Abstract
This study aims to examine the factors that affecting corruption in Indonesia local governments. The sample used in this study consist of 225 Indonesian local governments. This study uses secondary data obtained from the Financial Audit Board (BPK) and Provincial Government’s Financial Report (LKPD) from 2010-2014 period along with composition data that's obtained from the Regional House of Representatives (DPRD) in Indonesia. Data analysis were performed using regression analysis. The results of the analysis show that corporate governance proxied with the composition of DPRDs that do not coalesce with the government, compared with the total DPRD has a significant effect on the corruption of local governments in Indonesia. The results of the analysis also show that the Regional Financial Information System (SIKD) has no effect on the corruption of local government. The control variables used in this study include the government's internal control system (weaknesses of accounting and reporting controls, weaknesses of controlling the execution of the budget and the weakness of the internal control structure) and the characteristics of local government (size of local government, asset, and balanced funds).
Highlights
Corruption is a problem that can enter into a system, institution or a country and have an impacts on creating an ineffective government system (Langseth, 1999; Lintjer, 2000; Rose-Ackerman, 1999; Jain, 2001; Schneider, 2007; World Bank, 2005; Lange, 2008; Kaptein, 2011; dela Rama, 2012)
According to Dami (2016), an example of poor local governance occurs in Banten province, this is reflected in the opinion of the Financial Audit Board (BPK) towards the Provincial Government's Financial Report (LKPD) for two consecutive years got predicated as the disclaimer
This study concludes that corporate governance negatively affects the corruption of local government in Indonesia, the higher the corporate governance the corruption of local government in Indonesia will tend to decrease
Summary
Corruption is a problem that can enter into a system, institution or a country and have an impacts on creating an ineffective government system (Langseth, 1999; Lintjer, 2000; Rose-Ackerman, 1999; Jain, 2001; Schneider, 2007; World Bank, 2005; Lange, 2008; Kaptein, 2011; dela Rama, 2012). Acts of corruption are committed by the government elite but it includes almost all the elements of state organizers (Caesar et al, 2016). Corruption problem can occur due to poor corporate governances which performed by the government state apparatus (Black et al, 2000; Monteduro et al, 2016). According to Jensen & Meckling (1976), corporate governance encompasses overall mechanisms and controls to ensure that the leadership acts are in accordance with the interests of the stakeholders, whereas according to Caesar et al (2016) a conduct of poor local governance has an impact on corruption and poverty. According to Dami (2016), an example of poor local governance occurs in Banten province, this is reflected in the opinion of the Financial Audit Board (BPK) towards the Provincial Government's Financial Report (LKPD) for two consecutive years got predicated as the disclaimer
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