimately, strong GCG is not only about structure but about a culture of integrity. A company that dares to be honest about its risks will be trusted more than one that presents a perfect image. For investors, transparency is not a sign of weakness, but proof that a company is worthy of trust.
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Financial Reporting Transparency in Indonesia
In Indonesia, attention toward information disclosure has been increasing, driven both by regulation and by public expectations for greater corporate accountability.
New regulations from the Financial Services Authority (OJK) have strengthened reporting obligations, while investors demand more open and verifiable data. At the same time, public companies are beginning to build higher transparency standards, establishing a new benchmark for corporate governance at the national level.
Latest Regulations on Financial Reporting Transparency
The Indonesian government and financial regulators, particularly the Financial Services Authority (OJK), have introduced stricter transparency standards for financial reporting in recent years, especially in the banking sector.
One such step is OJK Regulation (POJK) No. 18 of 2025, which requires banks to publish reports containing material information, risk exposure, and financial positions accurately and comparably, effective starting February 2026. This regulation replaces the previous POJK 37/POJK.03/2019, aiming for bank financial statements to include material information, risk exposure, capital, and financial performance that are accurate, updated, and aligned with international best practices.
Additionally, electronic reporting for rural banks (BPR) and sharia rural banks (BPRS) is now regulated to enhance accuracy and public access to financial data. In the capital market, new policies such as SEOJK 10/2025 further strengthen transparency regarding ownership and share underwriting in publicly listed companies.
Investor and Public Demands for Data Transparency
Investors in Indonesia are now increasingly demanding that public companies provide financial statements that not only comply with accounting standards but are also transparent, relevant, and easily accessible. Trust becomes the key factor—when financial statements are perceived as vague or manipulative, investors may withdraw capital, reassess valuations, or even avoid investment altogether.
The public now also demands non-financial disclosures, such as sustainability reports, which most issuers on the Indonesia Stock Exchange (IDX) now produce. In essence, transparency has become a vital foundation for corporate reputation and long-term sustainability.
Benchmark Practices of Transparency Among Indonesian Public Companies
Several public companies in Indonesia—especially in the banking and energy sectors—serve as benchmarks for transparency practices. They not only report financial performance periodically but also publish sustainability reports integrated into their business strategies. The implementation of digital reporting through OJK and IDX systems has also enhanced data comparability and accessibility.
However, challenges remain in the consistency and depth of disclosed information, particularly among mid-sized non-financial companies. Nevertheless, the growing trend of higher reporting quality shows that transparency has now become both a measure of reputation and a source of corporate competitiveness.
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Negative Impacts of Inaccurate Financial Reporting
Accuracy in financial reporting is not merely an administrative requirement—it is the foundation of trust and legitimacy in the eyes of the public. When financial statements are inaccurate, the effects can extend to the company’s reputation, market value, and stability.
Risk of Losing Investor Confidence
Investors rely heavily on financial reports to assess a company’s health and growth potential. When data is proven inaccurate, market confidence plummets, often followed by a decline in stock prices and funding availability.
In the long term, loss of credibility may lead to capital flight, where investors withdraw funds and redirect them to competitors or other companies perceived as more transparent. In the domestic market, this can disrupt financial sector stability and reduce perceptions of national corporate integrity.
Potential Legal Sanctions and Reputational Damage
Inaccurate financial reporting can trigger legal sanctions from OJK, the Indonesia Stock Exchange (IDX), or other supervisory authorities. These sanctions may include administrative fines, market activity restrictions, or even license revocations for severe violations.
Beyond legal consequences, corporate reputation can be severely damaged in the eyes of the public, business partners, and employees. A single breach of accountability can go viral and cause long-term damage to the company’s image, making it far more difficult to restore trust than to maintain integrity from the beginning.
Ultimately, corporate governance and financial reporting transparency are not merely compliance instruments—they are moral and professional benchmarks for modern business.
In an increasingly ethics-sensitive market, investor trust is born from consistent integrity, not momentary image-building. Companies that maintain accurate information, responsible management, and openness to the public tend to gain a competitive edge that is difficult to match. In other words, corporate honesty has become the new currency for building reputation and long-term sustainability.
Arghajata Consulting is here to help companies strengthen market trust through the implementation of effective corporate governance and transparent financial reporting systems. With an analytical, best-practice-based approach, we assist clients in building financial foundations that are accurate, regulatory-compliant, and investor-trust-oriented.
Contact us for professional consultation on strengthening your company’s corporate governance and financial reporting systems.
