Indonesian Corporate Research Articles

Individual Corporations in Indonesia: Fostering Economic Growth and Fairness through Simplified Business Formation

In the pursuit of an organized and conducive business environment, the Indonesian government has ratified the Job Creation Law, introducing a legal concept of Individual Corporations for small and medium-sized entrepreneurs (UMK). This normative study employs a conceptual approach through Economic Analysis of Law, using primary, secondary, and non-legal materials to analyze the implications and orientation of this policy. The research findings suggest that the implementation of Individual Corporations, requiring only one founder or shareholder for establishment, leads to ease in creation and expansion of micro-small businesses, potentially impacting the ease of doing business index positively. This policy also fosters a proportionately growing, fair national economic structure, and is expected to enhance employment opportunities. The introduction of Individual Corporations represents a significant change in Indonesia's corporate law, aligning with national goals to improve investment conditions.Highlights:
 
 Introduction of Individual Corporations requiring only one founder simplifies business formation.
 Positive impact on the ease of doing business index and alignment with national investment goals.
 Fosterment of a proportionate, growing, and fair economic structure, enhancing employment opportunities.
 
 Keywords: Individual Corporations, Economic Growth, Small Entrepreneurs, Business Formation

Prophetic Business Orientation in Corporate Law Efforts to Incorporate Aspects of Divinity and Justice in Business Law


 
 
 
 
 
 
 
 This article explores the integration of prophetic business orientation, which combines religious and ethical values into corporate law, in the context of globalized modern economics. It employs a normative research methodology and legislative approach, analyzing the incorporation of values like transparency, ethics, and religious principles in Indonesian corporate law. The study reveals challenges related to legal uncertainty, corruption, unequal access to justice, and gender inequality in the workplace. Legal reforms and improved law enforcement are vital to promote ethical values and justice in contemporary business practices.
 Highlights:
 
 Ethics in Business: The study explores the concept of prophetic business orientation, emphasizing the integration of ethical and religious values into corporate law.
 Multi-Faceted Implementation: It highlights the diverse aspects involved in the implementation of prophetic business orientation, from transparency to environmental sustainability.
 Challenges and Necessity for Change: The research underscores the challenges, including legal uncertainty and corruption, and the need for legal reforms to promote ethical values and justice in modern business practices.
 
 Keywords: Prophetic Business Orientation, Corporate Law, Ethical Integration, Values in Business, Legal Reforms
 
 
 
 
 
 
 

Challenges and Prospects for Replacement Money in Addressing Corruption Crimes in the Indonesian Corporate World

Challenges and Prospects for Replacement Money in Addressing Corruption Crimes in the Indonesian Corporate World

Corporate Social Responsibility (CSR) Present for the Nation Program in Indonesia: Content Analysis on the Official Website of Four State-owned Corporations in Indonesia

The Corporate Social Responsibility (CSR) program’s design dynamics of creativity continue to evolve across concepts and goals. This design was made in response to the broader community’s growing interest and its larger contributions to the nation and state. This study focuses on how state defense values are the basis of CSR activities for the “State-owned Enterprises Present for the Nation” program in increasing nationalism in five own state corporations that actively participate in the program. On the official websites of the companies, a content analysis approach is applied as the study methodology. This study analyzes how CSR news makes the values of state defense the basis of CSR activities in increasing nationalism. A value analysis of how CSR activities are implemented and the ability to implement CSR is based on the country’s value of the essential elements of the defense. The purpose of this research is to search the concept of state defense values in CSR practices on five state-owned corporations. The data is processed and analyzed to determine the content of state defense value in the CSR implementation and practice that is used as the basis of CSR activities on state corporations in Indonesia.

Income Tax Cut and Firm Tax Avoidance

This study aims to examine the impact of Indonesian corporate income tax rate reduction on public companies’ tax avoidance. This study utilizes a quasi-experimental design with the difference-in-differences (DID) method to isolate the effect of corporate income tax rates changes on corporate tax avoidance behavior. Firms’ ownership structure is used to separate firms that are more likely to be affected by the tax law changes, thus representing the treatment group in the DID setting. Utilizing a sample of public companies listed on the Indonesia Stock Exchange in the 2019 and 2020 periods, this study finds that in the year preceding the tax rate reduction, firms with greater institutional ownership exercise higher tax avoidance compared to other firms. The differences, however, are not statistically significant, which may be caused by the short timespan between the policy announcement and tax filing period, limiting the time available for firms to adjust their tax avoidance behavior.
 Keywords: Tax Cut, Tax Avoidance, Institutional Investor

Unveiling the Legal Veil of Conglomerate-Owned Companies

Objective: This research seeks to comprehensively analyze the legal dimensions associated with conglomerates' management and oversight of their subsidiary companies. The study emphasizes the significance of adhering to established legal principles and frameworks in this context.
 
 Theoretical Framework: The term "conglomerate," as defined by the Big Indonesian Dictionary (KBBI), pertains to a prominent entrepreneur who possesses multiple companies or subsidiaries operating across diverse business sectors. These entities, while legally distinct, are consolidated into an integrated economic entity under the conglomerate's control. Conglomerates leverage their assets and existing companies to invest in other businesses through means such as establishing new entities, acquisitions, mergers, or spin-offs. This consolidation aims to achieve dividends, gain product/service control, and expand market share.
 
 Method: This study employs a normative legal research methodology to investigate conglomerates' legal aspects. The research approach involves scrutinizing legal rules, principles, and doctrines. It adopts a statutory approach by analyzing relevant legislation and regulations pertaining to conglomerates. Additionally, a conceptual approach is utilized to explore evolving perspectives within legal sciences. The research draws on primary, secondary, and tertiary legal sources, including legislation, official records, literature, expert opinions, and legal publications.
 
 Results and Conclusion: Conglomerates oversee distinct companies that form an integrated group, maintaining independent legal status. Professional management is upheld through separate Boards of Directors and Commissioners. Legal clarity and adherence to corporate law are emphasized to prevent liability. Amendments or new laws are needed in Indonesian Corporate Law to address conglomerate liability gaps.
 
 Originality/Value: This research contributes to the field by offering a comprehensive exploration of the legal intricacies associated with conglomerates and their subsidiary entities. It highlights the importance of adhering to legal frameworks and principles, providing insights into potential legal reforms necessary for effective conglomerate management and control.

Reconstruction of the Legal Policy Model Using the Multidoor Approach to Prevent Land Burning

This research aims to find an effective legal policy model for handling the criminal case of plantation land opening by fire, especially those carried out by corporations in Indonesia. Criminal law enforcement in these cases is not yet fully integrated. Thus, it requires the multidoor approach. The multidoor approach utilizes several criminal provisions to maximize all constitutional potentials and minimize failures starting from the investigation, prosecution, and punishment stages. This research was carried out by analyzing relevant legal principles, doctrines, rules, and norms. The constitution and courtly decisions were the main primary legal materials. This research shows that most plantation burning cases are not yet processed using the multidoor approach. Most of the prosecution’s indictments are prepared alternatively. They exclude the possibility of the cumulative application of other crimes as concurrent criminal acts (concursus). Based on the results, it was found that the multidoor approach needs to be reconstructed by strengthening the secretariat and the standard operating procedures in applying the multidoor approach that binds all law enforcement agencies. This crime has been classified as an environmental crime in the law, and it applies the premium remedium principle. The imposition of corporate criminal liability must be carried out maximally to prevent repeating the criminal acts that still frequently occur.

ISO 9001-2015: Compliance Audit of Quality Control Product Procedures

This research discusses compliance audits with the implementation of quality control Standard Operating Procedures based on ISO 9001:2015 at TEC Indonesia Corporation. The purpose of this study was to determine the level of employee compliance with the analysis based on ISO 9001:2015 in the Quality Control Product section. This research uses qualitative descriptive methods, and data collection is carried out through documentation techniques, document inspection, interviews, and direct observation at the research site. The results of this study stated the level of conformity and compliance with TEC Indonesia's quality control products with a percentage of 78.5% and a non-compliance rate of 21.5%. In this study, the author found three procedure discrepancies: the act of allowing the use, release, or acceptance through concessions by relevant parties and, if possible, by customers; the absence of review of discrepancies in products, including customer complaints; corrective actions within the company; and the absence of re-verification regarding the implementation of control documents as a corrective measure against non-conforming products.

Corporate Restructuring at One of The Energy Companies in Indonesia: Does it Have an Impact?

In 2021, one of Indonesia's state-owned enterprises (SOEs) in the energy sector, which is one of Indonesia's Fortune Global 500 companies, restructured and divided itself into six sub-holdings with distinct business segments. The company's corporate restructuring mechanism is financial and portfolio restructuring. Large corporations in Indonesia rarely engage in these corporate actions. Consequently, it is intriguing that this research examines the impacts of corporate restructuring. This study seeks to investigate the restructuring’s motives and the impacts of corporate reorganization on a company's performance, as well as its effect on the company's external environment. The authors utilized a qualitative approach with an explanatory case study to accomplish the research objectives. Individual depth interviews (IDI) are used to acquire data from multiple informants who represent shareholders, internal holding companies, and sub holding companies. This study provides an alternative assessment of the impacts of corporate reorganization so that both the company and the government can formulate future decision-making strategies. Most of the prior research on corporate restructuring employed an empirical quantitative technique approach, which involved analyzing data from a variety of companies and industries, so the results of the prior study lack comprehensive information.

Yield to maturity determinants in Indonesia corporate bonds with leverage as moderating variable

The capital market is a forum for companies to sell shares and bonds in the hope of obtaining additional funds raised from the proceeds of selling part ownership of the company or issuing debt securities. The long-term market or commonly called the capital market has a variety of instruments that can be considered for investors. Furthermore, the purpose of this study is to analyze the important determinants which can have an impact on the yield to maturity of company obligations in Indonesia by placing leverage variable as a moderation variable. The data in this study was obtained from 25 company bonds as a sample of the total population of 59 corporate bonds in industrial sector which were further tested with panel data analysis techniques. It made the total data of 75 with 3 years of research duration. This study found that profitability, leverage and company size influenced the yield to maturity of company bonds in Indonesia. otherwise, bond ratings were found to have no effect. Subsequent findings suggest the role of leverage as a moderation variable. In addition, the end of this part of the study presents practical and academic advice as a form of researcher contribution, to invest in corporate bonds with higher degree of profitability, leverage and company size.

Board Diversity and Government Link Company Performance: the Case of Emerning Country

The importance of board diversity to improve company performance has been documented by previous researhers. However, prior research failed to emphasise government link company. Therefore, this paper investigates the effect board diversity on performance of government link company in Indonesia. We use the supervisory board diversity since we have two tier Board in Indonesia corporate governance system. In addition, Board Diversity composed of four: tenure, age educational and gender diversity. The data is collected from the annual report and financial statement of the company. This kind of data was taken from Indonesia’s stock exchange website, company sites and other electronic sources. Board diversity is measured by Blau Index and firm performance is measured by four proxies: accounting performance (ROA and ROE), and market performance (Stock return and Tobin’s Q). The multiple regression analysis is applied to analyze the data. this study reveals that there is no effect of the board diversity on performance of government link company except board gender diversity for Tobin’s Q model. In addition, one control variable (company leverage) consistently for all models has a significant effect on company performance. This study has practical and theoretical implications, and it has been discussed in the paper. We suggest to the future investigator to add the research samples and consider other board diversity as factors affecting performance.

Making Investment Decisions on Shares of Bank Syarī’ah Indonesia Company with Price to Book Value (PBV) Approach

This research was conducted to determine the fundamental condition of Bank Syarī’ah Indonesia company in making investment decisions in Bank Syarī’ah Indonesia company (issuer code: BRIS). This research uses a quantitative method with a Price Book Value (Pbv) approach. The data used in this study is secondary data obtained from the Indopremier Securities, Stockbit Securities, and RTI Business applications, which originate from the annual reports of Bank Syarī’ah Indonesia companies for the 2018-2022 period, to be precise in the 3rd Quarter of 2022. The fundamental analysis forms by looking at the profile and the company's prospects, then analyzing the company's performance through the company's financial statements from 2018 to 2022. Fundamental analysis is also carried out by comparing the performance of Bank Syarī’ah Indonesia company with competitors in shares of the Syarī’ah financial sector, namely BTPN Syarī’ah (issuer code: BTPS) and Bank Aladin Syarī’ah (issuer code: BANK). Activities are carried out by calculating the intrinsic value or fair price of Bank Syarī’ah Indonesia shares using the PBV approach and completing investment decisions. The study found that Bank Syarī’ah Indonesia's corporate performance is good. The company's fundamental condition is also good, and its stock valuation is undervalued; based on these two analyses, Bank Syarī’ah Indonesia's shares are worth buying.

The Climate Change Litigation Based Human Rights Approach in Corporations: Prospects and Challenges

In recent years, the phenomenon of climate change has emerged as a critical global issue that poses a significant threat to human survival. Industries such as fossil fuels, manufacturing, and agriculture have been identified as major sources of greenhouse gas emissions. Corporate activities have played a role in triggering legal actions holding them accountable for their contribution to climate change. Therefore, this research analyses the prospects and challenges of climate change litigation against corporations in Indonesia using human rights approach. This research has adopted normative legal research with a statutory and historical approach. Descriptive analysis is applied to analyze the data. This paper reveals that the use of human rights approach can strengthen arguments against corporations over climate change. This paper concludes that despite the challenge that may arise, there is a big chance for successful climate change litigation against corporations in Indonesia by using human rights approach as the main claim.

Analisis Rasio Keuangan Perusahaan Telekomunikasi yang Terdaftar di Bursa Efek Indonesia (BEI) pada Tahun 2016–2020

In today’s modern era, the development of telecommunications in Indonesia is experiencing very rapid development. For the development of the telecommunications industry in Indonesia, technology has a very vital role. This is because the development of telecommunications always follows the existing technology. Purpose: This examine goals to determine the monetary performance of telecommunications corporations in Indonesia, namely PT. Telekomunikasi Indonesia Tbk, PT. Indosat Tbk, PT. XL Axiata Tbk, PT. Smartfren Telecom Tbk in 2016 – 2020 in terms of 4 financial ratios, specifically liquidity, solvency, activity, and profitability. Methodology: Data analysis in this study uses data from the financial reports of four telecommunications companies listed on the Indonesia Stock Exchange. The research method uses by researchers is a descriptive quantitative methode. Results: The results of this study have a look 1) Liquidity ratio evaluation the use of the fast ratio indicates that the 4 telecommunications organizations are in destructive situation, 2) Solvability evaluation the use of the debt to asset ratio indicates that the economic overall performance of the four businesses is in adverse circumstance, 3) activity ratio analysis using overall asset turnover suggests the overall performance of the four organizations in adverse circumstance, 4) Profitability ratio evaluation the use of return on funding suggests that the 4 businesses have bad financial overall performance.

Analysis of Law Enforcement Problems Related to Crime of Environmental Degradation Caused by Corporations in Indonesia

Corporations are part of industrialization that destroys the environment. Air pollution has damaged the environment. Criminal action against corporations for destroying the environment must provide a sense of justice. This study intends to examine the obstacles in handling corporate crime, which cause environmental damage, and how to deal with a corporate crime based on the value of justice. In this research, a philosophical approach was taken, namely the study of a case in terms of the ideal in the future. The study results found that there were obstacles in handling criminal cases of environmental destruction, such as those related to regional policies on investment, strong backing, and compensation, which then eliminated criminal cases. The Environmental Law regulates corporations' handling of criminal acts of environmental destruction. Accountability, in this case, is carried out by the business entity and the person in charge of the business entity. A crime can be applied to the management and owner of a corporation as a business entity. An offence is needed for corporations destroying the environment based on justice.

CORPORATE SOCIAL RESPONSIBILITY IN INDONESIA LAW AND LEGAL VALIDITY

The study, a continuation of earlier studies, examines in-depth the primary principles governing the operation of Indonesia's CSR through corporate law as well as the CSR law's credibility from a different angle that has not received much attention. This paper attempts to assess Indonesia's corporate social responsibility statute. It is utilized to develop an analysis as demonstrated in this work through the study of different research documents and literature. To fully explain the company's CSR from a legal standpoint, the data is gathered and then examined. The findings of this investigation show unequivocally that businesses in Indonesia develop their own CSR strategies based on a knowledge of CSR guidelines.

Does diversity in supervisory boards affect profitability and corporate social responsibility?

AbstractThis study analyses how individuals who bring diversity to the membership of supervisory boards (IDSBs) affect profitability and corporate social responsibility (CSR) by looking at their human capital, tokenistic leadership potential, and tendencies. IDSBs are females, younger people, those with PhDs, accounting experts, and foreign members. Their effect will be interpreted by utilizing resource dependence theory and tokenism theory. Additionally, their counterparts, namely board members who are male, older, who do not have PhDs, are not accounting experts, and are local nationals, were also examined. Indonesian corporations from 2017 to 2020 were analyzed using panel data. The proportion and number of IDSBs were classified as token leaders. Despite their rarity, female supervisory board members increased profitability. CSR was, however, negatively affected by women, accounting experts, and foreigners serving on supervisory boards due to their role as tokenistic leaders. Additionally, supervisory board members who are younger, have PhDs, and are accounting experts contributed to a drop in profitability. Surprisingly, supervisory board members who are younger (older) and have PhDs (non‐PhDs) did not yield empirical evidence regarding CSR, so it is beyond the scope of the perspective on tokenism. Finally, foreign board members increased profitability but this is limited to firm value.

Multinational Corporate Tax Avoidance in Indonesia

Purpose: This study aims to examine and analyze the effect of foreign ownership, foreign directors, transfer pricing, and multinational corporation on tax avoidance.
 
 Design/methodology/approach: The population of this study is multinational corporations listed on the Indonesia Stock Exchange for the period 2016-2019. Using the purposive sampling technique, the sample obtained according to the criteria is 280 observations. Data analysis was using eviews 9 software based on panel data.
 
 Findings: The results showed that foreign ownership had no significant effect on tax avoidance. Furthermore, foreign directors have no significant effect on tax avoidance. Likewise, transfer pricing as a proxy for related parties transactions also has no significant effect on tax avoidance. In contrast, the multinational corporation positively and significantly affects tax avoidance.
 
 Research, Practical & Social implications: Foreign ownership, foreign director, and transfer pricing become the primary basis factors for tax avoidance of multinational corporations in Indonesia.
 
 Originality/value: This study provides an academic contribution regarding the factors that influence tax avoidance by multinational corporations.

Determinasi Triple Bottom Line Disclosure Terhadap Nilai Perusahaan dengan Profitabilitas dan Volatilitas Arus Kas Sebagai Pemoderasi dan Ukuran Perusahaan Sebagai Variabel Kontrol

This study aims to examine the effect of The Triple Bottom Line (TBL) on firm value moderated by profitability and cash flow volatility. The two moderaing variables are controlled by firm size as a control variable. The sample was taken using a purposive sampling technique and the sample obtained was 43 companies that won Indonesia Corporate Social Responsibility Awards (ICSRA) 2021. This study used Moderated Regression Analysis (MRA). The result show that The Triple Bottom Line (TBL) and cash flow volatility have no effect on the value of the Indonesia Corporate Social Responsibility Awards (ICSRA) 2021. Meanwhile, profitability has a negative effect on firm value. In term of moderation, its is found that profitability is proven to be able to strengthen the relationship between the Triple Bottom Line (TBL) and firm value. Meanwhile, cash flow volatility was not able to strenghthen the relationship between the Triple Bottom Line (TBL) and firm value.

Determinants of corporate governance compliance: what matters and what does not?

PurposeThe objective of this study is to assess the level of corporate governance (CG) compliance and identify determinants of high compliance in Indonesian publicly listed corporations including family and nonfamily firms. The country uses a voluntary disclosure approach to enforce its regulations; thus, it is important to identify the factors affecting compliance.Design/methodology/approachEmploying a logistic regression model, this paper analyzes the CG index of high-compliance vs. poor-compliance companies and emphasizes factors that contribute to better governance compliance. The CG index of high-compliant firms is almost twice as high as that of low-compliant firms.FindingsThe study explores factors that contribute to high CG in an emerging market like Indonesian corporations. The study's findings indicate that family-owned businesses predominate in the low-compliance group. High-compliance firms are older and larger with higher financial performance, free float and leverage, as well as a positive influence of the founder's great leadership. The results support theoretical arguments that concentrated ownership and excessive majority shareholder control are key factors in determining the likelihood of good governance practices by firms. Hence, the market and regulators should devise effective strategies to encourage and reward high compliance.Research limitations/implicationsThe findings of the research offer several implications for the academic community and policymakers. Improving CG at the firm level is a viable goal, even though the agenda to reform minority investor protection laws and increase judicial quality is challenging and may take a long time to show significant results. Moreover, this study has some limitations that could be addressed in future research. The study focuses on a single-country setting, Indonesia. There are cultural aspects and governance settings that may be unique in the Indonesian context, which may limit the applicability of the findings to other countries with their own cultural settings and institutional legal framework.Originality/valueThe study investigates the factors that influence high governance compliance in specific CG regulations designed for the emerging Indonesian market. The study also discovers evidence that the crisis period has a favorable impact on the firm's decision to comply with governance provisions.