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Article
Publication date: 8 July 2019

Rayenda Khresna Brahmana, Doddy Setiawan and Chee Wooi Hooy

The purpose of this paper is to investigate whether the presence of controlling shareholder affects the value of diversification based on Indonesian listed firms. It…

Abstract

Purpose

The purpose of this paper is to investigate whether the presence of controlling shareholder affects the value of diversification based on Indonesian listed firms. It further examines whether the degree of controlling ownership and the types of controlling ownership matter.

Design/methodology/approach

Panel data were used over the period 2006-2010 with dynamic generalised method-of-moments estimations and it defined diversification as industrial diversification, international diversification or diversification in both. A few different thresholds for the control rights of the largest shareholder are also set.

Findings

The results show that industrial diversification improves firm value but international diversification does not, while diversified in both strategies discounted firm value. The presence of a controlling shareholder is found to have a significant diversification discount, and the effect is nonlinear, where the entrenchment effect occurs around 20 to60 per cent threshold of controlling across all types of diversified firms. Last, foreign firms are found to enjoy more value from industrial diversification, but it takes an adverse turn when these involve both diversification strategies. Government firms do not seem to be different from family firms.

Research limitations/implications

The study shows the need to differentiate diversification strategies and account for non-linearity and ownership identity in modelling diversification value. Also, the degree of shareholders’ control can be a significant channel to address the agency issue on diversification value.

Practical implications

Under the backdrop of unique Indonesian corporate ownership, the presence of controlling owners is shown, and their ownership affects the value of diversification. The entrenchment effect however appears only at a certain range of ownership. This is a crucial guide for the shareholders to ensure an appropriate monitoring system is installed to maximize the shareholder’s value, especially in family firms.

Originality/value

The value of this paper is twofold. At first, the first empirical evidence on the diversification debate with Indonesian firms for its unique institutional setting is presented. Second, the standard modelling framework to investigate the types of ownership on diversification value is extended, which has rarely been covered in previous investigations.

Details

Journal of Asia Business Studies, vol. 13 no. 3
Type: Research Article
ISSN: 1558-7894

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Article
Publication date: 4 March 2021

Ronny Prabowo and Doddy Setiawan

We investigate the effect of female CEOs on corporate innovation using Indonesian companies. More specifically, this paper aims to answer the following research questions…

Abstract

Purpose

We investigate the effect of female CEOs on corporate innovation using Indonesian companies. More specifically, this paper aims to answer the following research questions. First, do firms led by female CEOs innovate more or less than firms led by male CEOs? Second, does firm size positively moderate the effect of CEO gender on corporate innovation? Our research questions imply that female CEOs' innovative performance likely depends on the size of their firms.

Design/methodology/approach

Because the dependent variable is a dummy that equals one if the firm was an innovator and zero otherwise, this study employs probit analysis to test the hypotheses empirically. As an alternative test, we use a different measure of the dependent variable (INNOV-corporate innovation) by summing the firm's responses (yes/no) to nine innovation-related questions. Because this alternative measure of INNOV exhibits a count-data characteristic with non-negative integer values and more than 70% of the total sample did not engage in innovation activities at all, this study relies on the zero-inflated Poisson regression in the robustness test.

Findings

We have shown that firms led by female CEOs exhibit a greater probability of being innovators. Further, firm size increases the positive effect of female CEOs on firms' probability of engaging in innovation activities. Further, we also find that when female CEOs manage women-owned firms, their firms are more likely to engage in innovation activities.

Research limitations/implications

This study cannot further investigate the causal relationship between CEO gender and corporate innovation (e.g. by analyzing whether CEOs with different gender affects firm innovation) because it relies on the World Bank Enterprise Survey data. Nevertheless, this study suggests that stakeholders, especially in developing countries like Indonesia, need to encourage more women to hold CEO positions, especially in larger firms, because women-led firms perform better in innovation activities.

Originality/value

Our study thus highlights that female CEOs outperform their male counterparts in innovation activities. These results support the argument that because of gender-based discrimination that they receive, female CEOs are greatly motivated to exhibit greater innovation performance. Further, it is more difficult for women to hold the CEO positions in larger firms because of these firms' more intense managerial job market.

Details

International Journal of Social Economics, vol. 48 no. 5
Type: Research Article
ISSN: 0306-8293

Keywords

Open Access
Article
Publication date: 20 June 2020

Putri Anindya Listya Purwa and Doddy Setiawan

This paper aims to investigate the relation between gender and accounting conservatism in banking industry using cross-countries study.

Abstract

Purpose

This paper aims to investigate the relation between gender and accounting conservatism in banking industry using cross-countries study.

Design/methodology/approach

The study use cross-country data in banking industry. Sample of the study consists of 202 banks from 24 countries in the period 2016–2017.

Findings

The result of the study indicates that banks that operate in high masculine society are less conservative than banks that operate in low masculine society (feminine).

Originality/value

This research suggests that investors could consider investing in a country that has low masculinity (feminine) because it is more concerned with the protection of other society members through conservative choice as a protection from misleading decisions made based on too optimistic financial report.

Details

PSU Research Review, vol. 5 no. 2
Type: Research Article
ISSN: 2399-1747

Keywords

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Article
Publication date: 1 August 2016

Doddy Setiawan, Bandi Bandi, Lian Kee Phua and Irwan Trinugroho

This research aims to examine the effect of ownership structure on dividend policy using the Indonesian context. The most common ownership structure is concentrated in the…

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Abstract

Purpose

This research aims to examine the effect of ownership structure on dividend policy using the Indonesian context. The most common ownership structure is concentrated in the hand of family owners except in the UK and USA (La Porta et al., 1998, 2000). Family owners hold more than half of the companies in Indonesia (Carney & Child, 2013; Claessens et al., 2000). Family firms play an important role in Indonesia. Another important characteristic that emerges is the rise of government- and foreign-controlled firms in Indonesia. Thus, this research also divides ownership concentration into family firms, government-controlled and foreign-controlled firms.

Design/methodology/approach

Samples of this research consist of dividend announcements during 2006-2012 in Indonesian Stock Exchange. This research excluded financial data because these have characteristics that are different non-financial sectors’ characteristics. The final sample of this research consists of a 710 firm-year observation.

Findings

The result of this research shows that ownerships have a positive effect on dividend payout. This research divides the sample into family-controlled firms, government-controlled firms (GOEs) and foreign-controlled firms. This research shows that government- and foreign-controlled firms have a positive impact on dividend payout. However, family firms have a negative effect on the dividend payout. Family firms pay lower dividends because they prefer to control it themselves. Family firms earn benefit from those resources, but at the expense of minority shareholders. Thus, family firms engage in expropriation to minority shareholders.

Research limitations/implications

This study focuses on ownership structure of Indonesian listed firm. This study does not analyze the impact of other corporate governance mechanism such as board structure on dividend decisions. The owner of the companies (family, government and foreign firm) has an opportunity to put their member as part of board members. However, this study does not analyze the impact of board structure on dividend decisions.

Originality/value

This study provides evidence that ownership concentration positively affects dividend payout. However, there is a different effect of ownership structure (family-controlled firms, GOEs and foreign-controlled firm). Government- and foreign-controlled have a positive effect; however, family-controlled firm have a negative effect on dividend payout. Therefore, this study provides evidence of the importance of ownership structure on dividend decision.

Details

Journal of Asia Business Studies, vol. 10 no. 3
Type: Research Article
ISSN: 1558-7894

Keywords

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Article
Publication date: 5 November 2020

Lyna Latifah, Doddy Setiawan, Y. Anni Aryani and Rahmawati Rahmawati

This study provides empirical evidences on the relationship between business strategy and micro, small and medium enterprises (MSMEs) performance. Additionally, the study…

Abstract

Purpose

This study provides empirical evidences on the relationship between business strategy and micro, small and medium enterprises (MSMEs) performance. Additionally, the study aims to explore the role of innovation and accounting information systems (AISs) in the strategy performance linkage among MSMEs in Indonesia.

Design/methodology/approach

A questionnaire-based survey was conducted, which produced 102 valid responses. Surveys were distributed to MSME owners throughout Solo, Yogyakarta and Semarang, Indonesia. Data were analyzed by using structural equation model with partial least squares.

Findings

The result shows that business strategy has indirect impacts on MSMEs' performance. Both innovation and AIS positively mediate the relationship between business strategy and MSMEs’ performance.

Research limitations/implications

The performance variable was measured based on the owners' perception. This makes the results not to be reflective of the real performance situation.

Practical implications

Alignment between strategy and innovation plays a vital role in improving the performance of MSMEs. The differentiation strategy that focuses on product uniqueness and quality requires innovation to add value to the product and the customer. The innovation process is at high risk of failure, so MSMEs owners need accurate calculations in decision making. AISs are part of management control to reduce risk by identifying standards and directing organizational goals.

Originality/value

This study considers the contingency factors in the relationship between strategy and performance by providing innovation variables and AIS.

Details

Journal of Small Business and Enterprise Development, vol. 28 no. 1
Type: Research Article
ISSN: 1462-6004

Keywords

Open Access
Article
Publication date: 16 June 2021

Trisninik Ratih Wulandari and Doddy Setiawan

This study aims to examine the effect of ownership concentration and foreign ownership on tunneling activities in Indonesia.

Abstract

Purpose

This study aims to examine the effect of ownership concentration and foreign ownership on tunneling activities in Indonesia.

Design/methodology/approach

The population in this study were manufacturing companies listed on the Indonesian Stock Exchange from 2014 to 2018. The total observations used in this study were 557 observations. This study used three measurements to assess tunneling activities in a company, namely, related party receivables (TUL1), related party payables (TUL2) and related party receivables-payables (TUL3).

Findings

The results of this study indicated that ownership concentration and foreign ownership had a negative effect on tunneling activity of TUL1. Meanwhile, the effect of ownership concentration and foreign ownership on TUL2 and TUL3 showed a positive effect. This indicated that manufacturing companies in Indonesia preferred to carry out tunneling activities through related party payables compared with related party receivables. Foreign ownership was also effective in controlling the company’s tunneling activities when the company conducted tunneling transactions of related party receivables. Small companies and companies with positive return on assets were more susceptible to tunneling activities carried out by the companies.

Practical implications

The results of this study can be used as a consideration for investors in making decisions by looking at tunneling activities carried out by companies in Indonesia.

Originality/value

To the best of the authors’ knowledge, no previous study in the tunneling literature has compared the results of the effect of the concentration of foreign ownership and ownership on tunneling using three measurements at once. This is useful to see the company’s behavior of tunneling activities from a different perspective.

Details

Rajagiri Management Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0972-9968

Keywords

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Article
Publication date: 2 September 2013

Doddy Setiawan and Lian Kee Phua

This study aims at examining the impact of corporate governance on dividend policy among Indonesian companies. There are two theories of the effect of corporate governance…

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6031

Abstract

Purpose

This study aims at examining the impact of corporate governance on dividend policy among Indonesian companies. There are two theories of the effect of corporate governance on dividend policy: substitution and outcome theory. Substitution theory argue that corporate governance have negative effect on dividend policy, while outcome theory argue that corporate governance have positive effect on dividend policy. Therefore, this study investigates the effect of corporate governance on dividend policy in Indonesia. This study aims at examining the impact of corporate governance on dividend policy among Indonesian companies. There are two theories of the effect of corporate governance on dividend policy: substitution and outcome theory. Substitution theory argue that corporate governance have negative effect on dividend policy, while outcome theory argue that corporate governance have positive effect on dividend policy. Therefore, this study investigates the effect of corporate governance on dividend policy in Indonesia.

Design/methodology/approach

The sample of this research comprises 248 firms from Indonesian Stock Exchange during 2004-2006. This research using Transparency and Disclosure Index (TDI) to measure corporate governance in Indonesia

Findings

We find that TDI are low among Indonesian firms, with a score of 32 per cent out of the maximum point. This score indicates that Indonesian corporate governance is still low. The results show that there is a negative relation between corporate governance and dividend policy in Indonesia. Thus, the Indonesian companies pay more dividends when corporate governance practice is low. This result confirms applicable of substitution theory in Indonesia.

Research limitations/implications

This research focuses on manufacturing industry in Indonesia. Therefore, the conclusions of this research apply on the manufacturing companies in Indonesia

Practical implications

This research shows that companies with poor corporate governance pay dividend higher than companies with better corporate governance. Thus, investor can use this information to make investment decision.

Originality/value

This research provides evidence on the negative effect of corporate governance on dividend policy in Indonesia (substitution theory).

Details

Business Strategy Series, vol. 14 no. 5/6
Type: Research Article
ISSN: 1751-5637

Keywords

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