SINGARAJA — Transparent risk disclosure and consistent dividend payouts have proven to be the primary drivers in dampening stock price volatility within the banking sector on the Indonesia Stock Exchange. Recent research conducted by Kadek Yoga Suartika from Ganesha University of Education and I Kadek Jonh Stiawan from Markandeya University reveals that the capital market responds more actively to information carrying direct economic relevance than to routine corporate governance reporting. The study also highlights that an unqualified audit opinion successfully reinforces the positive market signals generated by dividend policy to maintain stock stability.
The background of this study stems from the high sensitivity of the Indonesian capital market to domestic and global economic dynamics, as reflected in the fluctuations of the Indonesia Composite Index between 2020 and 2024. The banking sector was selected as the focal point due to its dominant share of total market capitalization and its vital role in anchoring national financial stability. Given the complex risk exposure and strict regulations governing commercial banks, investors constantly seek highly credible information signals to mitigate uncertainty and reduce investment risks.
The research methodology applied a quantitative approach with an associative design, examining ten listed commercial banks that consistently distributed dividends on the Indonesia Stock Exchange from 2020 to 2024. Secondary data collected from annual reports, sustainability disclosures, and stock price movements were analyzed using panel data regression and Moderated Regression Analysis executed via STATA software. The researchers evaluated governance, risk, and compliance disclosures as distinct independent variables to capture specific market reactions.
The empirical results demonstrate that risk disclosure and dividend policy exert a statistically significant negative effect on stock price volatility. Greater transparency in communicating corporate risk profiles and higher dividend payout ratios lead directly to reduced stock price fluctuations in the market. In contrast, governance disclosure and compliance disclosure showed no significant impact on stock price volatility, as investors largely view normative regulatory compliance as standard reporting obligations rather than incremental market information.
The moderation analysis confirms that an audit opinion does not serve as a universal enhancer for all forms of corporate disclosures. An audit opinion failed to moderate the effects of governance, risk, or compliance disclosures on stock price volatility. However, an unqualified audit opinion significantly strengthened the negative relationship between dividend policy and stock price volatility. The combination of dividend distributions providing tangible economic returns and an independent audit opinion verifying financial accuracy creates a highly credible signal for market participants.
The implications of this research offer valuable insights for corporate executives, institutional investors, and market regulators. Banking executives are encouraged to enhance the substantive quality of risk disclosures and sustain stable dividend payouts to bolster investor confidence. For investors, risk transparency and dividend policies validated by clean audit opinions represent critical benchmarks for evaluating stock price stability prior to making capital market allocations.
Author Profiles
Kadek Yoga Suartika, Ganesha University of Education
I Kadek Jonh Stiawan, Markandeya University
Research Source
Article Title: Can Audit Opinion Change the Transparency-Volatility Link? GRC Disclosure and Dividend Policy
Journal Name: East Asian Journal of Multidisciplinary Research (EAJMR)
Publication Year: 2026
DOI: https://doi.org/10.55927/eajmr.v5i9.311
Official URL: https://journaleajmr.my.id/index.php/eajmr
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