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Article
Publication date: 20 September 2011

Ferdinand T. Siagian and Elok Tresnaningsih

The purpose of this paper is to investigate whether independent directors and audit committees that are chaired by an independent director as required by the Jakarta Stock…

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Abstract

Purpose

The purpose of this paper is to investigate whether independent directors and audit committees that are chaired by an independent director as required by the Jakarta Stock Exchange (JSX) affect the quality of reported earnings.

Design/methodology/approach

The paper uses both total discretionary accruals (DA) and earnings response coefficient (ERC) as the proxies for earnings quality. It runs multivariate regressions to examine the improvements in earnings quality after the firms meet the JSX requirements.

Findings

It is found that both DA and ERC improve significantly after firms acquire independent directors and independent audit committees. Lower DA occurs in the first and second years after the firms meet the JSX requirements. There is an improvement in ERC in the first years after firms meeting the requirements.

Research limitations/implications

The results suggest that independent directors and audit committees do improve earnings quality.

Originality/value

This is the first paper that compares the quality of earnings before and after firms acquire independent directors and independent audit committees. This methodology allows us to examine the impact of meeting JSX independence requirements on earnings quality. The findings contribute to the literature by showing the importance of having independent directors and an independent audit committee in order to improve earnings quality. These findings are specifically important for the capital market regulatory bodies, the shareholders, and the boards of directors, and for other users of financial reports in general.

Article
Publication date: 22 February 2013

Ferdinand Siagian, Sylvia V. Siregar and Yan Rahadian

The purpose of this paper is to investigate whether corporate governance practices and the quality of reporting are associated with firm value for public firms in Indonesia.

5105

Abstract

Purpose

The purpose of this paper is to investigate whether corporate governance practices and the quality of reporting are associated with firm value for public firms in Indonesia.

Design/methodology/approach

The authors hypothesize that there are positive associations between firm value and corporate governance practices and reporting quality. For the authors’ proxies for corporate governance and reporting quality they develop two new indices. First, they develop a corporate governance index (the CGI) to measure corporate governance practices by Indonesian firms. Second, they develop a reporting quality index (the RQI) to measure the firms’ quality of reporting and disclosures. To examine the associations the authors run multivariate regressions of their proxies for firm value on the two indices.

Findings

Consistent with the first hypothesis, the paper finds positive associations between corporate governance and different proxies of firm value. These findings suggest that firms that implement better corporate governance have higher values. Contrary to the second hypothesis, the paper finds negative associations between reporting quality and the proxies for firm value. These findings indicate that lower value firms tend to disclose more information that is consistent with the P3LKE than higher value firms.

Research limitations/implications

The results suggest that corporate governance practice by Indonesian public firms is value relevant and therefore, should provide incentives to the firms to improve their governance. This shows that the Indonesian government's efforts to promote corporate governance provide benefits to publicly traded firms. The results also indicate that firms with low values are more likely to disclose information that is consistent with the P3LKE. This warrants further research because this finding is inconsistent with the contention that more disclosures should result in higher value.

Practical implications

The authority needs to put more efforts in promoting good corporate governance implementations and making sure that public firms improve their disclosures and reporting quality in order to provide benefits to the users of financial information.

Originality/value

Corporate governance index for public firms is not readily available in Indonesia. Therefore, the authors develop an index to measure corporate governance implementations by Indonesian public firms. To the authors’ knowledge, this is the first paper that develops an index to measure adherence to the P3LKE, which is a comprehensive measure of the quality of reporting.

Details

Journal of Accounting in Emerging Economies, vol. 3 no. 1
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 11 November 2020

Hendar Hendar, Moch. Zulfa, Alifah Ratnawati and Mulyana Mulyana

The purpose of this paper is to investigate and test the role of religio-centric product strategy (RPS) in mediating the relationship among marketing innovativeness (MI)…

Abstract

Purpose

The purpose of this paper is to investigate and test the role of religio-centric product strategy (RPS) in mediating the relationship among marketing innovativeness (MI), market sensing capability (MSC), customer relationship management capability (CRMC) and brand management capability (BMC) with marketing performance (MP) in a religious-based industry. This is in accordance with the conditions of Indonesian religious people and the increasing demand for Muslim fashion products.

Design/methodology/approach

This paper selected 330 small fashion businesses in Indonesia and tested the regressive relations of the 6 constructs.

Findings

The findings showed that MI, MSC, CRMC and BMC have a positive effect on RPS and RPS also has a positive effect on MP, so that RPS acts as mediation in the relationship among MI, MSC, CRMC and BMC with MP.

Research limitations/implications

In-depth research on other dimensions of the role of antecedent variable of RPS, such as NPD capability, specialized marketing capability, resource reconfiguration marketing capability, architectural marketing capability and marketing resources that are interesting to discuss (Morgan, 2012), has not been done in research.

Originality/value

By examining the literature on dynamic capability, marketing strategy, entrepreneurship and business performance, this paper offers a unique analysis of dynamic marketing capability and its impact on product strategy and MP in religious-based industries.

Details

Journal of Research in Marketing and Entrepreneurship, vol. 22 no. 2
Type: Research Article
ISSN: 1471-5201

Keywords

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