Irwan Trinugroho

Ownership structure and dividend policy in Indonesia

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.

ISLAMIC BANKS’ MARKET POWER, STATE-OWNED BANKS, AND RAMADAN: EVIDENCE FROM INDONESIA

We use a monthly dataset to analyze whether Islamic banks have greater market power compared with their conventional counterparts. Using a sample of Indonesian banks, we find that Islamic banks possess greater market power than conventional banks. This condition does not hold, however, when we compare state-owned Islamic and conventional banks. We also find some specific determinants of Islamic banks’ market power: the Ramadan holy month (positive impact), the proportion of profit-and-loss sharing in their financing (negative impact), and the presence of a Sharia board (positive impact). Interestingly, Ramadan benefits not only Islamic banks but also conventional banks. Our findings support prior literature emphasizing the role of religiosity in Islamic banks’ behavior.

Re-examine Performance of Foreign Banks in Indonesia

We reexamine the performance of multiple definitions of foreign banks in Indonesia over the period of September 2005-December 2013 in a monthly dataset. We use a number of definitions of foreign banks which are branches and subsidiaries of foreign banks (BSFB), joint venture banks (JVB) and domestic banks acquired by foreign investors (DBAFI). Unbalanced panel data estimation, more particular random effect, is employed to examine our hypothesis. We find that BSFB have a higher performance than other banks. However, little evidence is revealed for the joint venture and acquired banks. Encouraging banks, more particular domestic banks, to be more efficient should be bolstered by the regulators to lead them to be more profitable and competitive.

Regional Banks and Market Power: Evidence from Indonesia

This paper investigates market power difference between regional banks and other banks in the context of Indonesia over the period of 2001-2009 resulting in 641 observations. Further, we also examine the determinants of market power of regional banks by considering local institutional development. According to the univariate and multivariate tests, we do find that Indonesian regional banks have a larger market power than other commercial banks. However, contrary to our expectation, in the regions with poor governance, market power of those banks is lower than that of well-governed regions. Similarly, socio-economic development is positively linked to the market power of regional banks.

Leverage, Firm Value and Competitive Strategy: Evidence from Indonesia

We study the agency theory by re-examining the effect of financial leverage on firm value. Moreover, we introduce a contingency variable: firm competitive strategy. To do so, we study non-financial firms listed on the Indonesia Stock Exchange from 2007 through 2013, resulting in 2,438 observations. Using the panel data technique, after controlling for firm-specific characteristics and industry differences, we find that leverage has a positive effect on firm value. Going deeper, we find that this effect is stronger for firms that apply a cost leadership strategy, differentiation strategy, or focused strategy.

The Disclosure Practices of Islamic Equity Funds

ABSTRACT We investigate the disclosure practices of screening and compliance information of Islamic equity funds around the world. Disclosures on Sharia advisors and screening information are quite high, but they are lower for compliance information such as Sharia advisory report (SAR) and holdings data. The results show that younger funds with better Sharia advisory board (SAB) governance which are domiciled in countries belonging to an Islamic international standard-setter body have the highest disclosure levels. However, funds domiciled in countries with a central SAB and following common law disclose less Sharia-related information. These findings are important for the effectiveness of disclosure framework.

Human Development, Banking Development and the Quality of Local Government: The Case of Indonesia

We extend the study of Trinugroho et al. (2015) by focusing on the effect of human development on banking development and the moderating effect of the quality of local government on the link between human development and banking development. We use unique data set by disentangling the type of banks (commercial bank, rural bank, and the total of both) to measure financial development. This research uses panel data at the provincial level for the period of 2010-2014. Generally, it could be concluded that human development has positive effect on banking development. To some extent, the quality of local government is found to strengthen the impact of human development on banking development.

Corporate failure prediction model in Indonesia: revisiting the Z-scores, discriminant analysis, logistic regression and artificial neural network

We investigate the accuracy of several corporate failure prediction models, namely the original Altmans Z-score and Z˝-score, discriminant analysis, logistic regression and artificial neural network (ANN) by studying Indonesian firms. Using hand-collected data of forced delisting and healthy listed firms in Indonesia stock exchange, our results show that our ANN model has the highest accuracy among other models, respectively, followed by Z˝-score, logistic regression model, discriminant analysis model and the original Z-score. In addition, among these models, we also find that the original Z-score has the smallest type I error, or it is the most sensitive model, whereas Z˝-score has the smallest type II error, or it is the most specific model. Thus, in the view of efficiency, even though those models are very simple and were developed more than 30 years ago, the predictive ability of their combination is still pertinent to predict corporate failure in Indonesia.

Past performance, family business and CEO succession: the case of Indonesia

This paper examines the link between firm past performance and the appointment of new CEOs in the Indonesian publicly traded family-owned firms. Further, we also investigate the effect of family member composition in the board of directors and board of commissioners on the CEO succession. This study encompasses 148 succession events gathered from ORBIS database for the period of 2006-2015. Employing a logistic regression, results show that the appointment of new CEOs is generally affected by firm past performance and family member composition in the board of directors. Negative past performance would lead firms to select non-family member. Further, the more the number the family members sitting on the board of directors, the higher the probability family-owned firms to select the new CEO inside family member.

The importance of synergy and organisation culture to accelerate university in the global environment: a case study

Indonesian universities appearance and recognition in the international environment is left behind some neighbouring countries, for example, Thailand, Malaysia and Singapore. In line with the policy of the Indonesian government to accelerate the international recognition of Indonesian universities, Universitas Sebelas Maret (UNS) which is relatively younger than other public universities in Indonesia, has aggressively progressed to achieve its vision to be a world-class university. Some accelerating strategies have been implemented, more particular with regard to research and innovation, academic quality and international collaboration. To do so, the university put more weight on the strengthening of integrity, ethics, loyalty, commitment and sense of belonging which create synergy between faculty members and administrative staffs. It eventually leads to a more conducive academic environment and organisational culture which is the basis for internationalisation strategy. On the other hand, the university has also released some technical policies and strategies for the internationalisation process.