Supervisory Board Research Articles

AN ANALYSIS OF SOCIOECONOMIC INEQUALITIES AMONG LOW-INCOME INDIVIDUALS WITH A SPECIFIC FOCUS ON THE COMPLIANCE INDEX OF SHARIAH GENERAL BANKS IN INDONESIA

The aim of this study is to investigate the correlation between the focus on the overall compliance index of sharia banks in Indonesia, particularly the profitability role index, sharia supervisory boards, and independent commissioners, and reducing social disparity among low-income groups. This study specifically examines the sharia commercial banks in Indonesia, and the samples were chosen using the purposive sampling method. The data collected comprises secondary data, specifically the annual reports of sharia commercial banks from 2017 to 2021. The data underwent the usual assumption test for analysis. Applying the multiple linear regression method for hypothesis testing. The SPSS software is employed for data processing. The results of this study suggest that the presence of an audit committee has a significant and positive effect on the sharia compliance index. The variables of liquidity, profitability, leverage, and sharia supervisory board have a negative and statistically insignificant effect on the sharia compliance index. The independent commissioner variable has a favourable effect on the sharia compliance index, although this effect is statistically insignificant. Therefore, it may be inferred that the profitability index, Sharia Supervisory Board, and Independent Commissioners, which serve as benchmarks for guaranteeing Sharia compliance in Indonesian Sharia banks, are not successful in alleviating the prevailing social inequality in Indonesia.

Corporate governance in relationship to value relevance and accounting conservatism: SBF 120 firms

This study examines the relationship between disclosure quality as measured by value relevance and accounting conservatism and the corporate governance mechanisms such as the characteristics of the financial market, board of directors and ownership structure of French companies listed on the SBF 120. The result shows that the companies can have a high value relevance of accounting information or practice the accounting conservatism when they are featuring by the existence of a high number of financial analysts who follow the company, listed on a US stock exchange or have a dispersed structure capital. The findings show also that the significant institutional shareholders, foreign ownership, board with small size, separation of functions as well as the creation of a supervisory board, as well as high performance and a low level of leverage contribute to improving the quality of accounting value.

Do family ownership and supervisory board characteristics influence audit report lag? A view from a two-tier board context

This study investigates the impact of family ownership and supervisory board characteristics on audit report lag in Indonesia. The study relies on a balanced panel dataset and matched-pair sample of 124 listed non-financial firms (2017–2019) in a two-tier board context, drawing on Type II agency theory and the entrenchment/alignment implications of ownership concentration. First, we find a positive and significant association between family ownership and audit report lag. Second, we find evidence that the size of the supervisory board (locally referred to as the board of commissioners) and the frequency of meetings are negatively associated with audit report lag. Further analyses reveal that firms with a larger proportion of family members on the supervisory board experience longer reporting lag. This finding highlights the family’s entrenchment and their domination of the board of commissioners. Additional analysis considering the commissioners’ backgrounds reveals that audit report timeliness worsens when there is a larger proportion of community leadership. This suggests that some commissioner profiles could further lead to entrenchment behaviors. Our findings contribute to the literature and to policy by highlighting the potential and limits of a two-tier board policy on accounting outcomes, particularly in the context of dominant family structures in emerging economies.

Relationship between sharia supervisory board attributes and sustainable development goals (SDGs) financing in Islamic banks

ABSTRACT It has been widely believed that Islamic finance holds a potential role in achieving sustainable development goals (SDGs). Hence, considering the power of the Shari’a Supervisory Board (SSB) to approve or reject Islamic banking products, this paper investigates the association between SSB attributes and Islamic banks’ SDG financing. The study utilized unbalanced data generated from a sample of 32 fully Sharia-compliant Islamic banks across nine (9) countries between 2013 and 2021. The findings reveal that SSB size and SSB financial expertise significantly reduced Shariá-compliant financing for agriculture, education, and health economic activities. Besides, while SSB foreign scholars have an insignificant association with agriculture and education financing, they significantly reduced financing for health. In contrast, SSB meetings and SSB gender diversity significantly increased funding for these activities. These findings could assist regulators in revising the SSB codes of governance to enhance their effectiveness in supporting Islamic banks’ activities aimed at achieving SDGs.

The Role of the Supervisory Board in the Development of Sharia Cooperatives in Aceh After the Enactment of the Sharia Financial Institutions Law

The Role of the Supervisory Board in the Development of Sharia Cooperatives in Aceh After the Enactment of the Sharia Financial Institutions Law

Optimalisasi Penerapan Prinsip Transparansi Dalam Pengelolaan Perum Perhutani

Juridically, the implementation of transparency principles as part of Good Corporate Governance in Perum Perhutani has been initiated, though not yet fully optimized. Perum Perhutani has provided easy access to information and strives to maintain good relationships with stakeholders through various activities and media, in compliance with OJK Regulation No. 31/POJK.04/2015 on Disclosure of Material Information by Issuers or Public Companies. Transparency in material information builds public trust in a company's performance, necessitating specific regulations governing Annual Reports, as outlined in Chairman of the Capital Market Supervisory Board and Financial Institution Decision No. KEP-431/BL/2012 regarding Submission of Annual Reports by Issuers or Public Companies. Public access to information enables understanding and monitoring of management activities, fostering professional and ethical implementation of corporate vision and mission, considering all stakeholders. Ultimately, optimal application of Good Corporate Governance serves as a collective commitment to professional and ethical company conduct, minimizing conflicts of interest and legal issues, thereby enhancing product quality, company management, corporate value development, and reputation improvement in the long run.

The Impact of Family Firms and Supervisory Boards on Corporate Environmental Quality

This paper examines the impact of family ownership and supervisory board characteristics on carbon emission disclosure. It uses balanced panel data and a matched-pair design of 124 non-financial firms listed on the Indonesia Stock Exchange from 2017 to 2019. This study finds that family firms and larger boards improve, while female board members harm carbon emission performance. Further analyses reveal non-linear relationships between family ownership and carbon performance. When control rights are limited, family firms prioritize controlling managers and improving carbon quality. Conversely, they prioritize personal objectives over environmental concerns when there are high control rights, resulting in decreased carbon emission performance. Additionally, family board members generate more carbon information, indicating the family owners effectively utilize their position on the supervisory boards to influence the company’s carbon emission performance. Finally, the study reports that more faculty member boards seem to hurt carbon emission reduction efforts. This result suggests that the diversity of their professional experiences does not affect the environmental effectiveness of supervisory boards. Our findings highlight the importance of understanding SEW principles and their connection to families in comprehending Indonesian corporate carbon emissions disclosures. The findings of this study enrich the worldwide literature by exploring the potential benefits of family business environmental performance. This study also adds to the literature on corporate governance, especially the role played by supervisory boards. Our findings align with the resource dependence theory, emphasizing the central function of supervisory boards as a monitoring tool. This study is constrained by its reliance on carbon emission data extracted from the annual reports of public firms, with a particular emphasis on pre-COVID-19 data. Future research should focus on sustainability reports and explore the time frame encompassing COVID-19 (2020–2022 datasets) to determine any differences in the findings.

STUDI KOMPARATIF ANTARA ASURANSI SYARIAH DENGAN ASURANSI KONVENSIONAL: SEJARAH, SUMBER HUKUM, MAYSIR, GHARAR, RIBA, DEWAN PENGAWAS SYARIAH, PENGELOLAAN RESIKO DAN PREMI

The purpose of this study is to compare Conventional Insurance with Sharia Insurance in terms of principles, history, legal basis, clean from Maghrib (maisir, gharar, and riba), Sharia Supervisory Board, risk management, and premi. The research method employed is a literature review with a descriptive approach, which is part of qualitative research. The descriptive approach is chosen to depict the distinctions between Sharia and Conventional insurance. The findings reveal significant differences across all aspects examined between Conventional and Sharia Insurance. Conventional Insurance traces its history back to Babylonian practices around 4000-3000 BC, notably the Code of Hammurabi, while Sharia Insurance originates from pre-Islamic Arab customs (aqilah system), later sanctioned by Prophet Muhammad, drawing legal sources from positive law and fatwas from DSN-MUI. Conventional Insurance incorporates elements of maysir, gharar, and riba in its operations, which are absent in Sharia Insurance. Unlike Conventional Insurance, Sharia Insurance has an internal Sharia Supervisory Board to ensure compliance with Sharia principles. Risk management in conventional insurance involves transfer of risk, whereas Sharia Insurance focuses on sharing of risk. Premi in Conventional Insurance consist of mortality tables, interest, and insurance costs, whereas Sharia Insurance premi consist of tabarru’ (donation) and savings (for life insurance), or tabarru’ alone (for non-life insurance). The tabarru’ element is derived from mortality tables without interest calculations.

PENGARUH GOOD CORPORATE GOVERNANCE TERHADAP KINERJA KEUANGAN PADA BANK UMUM SYARIAH DI INDONESIA

This research aims to empirically prove the influence of Good Corporate Governance on the financial performance of sharia banking. Based on the purposive sampling method, the samples obtained were 7 sharia banks that met the criteria. Research data was obtained from annual reports for the 2016-2021 period. The data in this research is quantitative data using secondary data. The analytical method used is multiple linear regression analysis of panel data. The research results show that the board of commissioners has a negative and significant effect on financial performance, because too many board of commissioners can reduce the company's profitability, the board of directors has a positive and significant effect on financial performance, the sharia supervisory board has a positive and significant effect on financial performance and the audit committee does not influence on financial performance. Together the board of commissioners, board of directors, sharia supervisory board and audit committee influence Return on Assets. Regarding efforts to improve financial performance, sharia commercial banks should focus more on the board of directors and sharia supervisory board. Because the better the board of directors and sharia supervisory board, the better the financial performance of sharia commercial banks in 2016-2018.

The Influence Of The Board of Supervisors, Commissioners, and the Audit Committee To The Islamc Social Reporting With The Size of Company as a Moderation Variable

Perlindungan dana yang disimpan oleh nasabah dibank adalah aspek krusial dalam hubungan hukum antara keduanya, ini penting karena terbukti bahwa dana yang disimpan di bank dapat terancam, karena tindakan curang dari pegawai bank yang menyelewengkan dana tersebut atau oleh pihak lain melalui berbagai metode. Penelitian ini bertujuan untuk menguji pengaruh Ukuran Dewan Pengawas Syariah, Dewan Komisaris, Komite Audit terhadap Islamic Sosial Reporting. Penelitian ini menggunakan Ukuran Perusahaan sebagai variabel moderasi. Populasi dan data yang digunakan meliputi 15 Bank Umum Syariah yang terdaftar OJK tahun 2015 dengan 86 amatan. Metode analisis yang digunakan yaitu uji asumsi klasik dan uji regresi dengan Stata. Hasil penelitian ini menunjukkan Ukuran Dewan Pengawas Syariah dan Rapat Dewan Pengawas Syariah yang dimoderasi Ukuran berpengaruh positif terhadap Islamic Sosial Reporting, sedangkan Rapat Dewan Pengawas Syariah, Dewan Komisaris, Komite Audit dan Ukuran Dewan Pengawas Syariah yang dimoderasi Ukuran Perusahaan berpengaruh negatif terhadap Islamic Sosial Reporting. Islamic Sosial Reporting penting untuk memastikan kepatuhan perusahaan terhadap syariah, meningkatkan kepercayaan stakeholder, mengelola risiko, dan mendukung pembangunan sosial dan ekonomi berkelanjutan

Gender diversity and financial performance in executive positions in German companies

An underrepresentation of women in executive positions has persisted for decades. This paper aims to analyze the financial impact of women in executive positions in German companies by examining the economic value added and exploring the effects of Environmental, Social, and Governance (ESG) factors and female supervisory board members on female board members. The results indicate that in the 200 largest German companies, the share of female executives increased between 2018 and 2022. Regardless of industry, female executives started at very low levels at around 4% in 2018; in 2022, this figure reached around 11%. Thereby, the financial sector showed the highest share of female executives at around 14% in 2022, and the industrial sector at around 9%. A closer look reveals that large companies have higher shares of female executives than smaller companies. Large companies show an average of 17% compared to small ones, and in 2022, only 8%. There is a positive correlation between the share of female supervisory board members and female executives, arguing that female supervisory board members seem to hire more female executives. Companies with more female executives tend to have lower ESG controversy scores, and companies with more female executives, measured by the economic value added, perform better financially than companies with few or no women. Companies with female executives show about 2 percentage points higher economic value added than those with the lowest share of females (no or few female executives). Thus, it seems that female executives matter and make a difference in companies.

Solusi Akad Murabahah bil Wakalah Pada Perbankan Syariah di Indonesia

A country's economic development can grow if its business sector is doing well. To maintain the existence of business growth, a source of financing capital is needed. This research aims to critically examine the murabahah bil wakalah financing contract in Islamic banking and provide solutions to these problems. This research uses a qualitative method. This study is descriptive analytic in which data collection is carried out by reviewing the literature then analyzing and interpreting the content to produce conclusions and recommendations. The results of the study suggest that there are several problems that occur in the murabahah bil wakalah contract, including goods that are not fully owned by the bank, moral hazard in customers, and an explanation of the cost and profit. The solution is that banks are expected to form a special unit to purchase goods for customers, the need to emphasize the contract at the beginning of the transaction to prevent moral hazard, and the activeness of the sharia supervisory board in overseeing all transactions carried out at Islamic banks.

The determinants of Takaful insurance financial stability: the moderating role of Shari’ah Supervisory Board

The determinants of Takaful insurance financial stability: the moderating role of Shari’ah Supervisory Board

Failure of Candidate Legislative Members in the 2024 General Election of Maros District

This study aims to find out social facts about the failure of candidates to become legislators to obtain seats in the Regional Rakyar Representative Council (DPRD) in the 2024 general election of Maros Regency. This research method is to use qualitative descriptive with a phenomenological approach. The data collection was obtained through observation (observation) and in-depth interviews in the field from various sources of research informants. The results of this study show that, (1) The failure of candidates to become members of the Regional People's Representative Council (DPRD) legislature as a result of the inability to compete with other candidates to win votes in the community. (2) Legislative candidates proposed by political parties are not qualified, and are unable to convince and explain to the public about the vision, mission and work program in the community, (3) The Election Supervisory Board (Bawaslu) is unable to prevent money political transactions between legislative candidates and the public, so that those who can get the most votes are only money politics.

Gender board diversity across Europe throughout four decades

We present a Gender Board Diversity Dataset (GBDD), which provides a cross-country perspective on women in management and supervisory boards that spans between 1985 and 2020. The data covers 43 European countries and accounts for private companies in addition to the stock-listed ones. GBBD was created using firm-level Orbis data. Our measures are based on a sample of more than 28 million unique firms observed for nearly seven years on average and reporting data about nearly 59 million individuals on management and supervisory boards. We provide the measures at the level of industry, country and year (firm-level data is proprietary). We provide three measures. The first is the share of women among all board members in a given industry, country, and year. The second one is the average of the shares of women across firms in a given industry, country and year. We also provide a new measure: the share of firms in a given industry, country and year which report no single woman on their board(s).

Comparison of Corruption Eradication Institutions in Various Countries (Indonesia, Hong Kong, Japan, Australia, New Zealand)

This study discusses the Corruption Eradication Commission (KPK) since 2019 there has been a significant change, because the second amendment to the KPK Law has been ratified through Law Number 19 of 2019, Indonesia's ranking index is at 115, amputated authority and declining performance. The study conducted a comparative approach between the Indonesian KPK and the corruption eradication institutions of Hong Kong, Japan, Australia and New Zealand. It was found that Asian and Australian countries have less authority, but are ranked high (3 to 14) in eradicating corruption compared to Indonesia which is ranked 115. The results of the study show that there has been a change in the position of the KPK institution in terms of state administration which is no longer an Auxiliary body but a state organ, full authority but requires permission from the supervisory board, accountability and full control by the government (executive).

DIRECTOR'S NATIONALITY DIVERSITY AND COMPANY PERFORMANCE: THE EVIDENCE FROM EMERGING MARKET

This study describes the diversity of directors' nationality from company attributes: company leverage, growth, size, age, and sub-sector. This study also analyses the association between directors' nationality diversity and the performance of Indonesia's listed companies using two measurements: ROA and ROS (accounting performance) and Stock return and Tobin’s Q (market performance). This study used 3,290 observations in 235 companies (from 2004 to 2017). As a result, the level of director nationality diversity varies based on the company size (large vs. small), company age (old vs. young), company growth (high vs. low), company leverage (high vs. low), company sub-sector (central vs. manufacturing vs. trading & service sub-sector). In addition, the diversity of the supervisory board nationality is negatively related to the ROA and Tobin’s Q and positively associated with stock return. The company breaks the negative effect of supervisory board nationality diversity by reducing the periods foreign directors need to familiarise themselves with newly discovered circumstances, such as culture, systems, and language. The company suggests increasing the supervisory board nationality diversity regarding the stock return as detailed theoretical and practical implications.

The Role of the Sharia Supervisory Board in Mediating Disclosure of Islamic Social Reporting and the Quality of Financial Reports on the Reputation of Sharia Banking in Indonesia

The Role of the Sharia Supervisory Board in Mediating Disclosure of Islamic Social Reporting and the Quality of Financial Reports on the Reputation of Sharia Banking in Indonesia

Cognitive board diversity and profitability – evidence from Islamic banks in Southeast Asia

PurposeLiterature on the board diversity of Islamic banks (IB) found limited knowledge of the “deep-level” attribute. This study aims to explain the impact of the board diversity attributes (education levels, educational backgrounds and the interactions between these two attributes of diversity) on profitability.Design/methodology/approachThe research sample is 37 fully flagged IBs from five Southeast Asian countries, covering nine years (2010–2019). Data were analyzed using the two-step system generalized moment (2SYS-GMM) method.FindingsWe found that the cognitive conflict between the board of directors (BOD) and the Shariah Supervisory Board (SSB), which has heterogeneity in its education level and educational background, positively affects profitability. These results reinforce the resources dependence theory (RDT) approach that having boards with heterogeneous characteristics is beneficial for IB.Practical implicationsThe findings of this study would offer useful information for Islamic banking authorities to revise or formulate rules and guidelines and make a greater effort to implement corporate governance (CG) reform measures by determining educational level and background as a requirement to become a member of a BOD or an SSB.Originality/valueThis paper contributes in three ways: (1) we use the “deep-level” diversity attributes of the BOD and the SSB, (2) it focuses on cognitive conflict in boards by presenting the expertise diversity of the BOD and SSB and (3) we interact with the level of education to evaluate the effect of a cognitive conflict.

LINKAGES SHARIAH GOVERNANCE AND ISLAMIC BANKS PERFORMANCE: EVIDENCE FROM GULF COOPERATION COUNCIL (GCC) COUNTRIES

The shariah governance system is crucial for Islamic banks (IB) because of the unique structure that is different from conventional banks. Good governance has an impact on stable performance. The shariah supervisory board (SSB) presence will convince stakeholders that IBs are running their business according to shariah principles. The focus of this research is the results of empirical studies in GCC countries. The research data was obtained from the bankscope database and manual collective from 2010-2018. This study uses a panel data model with a random effect method. Empirical results show that SSB size has a negative correlation with performance. SSB expertise and board size have a positive correlation with performance. Furthermore, SSB with doctoral qualifications and independent boards are not correlated with performance