ORCID Profile
0000-0002-7705-2672
Current Organisations
University of Technology Sydney
,
Otoritas Jasa Keuangan
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Publisher: Emerald
Date: 02-2016
Abstract: – The purpose of this paper is to extend the existing, yet limited, literature on the influence of ownership concentration and family control on the demands for high-quality audits. This study focusses on an emerging market, namely, Indonesia, where ownership concentration and family control are relatively higher than those in developed markets. – The s le consists of 787 firm-year observations of public firms listed on the Indonesia Stock Exchange. Following prior studies, a firm is considered using a higher quality audit when its external auditor is one of the Big 4 audit firms. Logistic regressions are employed to test research hypotheses. – Empirical evidence obtained reveals that firms with higher ownership concentration are more likely to hire a Big 4 auditor. Hence, in such firms, high-quality audits are employed to mitigate agency issues. However, when the controlling shareholder is a family, the association between ownership concentration and the demands for high-quality auditors turns negative, implying that family-controlled firms tend to sustain opaqueness gains by hiring lower quality auditors. – Previous empirical studies examining the influence of ownership concentration and family control on auditor choice are relatively limited in the literature and are heavily focussed on developed economies. In addition, the present study is one of the first to investigate the association between family control and auditor choice in the context of a developing economy.
Publisher: Emerald
Date: 11-01-2013
DOI: 10.1108/03074351311294016
Abstract: The purpose of this paper is to examine whether and how underpricing is associated with board structure and corporate ownership among firms conducting initial public offerings (IPOs) in the Indonesian equity market. To capture the most recent development, the s le comprises 101 firms conducting IPOs in Indonesia's primary equity market in the period of 2003‐2011. The explanatory variables consist of board size, board independence, ownership concentration, and institutional ownership. In further analysis, the authors perform regressions considering three types of the controlling shareholder, namely families, foreign entities, and the government. Providing some support for signaling theory, it is found that board independence is positively related to the level of underpricing. Further, this study provides evidence that the level of underpricing is negatively associated with both board size and institutional ownership, indicating that these two governance mechanisms play important roles in mitigating information asymmetry between the issuer and potential investors. Ownership concentration is insignificant in explaining the first‐day returns. When the type of corporate control is taken into account, it is revealed that government‐controlled companies tend to experience higher underpricing. This paper contributes to the IPO underpricing literature since the influence of corporate governance mechanisms on initial returns is relatively under‐researched, particularly within the context of emerging markets.
Publisher: Emerald
Date: 15-02-2013
DOI: 10.1108/08288661311299295
Abstract: The purpose of this paper is to explore disclosure on corporate governance mechanisms in annual reports of Islamic commercial banks in Indonesia. Employing a s le comprising seven Islamic commercial banks in Indonesia, the present study constructs the so‐called Corporate Governance Disclosure Index (CGDI) to score the banks' disclosure level. Corporate governance mechanisms addressed in this study include Shariah Supervisory Board, the Board of Commissioners, the Board of Directors, board committees, internal control and external audit, and risk management. It is revealed that Bank Muamalat and Bank Syariah Mandiri, the county's two largest and oldest Islamic commercial banks, score higher than their peers. Disclosure of the s le banks on some dimensions, such as board members and risk management, is found to be strong. On the other hand, disclosure on internal control and board committees tends to be weak. This study shows that the average disclosure level among the s le banks is relatively low. Hence, this result has important implications for the enhancement of corporate governance disclosure of Islamic banks, thereby wider acceptance and enhanced reputation could be gained. This paper is believed to be among the first to explore the practice of disclosure on corporate governance mechanisms among Islamic commercial banks. Additionally, it focuses on Indonesia, the largest Muslim country that has a different institutional setting from that in other Muslim countries.
Publisher: Emerald
Date: 07-06-2013
Abstract: The purpose of this paper is to examine the relationship between gender ersity on the management board and the financial performance of Indonesian listed companies. Cross‐sectional regression analysis was conducted based on a s le comprising 92.4 percent of public firms listed on the Indonesia Stock Exchange (IDX). The dependent variable was firm performance, measured by return on assets (ROA) and Tobin's q . The explanatory variable was gender ersity, proxied by the proportion of women, the presence of women, and a gender heterogeneity index. It was found that the representation of female top executives is negatively related to both ROA and Tobin's q , suggesting that female representation is not associated with an improved level of performance. From correlation analysis, the results also reveal that smaller firms, which tend to be family‐controlled, are more likely to have a higher proportion of female members on management boards. This implies that large firms are “tougher” for women in terms of opportunities to hold seats on the board. The data only cover one single financial year (2007) hence, the results may lack generalizability. Studies on the relationship between board gender ersity and financial performance have been conducted in the context of a few developed economies. This study contributes to the literature by examining such an issue in a developing economy that has a different environment from that of developed economies.
Publisher: Virtus Interpress
Date: 2011
DOI: 10.22495/COCV8I2C4P4
Abstract: This paper examines the associations between ersity of board members and financial performance of the firms listed on the Indonesia Stock Exchange (IDX). Three demographic characteristics of board members—gender, nationality, and age—are used as the proxies for ersity. Using a s le of 169 listed firms, this study finds that both accounting and market performance have significant negative associations with gender ersity. Nationality ersity is found to have no influence on firm performance. In contrast, the proportion of young members is positively related to market performance, providing evidence that young people in the boardrooms are associated with improved financial performance.
Publisher: Emerald
Date: 21-06-2013
DOI: 10.1108/10569211311324911
Abstract: The purpose of the present paper is to examine the influence of the educational qualifications of board members, including the CEO, on the financial performance of Indonesian listed firms. Indonesia is a developing economy that adopts a two‐tier board system. This study employs a s le comprising 160 firms listed on the Indonesia Stock Exchange (IDX). Tobin's Q and return on assets (ROA) are used as measures of financial performance. It uses four proxies for board members' educational qualifications, namely postgraduate degrees, degrees obtained from prestigious universities, degrees obtained from developed countries, and degrees in financial disciplines. Regressions are performed separately for the supervisory board, management board, and CEO. This study provides empirical evidence that the educational qualifications of board members and the CEO matter, to a particular extent, in explaining either ROA or Tobin's Q . For ex le, CEOs holding degrees from prestigious domestic universities perform significantly better than those without such qualifications. Even though intellectual competence should appear to be one of the considerations in the appointment of board members, educational qualification is not always a good proxy for superior advising or managerial quality. There may be many other factors that need to be considered, such as experiences, managerial skills, networks, and other skills obtained outside schools. As such, the establishment of a nomination committee, which is expected to provide independent recommendations on qualified candidates to serve in the boardrooms, plays an important role. Empirical studies focusing on the influence of the educational backgrounds of board members and the CEO on financial performance are still rare in the literature. This study is among the first to address such an issue in the context of a developing economy.
Publisher: Emerald
Date: 16-09-2013
Abstract: – The purpose of this paper is to investigate the influence of family control on the extent of voluntary disclosure in the annual report of Indonesian listed firms. Further, it seeks to investigate the role of corporate governance mechanisms in explaining the association between family control and voluntary disclosure. Governance mechanisms addressed here include board independence and institutional ownership. – This study employs a s le comprising non-financial firms on the Indonesia stock exchange that published the 2010 annual report. The voluntary disclosure index is computed for each s le firm, based on content analysis of the annual report. Cross-sectional regressions are performed to test research hypotheses. – Our evidence reveals that family control negatively and significantly influences the extent of information disclosure. This finding suggests that family-controlled firms have lower motivation to disclose additional voluntary information, which might unexpectedly expose private benefits maintained by the controlling family. We also find that the relationship between institutional ownership and disclosure is stronger in family firms. However, independent commissioners do not contribute to improving the extent of disclosure by family firms. – The present study contributes to the rare existing literature addressing the relation of family control to information disclosure. Further, the role of corporate governance mechanisms in promoting greater information transparency in family-controlled firms is still very rarely examined.
No related grants have been discovered for Salim Darmadi.