Influence Readability, Earning Management, Size, Information Asymmetry to Financial Risk

Abstract

Although investment provides high returns for investors, investors must be pay attention to the risks. After all, investments that ignore risk will lead to losses. Financial risk includes are number of common phenomena that affect the sustainability and financial health of the company. This study aims to understand the impact of Readibility of financial statement, Earning Management, Firm Size, and Information Asymetry on Financial Risk, based on existing literature. This study uses a quantitative explanatory approach with descriptive methodology using panel data analysis and the data used is secondary data. Readibility, Earnings Management, and Information Asymmetry are not significantly related to Financial Risk, because these factors are determined by financial analysis and professional auditors. Meanwhile, Firm Size has a positive impact on Financial Risk, because larger companies can also be more difficult to organize and control their operational activities, so it can lead to higher financial risk and vice versa. However, the lack of empirical literature creates conceptual, contextual, and empirical gaps. Future research should add qualitative approaches, such as in-depth interviews or case studies to explore the complex relationships between variables.