Public Companies In Indonesia Research Articles

THE INFLUENCE OF PRESENCE OF FEMALE IN BOARD OF DIRECTORS AND AUDIT COMMITTEE TOWARDS FINANCIAL PERFORMANCE: EVIDENCE FROM INDONESIAN PUBLIC COMPANIES

<p><strong>Background: </strong> Diversity on corporate boards and strong audit committees are essential for good corporate governance, and promoting gender diversity, particularly increasing the number of women on boards, has been proven to enhance overall business performance.</p><p><strong>Objective</strong>: This study aims to investigate whether the presence of women in the board of directors and audit committee affects the financial performance of Indonesian public companies listed on the Indonesia Stock Exchange (IDX). The study uses a purposive sampling method to select 670 companies from financial statements listed on IDX from 2019 to 2021, excluding the financial industry.</p><p><strong>Research Method</strong>: The study employed multiple linear regression analysis with a fixed effect model and an ordinary least square (OLS) model to assess ROA and PER. Recognizing the presence of heteroskedasticity and autocorrelation issues, the regression was adjusted using Robust Standard Error for standardization.</p><p><strong>Research Result</strong>: This study shows that having women on the board of directors positively influences Return on Assets (ROA) and negatively influences Price-to-Earnings Ratio (PER). Although the study did not find a significant influence of women on the audit committee, it suggests that the presence of women on boards of directors can potentially improve companies' financial performance.</p><p><strong>Research Originality/Novelty</strong>: The authors emphasize that their study fills a gap in the literature by examining the impact of female presence in board of directors and audit committees on financial performance in Indonesian public companies.</p>

Cost of Equity Pre and During Covid-19 Outbreak: Environmental, Social, and Governance Performance in Indonesia

This study examines the influence of Environmental, Social, and Governance (ESG) performance on the cost of equity (COE), prior to and during the COVID-19 period. This study analyses 65 Indonesian public companies in the non-banking and financial sectors that disclosed all ESG information in 2019 and 2020. 2019 is taken as the pre-COVID-19 period, while 2020 is the year during COVID-19. The results reveal that ESG performance is favorable in lowering the COE. However, the effect of ESG performance on COE decreased during COVID-19, such that it was ineffective in mitigating the negative impacts of COVID-19 on the COE. The disclosure of ESG includes the firm’s endeavors to be transparent to its stakeholders, thereby mitigating information asymmetry. The ability of companies to manage information asymmetry is substantial during high-uncertainty periods, such as the COVID-19 pandemic in 2020. However, this study is limited to Indonesian companies. As emerging markets, countries with characteristics similar to Indonesia may benefit from this study.

Analysis of Key Audit Matters Disclosures in Financial Reporting: The First Evidence from Indonesia

The aim of this study is to explore the first year of Key Audit Matters (KAMs) disclosure in Indonesia, which has been fully adopted since 2022. The research reports on matters published in 806 statutory audit reports of listed companies in 2022. This study provides the first description of KAMs disclosure by Indonesian public companies. The findings suggest that the most common KAM disclosures are related to "allowance for doubtful debt," "revenue (excluding fraud)," "valuation of inventories," "fixed assets (including depreciation)," and "property valuation." The study found differences between Big-4 auditors and non-Big-4 auditors concerning the average number of KAMs disclosed

Corporate Cash Holdings and Investment Efficiency: Do Women Directors and Financial Crisis Matter?

This study investigates the relationship between corporate cash holdings and investment efficiency, with a focus on how COVID-19 and the presence of women directors may influence this relationship. Using data from Indonesian public companies during the COVID-19 period, comprising 2350 firm-year observations, we employ fixed-effect regression models with industry and year controls to test our hypotheses. Robustness and endogeneity tests are conducted to ensure the reliability of our findings. Our research reveals that companies with larger cash reserves tend to experience decreased investment efficiency during the COVID-19 crisis. Moreover, the negative impact of substantial cash reserves on investment efficiency is exacerbated by the presence of female directors on the board. However, our findings also suggest that female directors can mitigate the adverse effects of excessive cash reserves on a company’s investment efficiency, particularly during unforeseen economic challenges such as the pandemic.

ANALYSIS OF THE IMPACT OF MERGERS AND ACQUISITIONS ON THE VALUE OF FINANCIAL SYNERGY

This study analyzes how mergers and acquisitions affect financial synergy in Indonesian public and state-owned companies. Using metrics like profitability, efficiency, liquidity, solvency, and funding capacity, it examines one year before and five years after these transactions, based on data from 84 firms (2005-2015, financial reports spanning 2004-2020). The Wilcoxon signed rank test calculates pre- and post-merger averages. Findings show decreased capital costs (debt, equity, weighted average) but also reduced profitability (ROIC) and efficiency (TAT). Stakeholders should focus on enhancing financial synergy by boosting funding capacity and planning to improve profitability, efficiency, solvency, and liquidity. Future research should specifically measure the incremental financial synergy value post-transaction and the value generated from operational synergy.

Human resources accounting optimization: A conceptual pathway to improve financial performance

This research discussed HRA’s impact on a company’s financial performance. Human Resource Accounting (HRA) is measured by using 16 indicators, while financial performance uses 4 indicators, which consist of return on assets (ROA), return on equity (ROE), firm size, and leverage ratio. The analytical method used is binary logistic regression. The result shows that none of the HRA indicators affect ROA, while the other three are still affected by HRA indicators. Employment report indicators and other employee benefits in HRA indexes significantly affect ROE. Human resource policy, human resource development fund, and superannuation fund affect firm size the most. The last leverage ratio is significantly affected by human resource policy. This research has implications for manufacturing companies to increase information transparency for investors in the capital market through the sustainability disclosure of periodical HRA reports. Meanwhile, it is recommended that the government take action to encourage HRA disclosure for public companies in Indonesia by making the standards and regulations needed.

Implementation Strategy Of Good Corporate Governance In Public Companies In Indonesia

It is crucial for public companies in Indonesia to implement Good Corporate Governance (GCG) in order to improve corporate performance, transparency, and accountability. Nevertheless, the implementation of GCG continues to encounter a variety of obstacles and challenges. The objective of this investigation is to evaluate the efficacy of GCG implementation strategies in Indonesian public companies. The qualitative research methodology employed employs data collection methods such as literature studies, surveys, and interviews with practitioners and regulators. At the corporate level, the study's findings indicate that GCG implementation strategies include the establishment of a robust governance structure, the development of suitable policies and procedures, and the enhancement of the responsibilities of the board of commissioners and directors. At the external level, strategies encompass the involvement of stakeholders, the crafting of supportive regulations by regulators and the government, and the provision of education and training to all parties. This study also examines the supporting and inhibiting factors of GCG implementation and offers suggestions to enhance the efficacy of GCG implementation in public companies in Indonesia.

The impact of it governance on audit outcomes and footnote readability for public companies in Indonesia

This study explores the relationship between IT governance and audit outcomes, including audit costs, quality, report lag, opinions, and the readability of financial statement footnotes in Indonesian public companies. Utilizing regression analysis, the research finds that while IT governance does not significantly affect audit costs, report lag, or opinions, it positively influences audit quality. Contrary to expectations, higher IT capabilities do not lead to increased audit costs but reduce them by lowering audit efforts. Furthermore, IT governance does not notably impact footnote readability, potentially due to information overload in annual reports. These findings shed light on the importance of IT governance in shaping audit quality and provide valuable insights for stakeholders in Indonesian public companies. Further research is encouraged to explore these relationships in different contexts and industries.

Language and business: Patterns in the annual report translations of public companies in Indonesia

The economic benefits of English proficiency and the pervasive use of English in business communications have increased the demand to translate business texts. As a part of the business text genre, an annual report is translated into English as a form of information disclosure for foreign investors of a public company in Indonesia. This study aims to explore translation patterns in annual reports from Indonesian to English using Catford’s classification of translation shifts and Becher’s classification of explicitations and implicitations. This research employed a mixed-method approach with both qualitative and quantitative analyses. The data sources were six annual reports of Indonesian public companies in three sectors (financial, non-cyclical consumer, and energy) obtained from each company’s official website. By applying qualitative and quantitative approaches, the analyses reveal patterns of annual report translation. The findings of this study indicate that there were significant differences between annual reports in various sectors, as evidenced by the chi-square test result (X2(4, N = 138) = 20.21, p .001) and by variations in how translation shifts are used. Patterns in translating annual reports from Indonesian to English were identified, namely the use of explicitations and implicitations in interactional, cohesive, and denotational manners through translation shifts. The results of this study suggest that annual report translation was made possible through shifts involving changes in syntactic structure and the choice of information to be added, omitted, or substituted.

Profitability and Market Value Effect on Carbon Emission Disclosures: The Moderating Role of Environmental Performance

Climate change is an issue that is of concern to the global public and scientific community. There is a close relationship between climate change and carbon emissions, which are the primary cause of global warming. Reporting on carbon emissions is essential for corporate accountability to stakeholders when evaluating a company's financial and non-financial performance. Good management of carbon emissions will enhance the company's reputation. This study analyses the impact of company profitability and market value on the disclosure of carbon emissions, with environmental performance serving as a moderating variable in the context of Indonesian public companies. This study concludes that: (1) There is no significant impact on profitability, as measured by Return on Assets, on Carbon Emission Disclosure; (2) The study finds that there is a statistically significant positive relationship between market value, measured by Tobin's Q, and the level of carbon emission disclosure. This relationship is significant at a 5% significance level; (3) The moderating effect of environmental performance on the relationship between profitability, as measured by return on assets, and carbon emission disclosure is found to be insignificant; (4) The significance level of 10% indicates that the relationship between environmental performance, as a measure of a company's environmental practices, and market value, as represented by Tobin's Q, is strengthened concerning the disclosure of carbon emissions. This research can contribute to developing accounting knowledge to close gaps in the body of knowledge regarding the disclosure of carbon emissions in developing nations, particularly Indonesia.

Controlling Function of Corporate Governance to The Relevance of Accounting Earnings Information

The relevance of accounting earnings information is needed to help users of financial statements to make a decision. This research intends to expand previous empirical studies by examining more comprehensive corporate governance variables, which are the proportion of audit committees and commissioners, the role of financial accounting experts in the audit committee, and ownership structure to increase the relevance of accounting earnings information. The aim of this research is to examine whether controlling function held by the company in order to perform good corporate governance can affect to the informativeness of accounting earnings in Indonesia. This research method uses Pooled Least Square (PLS) with total sample 327 firm-year observations of Indonesian public companies from 2017 to 2019. The result shows that the existence of effective controling function by multiple large shareholder, accounting expert, audit committee, and board size can increase the relevance of earnings information that rely on financial statement. This research findings could be as an additional literature in financial accounting and corporate governance area, and also for practitioners in manufacturing company in Indonesia that if a firm has good controlling function, it can provide relevant information about earnings to shareholders.

Does the gender diversity of the Board of Commissioners, Family Ownership, and Institutional Ownership Reduce the Likelihood of Financial Distress During COvid-19?

The purpose of this study is to investigate the effect of the gender diversity of the board of commissioners, family ownership, and institutional ownership on the possible financial distress of Indonesian public manufacturing companies during the COVID-19 pandemic and non-pandemic periods. This study uses logistic regression panel data to determine the effect of the three aspects of Corporate Governance (CG) studied on financial distress. A total of 648 company-year observations from 108 companies during the period 2017-2022 were used in the analysis. Research findings indicate that in non-pandemic periods, family ownership has a positive effect on financial distress, but the positive effect decreases during pandemic periods. Institutional ownership has a negative influence in the non-pandemic period and that influence has not changed during the pandemic period. Meanwhile, the gender diversity of the board of commissioners does not affect financial distress in either the pandemic period or the non-pandemic period. This report provides insights for company management and regulators in developing CG mechanisms, especially related to the board of commissioners' gender diversity, family ownership, and institutional ownership.

Female Representative in Audit Committee and Audit Fees: Evidence from Indonesia

This research is motivated by the conflicting results of literature discusses on gender in the audit committee on audit fees in Indonesia. The purpose of this study is to analyze the effect of the presence of females on the audit committee on audit fees using the context of Indonesian companies. In addition, this study also discusses the positive relationship on the presence of females in audit committee that strengthens firm inherent situational factors (firm complexity and risk) on audit fees using the Ordinary Least Square (OLS) model. The sample consists of public companies in Indonesia and listed on the Indonesia Stock Exchange (IDX) in the period 2019, 2020 or 2021. The results showed that there was no significant effect of the presence of females on the audit committee on audit fees in Indonesia that can be caused by female characteristics that have converged with male’s characteristics. Thus, females on the audit committee will have the same effect as men in the audit committee. This study contributes to the literature by providing new evidence regarding the relationship of female presence on audit committees to audit fees.

Exploring how good corporate governance shapes financial performance

This research aims to comprehensively investigate the impact of Sharia Supervisory Board, Board of Commissioners, Board of Directors, and Audit Committee on the financial performance of Islamic banks in Indonesia through a literature review approach. Utilizing the SINTA database as the primary source, the study will identify, select, and analyze relevant literature to understand the extent of each supervisory entity's influence on the financial performance. According to the analyzed literatures, the Sharia Supervisory Board profoundly influences Islamic financial institutions, ensuring adherence to Sharia principles, building trust, and mitigating risks, positively impacting financial performance. The Board of Commissioners, integral in strategic decisions, risk management, and governance, shapes overall financial well-being. The Board of Directors significantly influences financial outcomes, overseeing transparency and regulatory compliance. The proposed commissioners' board, with an independent judiciary, aims for unbiased management evaluations, essential for good corporate governance. Lastly, the Audit Committee enhances financial performance by ensuring transparency and mitigating risks, a crucial component mandated for public companies in Indonesia.

Minimizing Disguised Equity as Mandated by the Income Tax Law of Indonesia

The Indonesian government has limited the Debt-to-Equity Ratio (DER) to a maximum of 4:1 since the 2016 tax year and reduced the corporate income tax rate from 25% to 22% since the 2020 tax year. I compared data on public companies in Indonesia and Thailand to see the impact of reducing tax rates to reduce Tax Avoidance and reduce Disguised Equity. I also analyzed the findings of eleven previous studies regarding the effectiveness of DER restrictions in Reducing Tax Avoidance and Disguised Equity. As a result, a decrease in the tax rate has not been correlated with tax avoidance and DER. DER restrictions, although effective in reducing Disguised Equity, are ineffective in boosting tax revenues through company capital structure changes because with a DER limit of 4:1, companies still have room for tax savings. The DER limit of 4:1 is still higher than the average DER in sample companies of 0.3:1. Therefore, I suggest that the government immediately implement interest cost limitation regulations with the Interest Expense Limitation Based on EBITDA provisions as recommended by the OECD. I simulated changes in interest cost financing restrictions for companies listed on the Indonesia Stock Exchange between 2016 and 2021 if using a DER limit of 4:1 and if using Interest Expense Limitation Based on EBITDA. As a result, the government can increase potential tax revenues significantly.

Unveiling the Motivation of Fraudulent Financial Statement in ENVY: Fraud Triangle Theory

This study aims to unravel the motivations behind the production of fraudulent financial statements by PT. Envy Technologies Indonesia Tbk. It employs a case study approach and the fraud triangle theory to shed light on this critical issue. This research is of paramount importance because fraudulent financial statements can have severe repercussions, adversely affecting shareholders and the broader capital markets. The primary findings of this investigation indicate that three key factors played a significant role in encouraging fraud within PT. Envy Technologies Indonesia Tbk. These factors are pressure, opportunity, and rationalization. The impetus for such fraudulent actions is traced back to the pressure exerted on maintaining high stock prices. The opportunities for manipulation arise from a deficiency in internal oversight mechanisms, enabling misconduct. Furthermore, rationalizations are formulated to justify the diversion of IPO funds in a manner that aligns with the information disclosed in the prospectus. This research offers a nuanced understanding of the factors that drive financial statement fraud in Indonesian public companies. It highlights that fraudulent activities are often the result of a combination of pressures, opportunities, and rationalizations. Recognizing these factors can be instrumental in implementing preventive measures to mitigate the occurrence of such fraud in the future.

The Influence of Tax Exclusion Policies and Other Factors on the Value of Dividends Paid by Public Companies in Indonesia

This research aims to determine the effect of the dividend exclusion policy as a tax object as regulated in the Undang-Undang Cipta Kerja and its derivatives on dividends paid by companies. It is hoped that dividend payments can become a source of investment in Indonesia so that an increase in the amount of dividends paid will increase investment in Indonesia. This research also wants to know the effect of net profit, return on assets (ROA), free cash flow (FCF), and debt-to-equity ratio (DER) on the dividends paid by the company. The data used in the research is data from 2017 – 2022 which comes from 30 companies with the largest market capitalization on the IDX. The analysis was carried out using multiple linear regression on panel data using the Stata application version 16. Based on the research results, it is known that the policy of excluding dividends as a tax object does not have a significant effect on the dividends paid by companies. Meanwhile, net profit, ROA, and FCF have a significant and positive effect on the dividends paid by the company. DER is also known to have a significant and negative effect on the dividends paid by companies. The implication of this research is that to increase the dividends paid by the company, the policies implemented must be able to be utilized by the majority shareholders and there will be an increase in the company's net profit, ROA, and FCF as well as a decrease in DER.

Determinants of Sustainability Report Quality in Indonesian Public Companies: An Isomorphism Theory Approach

Determinants of Sustainability Report Quality in Indonesian Public Companies: An Isomorphism Theory Approach

FINANCIAL SHENANIGANS AND COMPANY CHARACTERISTICS IN INDONESIA PUBLIC COMPANY

Financial shenanigans are moves made by a company's management with the intention of falsifying the company's financial status and stated performance. The goal of this study is to clarify if financial considerations and company size have an impact on a company's propensity to engage in financial misdeeds in Indonesian public companies. Financial leverage, financial stability, personal financial need, and return on assets are the financial characteristics that were examined in this study. An Indonesian firm that has gone public serves as the study's sample. Purposive sampling was used in this study's sampling. This study's analysis method makes use of multiple linear regression. The findings revealed that the company was unaffected by all variables except for financial leverage.

The effect of independent commissioners, EVA, and ROA on firm value

The rising number of companies listed on the Indonesia Stock Exchange (IDX) each year reflects a growing trend of public companies in Indonesia. Investment in the manufacturing sector escalated from IDR 272.9 trillion in 2020 to IDR 325.4 trillion in 2021. This research aims to measure influence of the number of independent commissioners, Economic Value Added (EVA), and Return on Assets (ROA) on firm value. Multiple regression analysis is used as the method of analysis, and sampling is done using purposive sampling. The total sample consists of 202 samples from 45 consumer goods sector companies for the period of 2015-2019. The results of this research indicate that the number of independent commissioners, EVA, and ROA have a significant influence on the value of consumer goods sector companies registered on the Indonesia Stock Exchange (IDX) for the period of 2015-2019. This highlights the importance of ROA and EVA that can impact firm value and the role of independent commissioners in running a company.