EFFECTS OF MANAGEMENT PROFICIENCY ON FINANCIAL PERFORMANCE OF FOREIGN COMMERC...AkashSharma618775
The study sought to examine Management Proficiency on financial performance of foreign
commercial banks in Kenya from period of 2013 to 2019.
Design/Methodology/Approach; The return on equity (ROE) and return on asset (ROA) were used as measure on
measure of financial performance measures on foreign commercial banks in Kenya. The descriptive, correlation
and panel regression analysis based on fixed effect model with help STATA.
The Results; It indicated that an R squared of 0.6956 was obtained that implies that 69.56 percent of the variations
in financial performance of foreign commercial banks in Kenya was accredited to capital adequacy, asset quality
and management efficiency. A p-value of 0.0000 further endorsed that the variables that were used namely: capital
adequacy, asset quality and management efficiency had significant effect predicting the financial performance of
foreign commercial banks in Kenya. The model had a constant value of 0.87 thus inferred that in the absence of
capital adequacy, asset quality and management efficiency, the value of financial performance of foreign
commercial banks in Kenya was 0.87.
Originality/value: The main study objective was to provide the empirical evidence on management proficiency on
financial performance on foreign commercial banks in Kenya and demanded literature gaps
Firm level determinants to small and medium sized enterprises’ access to fina...rrpidani
Firm Level Determinants to Small and Medium-Sized Enterprises’ Access to Financing in Indonesia by Rita Pidani and Ishak Balaka. Academy of Taiwan Business Management Review, April 2013, Volume 9, Number 1, pp. 117-126.
Corporate Governance Practices of Indian Public Sector and Private Sector Ban...scmsnoida5
Banks play a major role in providing credit to the
productive sectors of the economy as well as act
as facilitators of financial inclusion and foremost
source of employment. Whereas, the Banking
Sector Acts as catalysts in promoting the growth
of economy, these also possess the capability to
cause calamity to an economy. Well governed
banks have the ability to cope up with risk
associated with them and benefit to the economy.
The present study is an attempt to investigate the
Corporate Governance practices being adopted
by the Indian Public Sector Banks and Private
Sector Banks. For this purpose, two Public Sector
Banks and Private Sector Banks have been
selected taking into account the top banks in the
BSE 100 index ranked on the basis of market
capitalization. In order to study the quality of
Corporate Governance practices of the banks,
an assessment tool – Corporate Governance
Disclosure Index (CGDI) has been developed.
The data has been collected from the annual
reports of the banks from the financial year 2002
to 2014. Further, to investigate the difference in
both the sector banks, student’s t-test has been
applied. The findings of the study reveal that
both the sector banks have significant difference with respect to Board related parameters,
Remuneration Committee sub-index and Non-
Mandatory sub-index.
Audit Committee Characteristics and Financial Performance of Deposit Money Ba...AkashSharma618775
The purpose of this study was to assess the predictive power of audit committee features on the financial
performance of listed Deposit Money Banks (DMBs) in Nigeria between 2009 and 2018. Thirteen (13) banks were
used over 10 years making a total of 130 firm year observation. The independent variable was audit committee
size, while the dependent variable was DMB financial performance measured by return on capital employed
(ROCE). The study used an ex-post factor research approach to address the research questions and the nature of
the study data. The study used the panel fixed effect approach (and the estimates were obtained using E-views 9).
The results show that audit committee size does not significantly predict ROCE nor does audit committee financial
skill and frequency of audit committee meetings. None of the independent variables have significant predictive
power on the performance of Deposit Money Banks in Nigeria. Thus, instead of DMBs focusing on expanding the
members of Audit committee, they should instead consider other things that can be done to have an effective audit
committee, such as gender, religion, region, ownership, etc that could possibly influence the performance of banks
in Nigeria.
EFFECTS OF MANAGEMENT PROFICIENCY ON FINANCIAL PERFORMANCE OF FOREIGN COMMERC...AkashSharma618775
The study sought to examine Management Proficiency on financial performance of foreign
commercial banks in Kenya from period of 2013 to 2019.
Design/Methodology/Approach; The return on equity (ROE) and return on asset (ROA) were used as measure on
measure of financial performance measures on foreign commercial banks in Kenya. The descriptive, correlation
and panel regression analysis based on fixed effect model with help STATA.
The Results; It indicated that an R squared of 0.6956 was obtained that implies that 69.56 percent of the variations
in financial performance of foreign commercial banks in Kenya was accredited to capital adequacy, asset quality
and management efficiency. A p-value of 0.0000 further endorsed that the variables that were used namely: capital
adequacy, asset quality and management efficiency had significant effect predicting the financial performance of
foreign commercial banks in Kenya. The model had a constant value of 0.87 thus inferred that in the absence of
capital adequacy, asset quality and management efficiency, the value of financial performance of foreign
commercial banks in Kenya was 0.87.
Originality/value: The main study objective was to provide the empirical evidence on management proficiency on
financial performance on foreign commercial banks in Kenya and demanded literature gaps
Firm level determinants to small and medium sized enterprises’ access to fina...rrpidani
Firm Level Determinants to Small and Medium-Sized Enterprises’ Access to Financing in Indonesia by Rita Pidani and Ishak Balaka. Academy of Taiwan Business Management Review, April 2013, Volume 9, Number 1, pp. 117-126.
Corporate Governance Practices of Indian Public Sector and Private Sector Ban...scmsnoida5
Banks play a major role in providing credit to the
productive sectors of the economy as well as act
as facilitators of financial inclusion and foremost
source of employment. Whereas, the Banking
Sector Acts as catalysts in promoting the growth
of economy, these also possess the capability to
cause calamity to an economy. Well governed
banks have the ability to cope up with risk
associated with them and benefit to the economy.
The present study is an attempt to investigate the
Corporate Governance practices being adopted
by the Indian Public Sector Banks and Private
Sector Banks. For this purpose, two Public Sector
Banks and Private Sector Banks have been
selected taking into account the top banks in the
BSE 100 index ranked on the basis of market
capitalization. In order to study the quality of
Corporate Governance practices of the banks,
an assessment tool – Corporate Governance
Disclosure Index (CGDI) has been developed.
The data has been collected from the annual
reports of the banks from the financial year 2002
to 2014. Further, to investigate the difference in
both the sector banks, student’s t-test has been
applied. The findings of the study reveal that
both the sector banks have significant difference with respect to Board related parameters,
Remuneration Committee sub-index and Non-
Mandatory sub-index.
Audit Committee Characteristics and Financial Performance of Deposit Money Ba...AkashSharma618775
The purpose of this study was to assess the predictive power of audit committee features on the financial
performance of listed Deposit Money Banks (DMBs) in Nigeria between 2009 and 2018. Thirteen (13) banks were
used over 10 years making a total of 130 firm year observation. The independent variable was audit committee
size, while the dependent variable was DMB financial performance measured by return on capital employed
(ROCE). The study used an ex-post factor research approach to address the research questions and the nature of
the study data. The study used the panel fixed effect approach (and the estimates were obtained using E-views 9).
The results show that audit committee size does not significantly predict ROCE nor does audit committee financial
skill and frequency of audit committee meetings. None of the independent variables have significant predictive
power on the performance of Deposit Money Banks in Nigeria. Thus, instead of DMBs focusing on expanding the
members of Audit committee, they should instead consider other things that can be done to have an effective audit
committee, such as gender, religion, region, ownership, etc that could possibly influence the performance of banks
in Nigeria.
The Islamic Rural Bank (IRB) Bumi Rinjani Kepanjen is a financial institution that has Sharia
principles in carrying out its activities conventionally. In improving the development of financial institutions, it
is necessary to assess the company's financial performance. Thus, researchers want to know how the financial
performance of IRB Bumi Rinjani Kepanjen during the 2016-2020 period.
Quality Improvement of BMT by Performance, Efficiency, Good Corporate Governa...Mega Widayanti
Baitul Maal Wat Tamwil (BMT) is an Islamic microfinance institution which aims to collect and distribute funds from the surplus to the deficit unit. As a non-bank financial institution, BMT has been established as many as 200.808 units in 2015. The implementation of Islamic principles with the concept of ta'awun somehow becomes the main attraction of BMT, which in fact, gains the highest number of the service used among other microfinance institutions with approximately 18% percent of the total microfinance institution clients (2013). Meanwhile, BMT’s performance of development assets reached IDR 4.7 trillion with the total funds of IDR 3.6 trillion in 2015. This indicates that BMT has grown rapidly over the years. Despite the significant growth, BMT has also encountered a great deal of problems during the process. Some problems that might occur include the inadequate regulations of credit (credit fund is only distributed to some sectors of mudharib group), the inefficiency of Human Resource (HR) or executives and staff (parts of finance official which exceed the limits when giving loans) and the inadequacy of the detection of non-performing loans possibilities, which includes the growth of cash flow of the mudharib. This paper applied qualitative descriptive method to analyze the problem from various journals related to the issues of BMT. The authors employed categorical analysis to define the MEGA (Performance, efficiency, good corporate governance and value added measurements) whereas strategic measurement was used to measure the financial and management performance, efficiency, quality of governance and value-added achieved in order to improve the quality of BMT.
Keywords: Baitul Maal Wattamwil, Measurement, Efficiency, Good Corporate Governance, and Value Added
This study aims to analyse the impact of external factors and internal factors on the risk factors of
regional development bank. Sample used in this study is regional development banks in Indonesia in the period
of 2015 – 2019.
Corporate governance is of great importance for financial performance. Corporate governance issues have attracted public interest in the financial sector both locally and internationally after waves of corporate rip-offs and failures that almost led to loss of confidence in the finance sector. The general objective of this study was to determine the effect of corporate governance on financial performance of Savings and Credit Co-operatives in Kenya. The study adopted a descriptive research design. The study targeted a population of 65 active Savings and credit Co-operatives operating in Embu County. A sample size of 57 Savings and Credit Co-operatives was used in this study. Stratified sampling technique was used to select the sample. Primary data was collected using self-administered semi-structured questionnaires while secondary data was obtained from financial statements and periodicals using a record survey sheet. Pre-testing of research tool was conducted before the actual data collection was carried, to determine the reliability of the questionnaire by use of a Cronbach‘s alpha, statistical coefficient, while the validity was tested to ensure that the questions in the questionnaire provides adequate coverage to the investigative questions. Correlation and multiple regression analysis was used to establish the relationship between independent and dependent variables. The study findings indicated that corporate governance positively affected the financial performance. In specific the board composition and corporate risk management for SACCOs had a positive effect on the financial performances of the SACCOs. The study is beneficial to SACCOs management in improving the performance of Savings and Credit Co-operatives and enabling them to compete globally. The study recommends gender parity consideration and balanced mix of skilled board members during appointments of the board members. The recommendations are important to the government, especially the department of cooperatives in strengthening policies regarding cooperative societies.
This research work investigated the influence of firm size on the financial performance of deposit money banks quoted on the Nigerian stock exchange. The research work is necessitated by the need to find the factors that respond positively or negatively to the financial performance of deposit money banks in Nigeria. Five deposit money banks were sampled with the aid of Taro Yemeni sampling technique to represent the entire banking industry in Nigeria. The firm size proxied by log of total assets represents the explanatory variable while the financial performance measured by profitability proxied by return on asset is the dependent variable. The analysis was conducted using the pooled OLS regression and fixed effect/random effect regression with the aid of STATA for panel regression. In addition, descriptive statistics and correlation analysis were computed. The finding of the study indicates that firm size insignificantly negatively influenced financial performance as a result of diseconomies of scale. The study therefore recommends that the industry should minimize the cost of expansion and enjoy maximum benefits of economies of scale in addition to other factors that may stimulate financial performance should be considered instead of the firm size that indicate insignificantly negative effect.
Relevance of Mergers and Acquisition on Financial Performance of Deposit Mone...iosrjce
The paper examined the effects of Merger and Acquisition on the financial performance of selected
deposit money banks in Nigeria with emphasis on Profit After Tax, Gross Earnings and Asset Growth as
financial efficiency parameters. Two Nigeria Deposit Money Bank were selected using convenience and
judgemental sample selection methods. Data were collected from the published financial statements of the banks
namely former Oceanic bank and Ecobank Plc (now Ecobank Plc) and former Intercontinental Bank Plc and
Access Bank (Access Bank Plc). Data were analyzed using Linear Regression statistical tool. The results
revealed that Post Merger Financial Performance was significantly improved than the Pre Merger period of the
banks. The study therefore recommends that banks can merge or acquire each other as this has proved to
become a plat form for rescuing ailing ones and could provides a platform that could enhance batter financial
performance
Good corporate governance means establishing a management structure and mechanism within the organisation to create relations between PTT’s Board of Directors, the management, staff and shareholders to serve the best interests of shareholders, taking into account the interests of all stakeholders. PTT’s corporate governance embraces the following six principles
An Impact of Capital Adequacy Ratio on the Profitability of Private Sector Ba...Dr. Amarjeet Singh
Profitability being one of the cardinal principles of bank lending acts as a game changer for the survival and success of private sector banks in India. In order to stay profitable, banks have to capitalise on every penny advanced to yield the expected returns. However, considering the constraints laid down by the Reserve Bank of India, banks have to maintain a minimum capital adequacy ratio, as per the current BASEL III regulations active in India. With the mergers of public sector banks, the challenge has got just tougher for the private sector banks in India. Expansion and Diversification are the key strategies adopted by the key players from the private banking sector, however, with the minimum capital adequacy ratio observed by them, it is necessary to understand its actual impact on the bank’s profitability. This research paper aims to throw light upon the linkage that capital adequacy has with the bank’s profitability. It attempts to establish a relation between the Capital Adequacy Ratio with the Net profits of the bank. For the purpose of this study, data from the past 5 years of the leading private sector banks has been collected, namely, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, AXIS Bank and YES Bank. The collected data has been analysed using Pearson’s Correlation to establish a relation between the CAR Ratio & the bank’s profitability. Hypothesis testing has been further done to study the quantum of proportionate change in the profitability with a change in the CAR Ratio for private sector banks using applicable research tools. The said research tools are applied to achieve the desired results while maintaining the required quantum of accuracy. It also aims to understand the proportionate impact of changes in CAR to the bank’s profitability, which can act as a suggested measure for banks to develop a reliable framework for efficient capital management and increase overall efficiency. The results derived from the data collected and analyzed aim to provide scope for further study on the subject matter.
Impact of Web Advertisement on Customers Perception - A Case of Banking Sectorscmsnoida5
Nowadays a lot of innovative services are
offered by the financial service providers to their
customers. The use of more innovation in the
financial sector is the resultant of the day by day
advancement in the technology. Also customer
of today is well aware of the latest technology
and they demand their providers to execute
the technology for business prospective. Target
of all financial service providers’ advertisers
is to reach maximum customers. For this they
utilize every promotional and advertisement
channel so as to reach and inform maximum
public about their products. The purpose of
present study is to determine impact of web
advertisement on customer perception in case of
banking sector. The data will be collected from
200 approx respondents who are aware of the
web advertisements. The collected data will be
put in the Statistical Package for Social Sciences
(SPSS). Afterwards the regression analysis and
correlation analysis will be applied in order to
determine the impact of the web advertisement
on the purchase intention of the customers in
regards to the banking and investment products.
Corporate Governance and Its Impact on Financial Performance in Nepalese Comm...IJMREMJournal
Corporate governance is about building credibility, ensuring transparency and accountability as well as
maintaining aneffective channel of information disclosure that would foster good corporate performance.
Corporate governance is the extent to which companies are run in an open and honest manner is important for
overall market confidence. Corporate governance describes all of the devices, institutions, and mechanisms by
which corporations are governed. The basic objective of the study is to analyze the level and structure of
corporate governance in Nepal and determine its effects on financial performance in commercial banks of
Nepal. Descriptive research design has been followed and multistage sampling method is used. Both primary as
well as secondary data have been used to collect the information. It is found that corporate governance has
played the significant role to keep the corporate governance in Nepalese commercial Banks
The Islamic Rural Bank (IRB) Bumi Rinjani Kepanjen is a financial institution that has Sharia
principles in carrying out its activities conventionally. In improving the development of financial institutions, it
is necessary to assess the company's financial performance. Thus, researchers want to know how the financial
performance of IRB Bumi Rinjani Kepanjen during the 2016-2020 period.
Quality Improvement of BMT by Performance, Efficiency, Good Corporate Governa...Mega Widayanti
Baitul Maal Wat Tamwil (BMT) is an Islamic microfinance institution which aims to collect and distribute funds from the surplus to the deficit unit. As a non-bank financial institution, BMT has been established as many as 200.808 units in 2015. The implementation of Islamic principles with the concept of ta'awun somehow becomes the main attraction of BMT, which in fact, gains the highest number of the service used among other microfinance institutions with approximately 18% percent of the total microfinance institution clients (2013). Meanwhile, BMT’s performance of development assets reached IDR 4.7 trillion with the total funds of IDR 3.6 trillion in 2015. This indicates that BMT has grown rapidly over the years. Despite the significant growth, BMT has also encountered a great deal of problems during the process. Some problems that might occur include the inadequate regulations of credit (credit fund is only distributed to some sectors of mudharib group), the inefficiency of Human Resource (HR) or executives and staff (parts of finance official which exceed the limits when giving loans) and the inadequacy of the detection of non-performing loans possibilities, which includes the growth of cash flow of the mudharib. This paper applied qualitative descriptive method to analyze the problem from various journals related to the issues of BMT. The authors employed categorical analysis to define the MEGA (Performance, efficiency, good corporate governance and value added measurements) whereas strategic measurement was used to measure the financial and management performance, efficiency, quality of governance and value-added achieved in order to improve the quality of BMT.
Keywords: Baitul Maal Wattamwil, Measurement, Efficiency, Good Corporate Governance, and Value Added
This study aims to analyse the impact of external factors and internal factors on the risk factors of
regional development bank. Sample used in this study is regional development banks in Indonesia in the period
of 2015 – 2019.
Corporate governance is of great importance for financial performance. Corporate governance issues have attracted public interest in the financial sector both locally and internationally after waves of corporate rip-offs and failures that almost led to loss of confidence in the finance sector. The general objective of this study was to determine the effect of corporate governance on financial performance of Savings and Credit Co-operatives in Kenya. The study adopted a descriptive research design. The study targeted a population of 65 active Savings and credit Co-operatives operating in Embu County. A sample size of 57 Savings and Credit Co-operatives was used in this study. Stratified sampling technique was used to select the sample. Primary data was collected using self-administered semi-structured questionnaires while secondary data was obtained from financial statements and periodicals using a record survey sheet. Pre-testing of research tool was conducted before the actual data collection was carried, to determine the reliability of the questionnaire by use of a Cronbach‘s alpha, statistical coefficient, while the validity was tested to ensure that the questions in the questionnaire provides adequate coverage to the investigative questions. Correlation and multiple regression analysis was used to establish the relationship between independent and dependent variables. The study findings indicated that corporate governance positively affected the financial performance. In specific the board composition and corporate risk management for SACCOs had a positive effect on the financial performances of the SACCOs. The study is beneficial to SACCOs management in improving the performance of Savings and Credit Co-operatives and enabling them to compete globally. The study recommends gender parity consideration and balanced mix of skilled board members during appointments of the board members. The recommendations are important to the government, especially the department of cooperatives in strengthening policies regarding cooperative societies.
This research work investigated the influence of firm size on the financial performance of deposit money banks quoted on the Nigerian stock exchange. The research work is necessitated by the need to find the factors that respond positively or negatively to the financial performance of deposit money banks in Nigeria. Five deposit money banks were sampled with the aid of Taro Yemeni sampling technique to represent the entire banking industry in Nigeria. The firm size proxied by log of total assets represents the explanatory variable while the financial performance measured by profitability proxied by return on asset is the dependent variable. The analysis was conducted using the pooled OLS regression and fixed effect/random effect regression with the aid of STATA for panel regression. In addition, descriptive statistics and correlation analysis were computed. The finding of the study indicates that firm size insignificantly negatively influenced financial performance as a result of diseconomies of scale. The study therefore recommends that the industry should minimize the cost of expansion and enjoy maximum benefits of economies of scale in addition to other factors that may stimulate financial performance should be considered instead of the firm size that indicate insignificantly negative effect.
Relevance of Mergers and Acquisition on Financial Performance of Deposit Mone...iosrjce
The paper examined the effects of Merger and Acquisition on the financial performance of selected
deposit money banks in Nigeria with emphasis on Profit After Tax, Gross Earnings and Asset Growth as
financial efficiency parameters. Two Nigeria Deposit Money Bank were selected using convenience and
judgemental sample selection methods. Data were collected from the published financial statements of the banks
namely former Oceanic bank and Ecobank Plc (now Ecobank Plc) and former Intercontinental Bank Plc and
Access Bank (Access Bank Plc). Data were analyzed using Linear Regression statistical tool. The results
revealed that Post Merger Financial Performance was significantly improved than the Pre Merger period of the
banks. The study therefore recommends that banks can merge or acquire each other as this has proved to
become a plat form for rescuing ailing ones and could provides a platform that could enhance batter financial
performance
Good corporate governance means establishing a management structure and mechanism within the organisation to create relations between PTT’s Board of Directors, the management, staff and shareholders to serve the best interests of shareholders, taking into account the interests of all stakeholders. PTT’s corporate governance embraces the following six principles
An Impact of Capital Adequacy Ratio on the Profitability of Private Sector Ba...Dr. Amarjeet Singh
Profitability being one of the cardinal principles of bank lending acts as a game changer for the survival and success of private sector banks in India. In order to stay profitable, banks have to capitalise on every penny advanced to yield the expected returns. However, considering the constraints laid down by the Reserve Bank of India, banks have to maintain a minimum capital adequacy ratio, as per the current BASEL III regulations active in India. With the mergers of public sector banks, the challenge has got just tougher for the private sector banks in India. Expansion and Diversification are the key strategies adopted by the key players from the private banking sector, however, with the minimum capital adequacy ratio observed by them, it is necessary to understand its actual impact on the bank’s profitability. This research paper aims to throw light upon the linkage that capital adequacy has with the bank’s profitability. It attempts to establish a relation between the Capital Adequacy Ratio with the Net profits of the bank. For the purpose of this study, data from the past 5 years of the leading private sector banks has been collected, namely, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, AXIS Bank and YES Bank. The collected data has been analysed using Pearson’s Correlation to establish a relation between the CAR Ratio & the bank’s profitability. Hypothesis testing has been further done to study the quantum of proportionate change in the profitability with a change in the CAR Ratio for private sector banks using applicable research tools. The said research tools are applied to achieve the desired results while maintaining the required quantum of accuracy. It also aims to understand the proportionate impact of changes in CAR to the bank’s profitability, which can act as a suggested measure for banks to develop a reliable framework for efficient capital management and increase overall efficiency. The results derived from the data collected and analyzed aim to provide scope for further study on the subject matter.
Impact of Web Advertisement on Customers Perception - A Case of Banking Sectorscmsnoida5
Nowadays a lot of innovative services are
offered by the financial service providers to their
customers. The use of more innovation in the
financial sector is the resultant of the day by day
advancement in the technology. Also customer
of today is well aware of the latest technology
and they demand their providers to execute
the technology for business prospective. Target
of all financial service providers’ advertisers
is to reach maximum customers. For this they
utilize every promotional and advertisement
channel so as to reach and inform maximum
public about their products. The purpose of
present study is to determine impact of web
advertisement on customer perception in case of
banking sector. The data will be collected from
200 approx respondents who are aware of the
web advertisements. The collected data will be
put in the Statistical Package for Social Sciences
(SPSS). Afterwards the regression analysis and
correlation analysis will be applied in order to
determine the impact of the web advertisement
on the purchase intention of the customers in
regards to the banking and investment products.
Corporate Governance and Its Impact on Financial Performance in Nepalese Comm...IJMREMJournal
Corporate governance is about building credibility, ensuring transparency and accountability as well as
maintaining aneffective channel of information disclosure that would foster good corporate performance.
Corporate governance is the extent to which companies are run in an open and honest manner is important for
overall market confidence. Corporate governance describes all of the devices, institutions, and mechanisms by
which corporations are governed. The basic objective of the study is to analyze the level and structure of
corporate governance in Nepal and determine its effects on financial performance in commercial banks of
Nepal. Descriptive research design has been followed and multistage sampling method is used. Both primary as
well as secondary data have been used to collect the information. It is found that corporate governance has
played the significant role to keep the corporate governance in Nepalese commercial Banks
Forensic Accounting and Integrated Financial Reporting of Banks using HausmanIJAEMSJORNAL
This study examined forensic accounting and integrated financial reporting of listed banks in Ghana. The study aimed to examine forensic accounting effects on the integrated financial reporting of the listed banks. Its specific objectives determined the impact Litigations, Claims, Fraud cases reported, Cost of forensic investigation and Non-performing loans (LCFCN) have on integrated financial reporting variables such as corporate social responsibility – CSR. Integrated financial reporting (IFR) is the dependent variable while forensic accounting (FA) is the independent variable. In line with these stated objectives, five research questions and five hypotheses were formulated and it adopted the ex-post facto research design. The population of study constitutes 24 listed banks in Ghana, only 8 listed banks was selected through a purposive sampling. The data for the study was purely secondary and sourced from related books of the banks via Central Banks bulletin (Ghana), African financials and banks reports for a period of 16years from 2004-2020. Moreover, data were analyzed using the descriptive statistics, the Shapiro -Wilk test for a diagnostic check for normality and a combination of the panel regression analysis with the Hausman test which aided appropriately specification whether the analysis should be done with a fixed effect or random effect model of which the fixed effect was used for the interpretation at (P 0.050 < 0.10). In nations analyzed, the results among others demonstrated that forensic accounting and integrated financial reporting were statistically significant at 1%, 5%, and 10% as claims is positive and have significant effect on CSR (β = 64687.53, P<0.10); Non-performing loans is statistically significant and had a negative effect on CSR (β = -2.934, P= 0.054 @ 0.10). The study hence concludes that the effective implementation of forensic accounting had a constructive and significant effect on the integrated financial reporting of listed banks in Ghana. The study recommends among others that the apex banks should mandate banks to incorporate forensic accounting when reassessing their employability skill set, report production, debt administration and management, and portray fairness virtue in their reporting system so as to attract more investment and positive public image.
Corporate Governance and Firm Performance: The Role of Transparency & Disclos...Muhammad Arslan
Purpose: This purpose of this paper is to empirically examine the relationship between transparency and disclosure and firm performance. Highlighting the importance of corporate governance in banking sector, the paper has focused in depth over its role, level and its impact on performance in banking industry of Pakistan. Design/methodology/approach: The paper access this purpose by constructing transparency and disclosure index for the past five year 2007-2011, using proxies for three sub-categories which are board and management structure disclosure, ownership structure disclosure and financial transparency disclosure. The paper also investigated structural changes of T&D Index and its effect on bank financial performance over the sample of 30 banks operating in Pakistan. Findings: Empirical analysis results by using ordinary least square regression model, reveals that financial performance is positively related to the transparency and disclosure and their sub levels except ownership structure disclosure which has negative relation with both ROA and ROE. Furthermore the average T&D level in Pakistani banking sector is above average. Practical implications: The current research paper aims for important policy implementation to reduce information asymmetry and improve corporate governance and firm performance in banking sector of Pakistan.
Post privatization Corporate Governance and the challenges of working capital...inventionjournals
The paper examines the impact of Corporate Governance on liquidity ratio of Ashaka Cement Company. The variables studied were activity ratio as dependent variables and Corporate Governance proxies as independent variables. Data was collected from the secondary sources, and the statistical tools employed in the Methodology were; Performance Trend Analysis and OLS regression. Trend Analysis result suggests that, liquidity ratio was higher pre privatization periods. Inferential Statistics Result suggests that, minority ownership, board size and privatization have positive and significant impact on liquidity ratio of Ashaka Cement Company, while, Total Market Value of Shares and percentage of non executive directors have negative and significant impact on liquidity ratio of Ashaka Cement Company. However, workforce has positive and insignificant impact on liquidity ratio. The study concludes that, corporate governance has significant impact on liquidity ratio of Ashaka Cement Company. However, unfavourable macroeconomic environment militated against its efficiency. The study recommends that, Nigerian government should ensure favorable macroeconomic environment, Foreign Investors should secure global cement market opportunities to justify investment and enhance companies’ earnings The findings may useful to corporate stakeholders and government policy makers
The Impact of Corporate Governance on Improving Overall Performance of the Co...CSCJournals
Corporate governance is recognized as one of the most important implications in building marketplace confidence. The study will assess the level of implementation of corporate governance and level of performance in seven companies from different industries in some countries. We selected seven companies (Audi Bank, Nestlé Group, Dana Gas, Medgulf, Coca Cola, SABIS, Al Baraka Banking Group) which operate in different sectors (Banking, Food and beverages, Energy, Insurance, Education, and Islamic Banking).
The result of the study shows that there is a significant relationship between corporate governance practices and companies' performance. It is expected that the findings of this research paper would contribute to improve understanding about corporate governance practices and their impacts on improving overall performance of the companies.
Results of the study shows that through appropriate application of the standards of corporate governance companies increase profitability, effectiveness and efficiency, improve their credibility, sustainability, transparency, disclosure, reputation, competitiveness and quality in all aspects and enhance management control, risk management, financial management, oversight and relations with key stakeholders such as investors, business partners, employees, customers, etc.
The study recommends that companies should implement corporate governance principles and standards in their strategy and decision making process. They should focus on board of directors, committee structure, risk management, internal audit, external audit, internal control, human capital, sustainability, social responsibility, financial management, disclosure, transparency and the rights of shareholders.
Corporate debt policy remained a significant, but a challenging decision for managers entrusted with the responsibility to improve the value of the firm. Thus, this study examines the factors influencing the capital structure decisions of firms in Nigeria. The study employs a panel data regression model to analyze data from firms in Nigeria for the period 2011 to 2015. The result of the empirical analysis reveals that firms in Nigeria have a preference to finance economic operations from retained earnings and the use of short-term debt on rollover basis. The finding of this study confirms that debt decreases with profitability and growth opportunities. The findings show that asset tangibility and firm size have a positive and significant relationship with debt policy of firms in Nigeria. The analysis also reveals that managerial ownership has a negative and significant relationship with debt ratio of firms in Nigeria. The study shows a non-significant positive relationship between non-debt tax shields and debt. The study demonstrates that the trade-off and pecking order theories both explains the factors influencing capital structure decisions of firms in Nigeria. Therefore, this study suggests the need for stakeholders to develop the financial markets and make it accessible for firms to obtain long-term financing for economic growth and development.
NO1 Uk Rohani Baba In Karachi Bangali Baba Karachi Online Amil Baba WorldWide...Amil baba
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US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
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Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
Latino Buying Power - May 2024 Presentation for Latino CaucusDanay Escanaverino
Unlock the potential of Latino Buying Power with this in-depth SlideShare presentation. Explore how the Latino consumer market is transforming the American economy, driven by their significant buying power, entrepreneurial contributions, and growing influence across various sectors.
**Key Sections Covered:**
1. **Economic Impact:** Understand the profound economic impact of Latino consumers on the U.S. economy. Discover how their increasing purchasing power is fueling growth in key industries and contributing to national economic prosperity.
2. **Buying Power:** Dive into detailed analyses of Latino buying power, including its growth trends, key drivers, and projections for the future. Learn how this influential group’s spending habits are shaping market dynamics and creating opportunities for businesses.
3. **Entrepreneurial Contributions:** Explore the entrepreneurial spirit within the Latino community. Examine how Latino-owned businesses are thriving and contributing to job creation, innovation, and economic diversification.
4. **Workforce Statistics:** Gain insights into the role of Latino workers in the American labor market. Review statistics on employment rates, occupational distribution, and the economic contributions of Latino professionals across various industries.
5. **Media Consumption:** Understand the media consumption habits of Latino audiences. Discover their preferences for digital platforms, television, radio, and social media. Learn how these consumption patterns are influencing advertising strategies and media content.
6. **Education:** Examine the educational achievements and challenges within the Latino community. Review statistics on enrollment, graduation rates, and fields of study. Understand the implications of education on economic mobility and workforce readiness.
7. **Home Ownership:** Explore trends in Latino home ownership. Understand the factors driving home buying decisions, the challenges faced by Latino homeowners, and the impact of home ownership on community stability and economic growth.
This SlideShare provides valuable insights for marketers, business owners, policymakers, and anyone interested in the economic influence of the Latino community. By understanding the various facets of Latino buying power, you can effectively engage with this dynamic and growing market segment.
Equip yourself with the knowledge to leverage Latino buying power, tap into their entrepreneurial spirit, and connect with their unique cultural and consumer preferences. Drive your business success by embracing the economic potential of Latino consumers.
**Keywords:** Latino buying power, economic impact, entrepreneurial contributions, workforce statistics, media consumption, education, home ownership, Latino market, Hispanic buying power, Latino purchasing power.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
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1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
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THE EFFECT OF GOOD CORPORATE GOVERNANCE IMPLEMENTATION AND PROPORTIONS OF STATE OWNERSHIP ON BANKING FIRMS MARKET VALUE
Hamonangan Siallagan
University of HKBP Nommensen, Medan, Indonesia
Email: monangsiallagan@gmail.com,
ABSTRACT
The purpose of this paper are to examines the impact of GCG implementation and proportion of government ownership on market value of listed banking companies in Indonesia. GCG implementation index is constructed to summarize the annual report information contained in GCG implementations variable using criteria of annual report award (ARA). The paper presents data for listed bank in Indonesia from 2009 up to 2013 which are used for estimating market value. Eviews was used to analyze the research purpose, that consist are descriptive statistics and weighted least square-fixed efect method of panel data. Findings revealed that conditions of GCG index implementation on banking companies is well enough, nevertheless the gaps of banks is wide enough. The result of estimation revealed that there is a positive and significant relationship between the explanatory variables of GCG implementation index and proportion of state ownership on market value. Based on this research, a policy that needs to be taken by the relevant parties in the development of corporate governance on the banking sector is expected to be directed to the purpose to overcome the implementation of GCG.
Keywords: good corporate governance, market value, state ownership
1. BACKGROUND
Attention for the implementation of good corporate governance (GCG) principles and practices is crucial in maintaining and increasing the investor’s trust. The multi-dimensional crisis in 1998 has made the good governance issues serious and popular concerns in Indonesia. The event has shown that one of fundamental factors causing the crisis is the ignorance of GCG principles (Arafat, 2008).
The survey conducted by La Porta, Lopez, Shleifer, dan Vishny during 1998-2000 classified Indonesia as the country which having low level of good corporate governance implementation. The survey corresponds to the survey conducted by Price, Waterhouse & Coopers in 1999 on the Investors in Asia which is able to illustrate how corporate governance is applied in many Asian countries. Meanwhile, the Asian corporate governance Association states that compared to nine Pacific Asian countries, the GCG level in Indonesia is still the lowest during 2000-2004. From the survey reuslt we can be seen that our country is the lowest level in implementing GCG.
One sector included in the ignorance on the implementation of GCG practices is national banking sector. According to Husnan (2000), there are many experts posing that the weakness in the implementation of corporate governance on banking industries in the developing countries such as Indonesia is one of the factors leading to the economic deterioration during 1997-1998. The deterioration of GCG principles implementation in Indonesia is depicted by Published Survey of Views of Institutional Investors in Singapore (2002) which stated that Indonesia belongs to the worst performers in implementing GCG principles.
Hawkins (1999) explained that the fragility of banking sector is indicated by some banking key indicators in 1998 which were in the worst condition. That time, the performance of national banking industries were worse compared to those of many Asian countries which also were experiencing economic crisis, such as South Korea, Malaysia, Phillipines, and Thailand.
The condition was worsened by the big scandals in national banks that had decreased the people’s trust on those intermediate institutions. Arafat (2008) noted that the amount of financial losses caused by banking fraud during 1999-2005 were 6.3 trillion IDR and 153 million USD. Such financial losses could not have happened or at least been reduced if the national banks had applied the following principles: prudential principles, internal control, risk management, dan business ethics. In other words, the banks should implement GCG well and correctly.
GCG practices are important for the banking sector since the sector is one of dominant pillars in the economic growth of a nation. The healthy banking management will help nation to grow, through the appropriate mobilization of financial resources and its usage. Without principles such as transparency, accountability, responsibility, independency, and fairness, the robustness of national banking will not be assured. Hasan (2001) stated that GCG principles (fairness, responsibility, transparency, dan accountability) will encourage value drivers (for example, net interest margin, cost to income, risk management, asset quality, fee-based income, etc) to perform better as the corporations are managed with the best practices which in turn will increase the corporations’ value creations.
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Another important issue which is able to influence market value of the firm is the form of ownership. Wahyudi and Pawesti (2006) stated that the ownership structure is believed to be able to influence a company’s progress which eventually will also influence the company’s performance in maximizing its corporate value. The studies on state ownership conducted by La Porta et. al. (1999), Kusumawati (2007) and Fauziah (2011) found that the government ownership has negative impacts on the corporate performance. The government slows the performance down because it has not been able to manage the company well. Even the government may intervene the performance for the sake of its interests.
2. THEORY AND HYPOTHESES DEVELOPMENT
2.1. CORPORATE GOVERNANCE CONCEPT
The main theories related to the corporate governance concept are stewardship theory dan agency theory. Stewardship theory views management as a trusted party to perform best for the shareholders’ interests. On the other hand, the agency theory considers the management as ‘the agent’ for the shareholders that will consciously act for its own sake, not as a wise party and be fair with the shareholders.
Corporate governance develops based on the agency theory in which the corporate governance must be monitored and controlled to ensure that the governance is performed according to the rules and policies. Corporate governance is a set of relationships among corporate governance, committee, the shareholders, and other parties who have interests with the company. World Bank defines good corporate governance as a set of laws, rules, and policies which must be followed in order to motivate the corporate sources to perform efficiently, producing a long-term economic value which will be beneficial for the shareholders and the citizens.
In the academic literature, corporate governance is acknowledged as related to “the issues on the separation of ownership and control”. According to Cadburry committee, GCG is a set of principles which guides and control a company to reach the balance between the power and the authority of the company in giving its accountability especially for to the shareholders, and to the stakeholders generally. In this case, the implementation of GCG is aimed to create additional value for the involved parties.
Syakhroza (2002) defines corporate governance as a system used by “the committee” to guide, control, as well as monitor the good governance of corporate resources based on transparency, accountability, responsibility, independence, and fairness in the attempts for reaching the corporate goals.” Furthermore, Syakhroza (2003) stated that corporate governance consists of six elements, namely are:
1. Focusing on the board,
2. Employing the laws and the rules as the means for leading and controlling.
3. Governing the corporate resources efficiently, effectively, economically, and productively (E3P).
4. Transparency, accountable, responsible, independent, dan fairness (TARIF).
5. The organizational goals
6. Strategic control.
National committee on Corporate Governance (2004) stated that as a intermediate, trusted institution, bank must follow the transparency principle, own the performance measurement from every bank based on the measurements consistent to the corporate values, corporate goals and strategies as the reflection of bank accountability, hold the prudential banking practices and ensure the implementation of the policies as the manifestation of bank responsibilities, be objective and free from any pressures in making decision (independency), and always recognize the stakeholders’ interests based on the fairness principle.
2.1.1. TRANSPARENCY
Transparency means open information, both in the decision making process and disclosure of the material information which is relevant to the company. In realizing the transparency, a company must provide information which is adequate, accurate, and on time to the related parties and presents the financial reports as well as other information which are significant to the corporate performance. In addition, the investors must be able to access the critical information about the company when needed.
By implementing this principle, the stakeholders are able to know the possible risks in conducting transactions with the company. Besides that, transparency allows the market efficiency due to the information on the corporate performance which is reported accurately, on time, clearly, consistently, and comparably. If the principle is followed well and correctly, then the conflict of interest may be avoided.
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2.1.2. ACCOUNTABILITY
Accountability is one of primary solutions for handling agency problems between the shareholders and the management or between the management and the stakeholders. Accountability can be realized by an effective control which is based on the balance of power among the shareholders, the board of commissioners, and the director. The director is in charge of daily operations while the commissioners accompany the shareholders in monitoring the company’s progress. In this context, the relationship between the commissioners and the director implicitly is one of the corporate governance’s domains which should be performed well. With accountability, the clarity of the function, structure, system and the responsibility of the company can be achieved so the corporate governance can be implemented effectively.
In Indonesia, the recurring problem is the malfunction of the commissioners or when the commissioners take the roles and the authorship of the director. In this case, accountability demands the clarity of the functions, rights, duties, authorities, and the responsibilities of the shareholders, the commissioners and the director. With the clarity, the company will avoid the agency problem (the clash of the roles’ interests).
2.1.3. RESPONSIBILITY
Responsibility encompasses those related to the fulfillment of the company’s social duties as part of society, such as the development of the community environment. Responsibility is also related to the director’s responsibility on the managerial aspects of company, such as the attempts for cost efficiency, competitiveness improvisation, exploration for any potential profits, etc (Corporate governance in APEC, December 1998). By implementing this principle, it's expected the company realizes that in its operations it oftens produces negative impacts on the society and help the government reduce the gap between the people’s income and job chances for the people who have not received the benefits of the market mechanism.
2.1.4 INDEPENDENCY
GCG will be well realized if the company managed independently so that every part of it will not dominate each other and cannot be intervened by any external party. The presence of an independent commissioner is essential for supporting such realization. The independent commissioner may help planning the corporate long term strategies and review the implementations frequently.
In Indonesia, KNKCG organizes the availability of an independent board of commissioners. KNKCG stated that a board of commissioners has the responsibility and authority to monitor the director’s policies and the activities as well as provide advices when needed. In order to increase the effectiveness and transparency on the board’s considerations, the members of the independent commissioners are at least 20% of all members. The independent board of commissioners must be independent from the directors and the shareholders and has no personal interests which affects his ability to do its duties fairly and for the sake of the organization.
2.1.5. FAIRNESS
Fairness is a fair, equal treatment in fulfilling the stakeholders’ rights which were determined by the agreements and the rules. With this principle a company must be able to ensure the protection for the shareholders’ rights, including the minor shareholders’ and the foreign shareholders’ ones. The framework of corporate governance designed in the company must be able to ensure the fair treatments for all shareholders, including the minor and the foreign ones. All of the shareholders must own chances to receive compensation every time their rights are violated. This principle also encourages an equal treatment on the stocks in the same level, forbids insider trading or slef- dealing, and have the members of the board to be open when some suspicious transactions are found.
There are many studies concerning the effects of implementing GCG on company’s market value. Bai et. al. (2004) examined the relationship between the implementation of corporate governance and the market value of some companies that go public in China. Corporate governance variabel was constructed in an index consisting of internal mechanisms (board of directors, executive compensation, ownership structure, dan financial transparency) and the external mechanisms (the market for corporate control, legal infrastructures and protection of minority shareholders, dan product market competition). The results show that the corporate governance variable statistically significant impact on the company’s market value.
Black et. al. (2003) examined the impact of the GCG implementation on the companies’ market value in Korea. The results show that corporate governance was statistically significant on the companies’ market value. Chahine (2004) studied the relationship between the corporate governance variable and the companies’ market value
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which go public in small to middle scales in Nouveau. The results show that the corporate governance mechanisms statistically had significant impacts on the market value or the company.
In indonesia, there is a number of studies on GCG. Isgiyarta and Tristiarini (2005) studied the effects of implementing corporate governance principles on the abnormal return in the financial reports announcement. The results show that the implementation of the corporate governance principles namely transparency, fairness, accountability, and responsibility had significant effects 0n the abnormal return. Mayangsari and Murtanto (2002); Sulistyanto and Linggar (2002); and Simanjuntak (2002) also revealed the GCG roles in increasing the corporate values. Unlike others, the studies by Darmawati (2003) on the manufacturing organisation and Sukmawati (2004) on the organisation in financial sector found the diverse proofs that the GCG implementation had no positive effects on the market value of companies.
From the previous studies, empirically its proven that the investors are willing to give a rather high premium to the companies which employ corporate governance principles consistently (Lukuhay, 2002). The increment of stock prices can be seen by the presence of the abnormal return, particularly the increment of stock prices as the result of the increment of the investors’ trust caused by the GCG implementation.
2.2. PROPORTION OF GOVERNMENT (STATE) OWNERSHIP
Some studies show that the government’s ownership on banks has not guaranted that its performance is better than the non-government’s. There is a number of national banks which are technically almost bankrupt due to their poor performances, but due to “owned by the government”, they still survive. The basic inquiry on such issues is does the government still need to own banks or even expand its ownership? the issues can be reviewed in the context of agency conflict. Jensen and Meckling (1976:305-360) posed that individuals have self interest behaviors. Its implications can be seen in the owner who gives his authority to the management to run the company.
More serious problems may occur when the government acts as both player and supervisor. The government have all of the roles: regulator, supervisor, bank owner, creditor, obligor, customer bank depositors, and Deposit Insurance Corporation (Indonesian: LPS). With such numerous roles, the agents can perform any possible manuevers in order to acquire bigger profits for themselves instead for the principals (people as the owners). If each agent’s acts is based on self-interest, according to the game theory, whatever the scenarios of the conflicts between multi-agents versus the principals, it could be predicted that the game will not be fair (Kaaro dan Mahadwartha, 2007).
Kaaro dan Mahadwartha (2007) show that the government’s ownership on banks and multi-roles as the agents in banking industries potentially increase the damages of the major people as the principals. Based on the agency theory, maintaining the government’s ownership on corporations will likely to increase denasionalism. The theory shows the controversy that nationalism is not identical with the government’s ownership on corporations, but how the corporations are able to increase the people’s prosperity.
The perspective of governance aspect states that the private corporations are more successful in handling the corporate governance issues compared to the government’s corporations. Their superiorities are based on the better performances in handling the contract and incentives especially in its function as the driver of the corporate efficiency. Based on the explanation above it can be concluded that the government’s ownership on the banks and equity participation have negative impacts on the banking industries’ market values.
A study related to the impacts of the government’s equity ownership on the company's market value was conducted by Wei et. a. (2005) in china government’s corporations which were privatized during 1991-2001. The result shows that the government’s equity ownership significantly has negative impacts on the company’s market value. Barth, Caprio Jr and Levine (2001), with the empyrical data from 60 countries, show the negative correlation between the government’s ownership on banks and the financial development. The countries whose government’s ownership is bigger have the tendency to own little developing banks.
La Porta, Lopez-de-Silanes dan Shleifer (1999) tested the relation of the government’s equity participation and the financial development and its results correspond to the results of Barth, Caprio Jr dan Levine (2001)’s work. They show that the government’s equity participation actually slows down the progress in financial sector. Marciano (2008) stated that the government’s corporations controlled by bureaucrats have political interests, not for the prosperity of the corporate or even the people. This would lead to the reduction of the government control over the corporation managers.
Kartikawati (2007) and Fauziah (2011) stated that the concentration of the government’s ownership has negative impacts on corporate performance. The government may slow it down because it cannot manage the organization well. Even the government may intervene the performance for the sake of its self-interest.
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2.3. THE LOGICAL FRAMEWORK AND HYPOTHESES
The logical framework of this study is shown in Figure 2.1.
Figure 2.1: Logical framework of study
Based on the background, objectives, literary reviews and the theoretical background as explained before, the hypotheses to be tested in this study are as follows.
H1. The implementation of good corporate governance significantly and positively influences the banking firms market value.
H2. The government’s ownership significantly and negatively influences the banking firms market value.
3. THE RESEARCH METHODOLOGY
3.1. POPULATION AND SAMPLE
The population used in this study consists of the banks which listed in Indonesian Stock Exchange per 31 December 2009 until 31 December 2013. The sample consists of the public banks which meet these criteria:
1. Enlisted in BEI during 2009-2013 periods.
2. Providing the financial reports ranged from 2009-2013.
3. Publishing the auditor financial statement with the book year which ended on 31 December for each observation period.
4. Providing stock prices data during estimation and observation phases.
3.2. TYPES OF DATA
The data used in this study are panel data which combined time series and cross section. The types of data are primary and secondary data. The primary data used are the GCG implementation index of each bank from 2009- 2013. The data was obtained from the content analysis of the GCG implementation information which was disclosed in the annual report according to Annual Report Award (2007) criteria with some simplification and adjustment to the nature and the characteristics of the banking corporations. The secondary data was obtained from the financial report published during 2009-2013. The market value data of the banks were obtained from the results of calculation using Tobin’s Q corporate market value equation.
Good Corporate Governance
GCG Principle
Transparency
Accountability
Responsibility
Independency
Fairness
Goverment (State) Ownership
Banking Firms Market Value
DESCRIPTIVE STATISTIC
PANEL DATA REGRESSION ANALYSIS
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3.3. MEASUREMENTS AND DEFINITION OF OPERATIONAL VARIABLES
The study employed two independent variables (GCG, and the proportion of the government’s ownership) as well as a dependent variable (market value of the firm). The following are the description and measurement of each variable.
1. Market value (MV)
Market value is the wealth value which cannot be found in the balance sheet, such as good governance, good reputation, and bright prospects. This ratio provides indications for the banking corporations’ governance about the investor’s assessment on the corporate performance in the past and the future prospects. The ratio is measured with Tobin’s Q. Some researches using Tobin’s Q as the proxies of corporate value are Chong and López-de-Silanes (2006) and Darmawati et.al. (2004).
The Tobin’s Q ratio used in this study corresponds to the work of Darmawati et.al. (2004: 391-407) which is calculated with the equation:
2. The implementation of GCG (GCG)
The implementation of GCG is represented by the information disclosure concerning the implementation of GCG in banking annual report which is realized in GCG index. The instrument used for generating score is the SIMAK list of the fullfilment of information disclosure on the implementation of GCG which refers to the Annual Report Award 2007 (ARA 2007) criteria. GCG index obtained is compared to the maximum score of each classification, multiplied by the weight of each classification of ARA criteria. ARA 2007 consists of 8 classifications: General (5%), the summary of important finance data (5%), the reports of the board of commissioners and the board of directors (5%), the company profile (5%), the management analysis and discussion on the management performance, good corporate governance (30%), financial information (20%), and others: The GCG practices which are beyond criteria (maximum of +5%) and bad corporate governance which is not included in criteria (maximum of -5%).
The measurements of each GCG principle in this study are as follows:
1. Transparency, measured by using the scores of implementing transparency principle (ARA criteria) and PBI no: 3/22/PBI/2001, PBI no.8/14/2006, the GCG guidence by Indonesian banking-National committee on Corporate Governance (Indonesian: Komite Nasional Kebijakan Corporate Governance (KNKCG)). The total score, if all requirements are met, is 40 points.
2. Accountability, measured by the information disclosure in the annual report on the organizational structure, the board of commissioners, the board of directors, the audit committee, the nominations committee, the remuneration committee, risk policy committee, and other committee, the compliance officers and the corporate secretary. The total score, if all of information disclosure elements on the implementation of accountability are met,is 32 points.
3. Responsibility, measured by the cost related to the company’s social duties on the community. Total score, if all of information disclosure elements on responbility in the annual report are met, is 10 points.
4. Independence, measured from the amount of the proportion of the independent commissioners in each bank. Total score, if all of information disclosure elements on independence are met, is 2 points.
5. Fairness is measured from the information disclosure on the results of the general meeting of shareholders (Indonesian: Rapat Umum Pemegang Saham (RUPS)) and the extraordinary general meeting of shareholders (Indonesian: RUPS Luar Biasa (RUPSLB)) held by the banking corporations and the fairness score of the financial report presented by the independent auditor to a given bank. The total score, if all of information disclosure elements on the implementation of this principle are met, is 6 points
3. The proportion of govenrment’s ownership (GOV_SHARE)
It describes the amount of the proportion of govenrment’s equity ownership on banks in the form of stocks ownership in the name of government or through banking recapitalization on behalf of Indonesian Bank Restructuring Agency (Indonesian: Badan Penyehatan Perbankan Nasional (BPPN)), Assets Management Corporation (Indonesian: PT. Perusahaan Pengelola Aset/PPA) or Finance Minister. The variable is calculated with the following formula:
Market Value of Equity + Book Value of Liabilities
Book Value of Assets
Tobin's Q
=
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The following is the spesification of panel data regression analysis empirical model which will be used:
where:
1. it represents panel data in which i represents banking corporation and t represents time period,
2. β₁ adalah constanta,
3. β₂ β₃ are the parameters of independent variables, and
4. ε is the resistance level.
4. THE RESULT OF DATA ANALYSIS
4.1 THE DESCRIPTIVE STATISTICS
Table 4.1: Descriptive Statistic
Based on table 4.1, GCG principles implementation in Indonesia's banking sector during 2009-2013 are as follows:
1. Tansparency, the lowest score of 26.00, the highest score of 38.85, the mean score of 32.4495, dan the standard deviation score of 3.7439. Its show that the banking firms have good transparency, although there are still wide gaps in disclosing the implementation of transparency principle which is represented by the information disclosure in the annual financial report about the bank profile and ownership, the summary of important financial report, the detailed financial information, the management analysis and the discussion about the bank performance, the explanation of risk management, internal audit and control as well as any important events which influence bank conditions, the easy access to information and bank data, and the punctuality of the financial report.
2. Accountability, with the lowest score of 12.00, the highest score of 32.00, the mean score of 23.6033, and the standard deviation score of 5.0601. Its shows that most of banks have disclosed the information about its organizational structures, the availability and the functions of the board of commisioners, the board of directors, the audit committee, the nomination committee, the remuneration committee, the corporate secretary, the risk policy committee, and other committee owned by the banks. But from its relatively high standard deviation score it can be seen that there are still wide gaps among tne banks in announcing the information which reflects the implementation of the accountability principle.
3. Responsibility, with the lowest score of 2.00, with the highest score of 10.00, the mean score of 6.2833 above the median score and the standard deviation score of 2,62603. Its shows that most of public banks have disclosed the information concerning the bank’s responsibilities towards the principals and the environment in its annual financial report.
4. Independence, with the lowest score of 0.00, the highest score of 2.00, mean score of 1.6416 and the standard deviation score of 0.4986. Its shows that most of the banks have disclosed information that their corporations have independent board of commissioners and that board also lead the audit committee as prescribed in
GOV_SHARE
Government capital stocks
Total capital stock of company
100 %
=
x
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Indonesian Bank policies number 8/14/PBI/2006 on the implementation of GCG to general banks and the guide of GCG banking.
5. Fairness, with the lowest score of 4.00, the highest score of 6.00, the mean score of 5.30, and the standard deviation score of 0.7053. Its shows that most of the banks have disclosed the information about the results of RUPS and RUPSLB and the financial reports which are presented receive both qualified opinion and unqualified opinion.
6. GCG index, with the lowest score of 0.4004, the highest score of 0.9392, the mean score of 0.7087 and standard deviation score of 0.1545. Its shows that most of the banks have implemented GCG, although there are few that have low GCG implementation with the lowest index score of 0,4004, far behind the banks that implement GCG with the index scire of 0,9392.
7. Market value, with the lowest score of 0.833, the highest score of 1.674, the mean score of 1.1196 and the standard deviation score of 0.1130. Its shows that most of public banks have market value above 1.00. It indicates that there is a prospect of growth for the banking firms in Indonesia.
4.2 THE PANEL DATA ANALYSIS AND DISCUSSION
Random Effect method was employed in this study. The reason was due to t = 5 year and n = 24, where T < N. Using Eviews 8 software, the estimation on regression model produced some coefficient value and parameter of each variable which is presented as follows:
Dependent Variable: MV?
Method: Pooled EGLS (Cross-section weights)
Date: 09/07/14 Time: 19:42
Sample: 1 5
Included observations: 5
Cross-sections included: 24
Total pool (balanced) observations: 120
Linear estimation after one-step weighting matrix
Variable
Coefficient
Std. Error
t-Statistic
Prob.
C
0.977768
0.032845
29.76949
0.0000
GCG?
0.181027
0.043440
4.167265
0.0001
GOV_SHARE?
0.000962
0.000351
2.744467
0.0073
Fixed Effects (Cross)
ABKB--C
0.004055
BABP--C
-0.086261
BBCA--C
0.040274
BBIA--C
0.081909
BBNI--C
-0.123812
BBNP--C
-0.020777
BBRI--C
0.047221
BCIC--C
0.101258
BDMN--C
0.068545
BEKS--C
0.028508
BKSW--C
-0.018732
BMRI--C
0.015331
BNGA--C
0.025349
BNII--C
-0.017865
BNLI--C
-0.010629
BSWD--C
-0.013211
BVIC--C
-0.052471
INCP--C
-0.059414
LPBN--C
-0.040565
MAYA--C
-0.053094
MCOR--C
0.038410
MEGA--C
-0.006262
NISP--C
0.004929
PNBN--C
0.047303
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Effects Specification
Cross-section fixed (dummy variables)
Weighted Statistics
R-squared
0.708374
Mean dependent var
2.208178
Adjusted R-squared
0.630814
S.D. dependent var
1.641765
S.E. of regression
0.099867
Sum squared resid
0.937501
F-statistic
9.133246
Durbin-Watson stat
2.076858
Prob(F-statistic)
0.000000
Unweighted Statistics
R-squared
0.346968
Mean dependent var
1.119625
Sum squared resid
0.993779
Durbin-Watson stat
1.914888
From the result of regression estimation, a regression model equation was derived:
MV = 0.9777 + 0.1810*GCG + 0.0009*GOV_SHARE +
The equation shows:
1. The GCG regression coefficient is 0.1810, which means that every 1% increment in the value of GCG implementation causes 0.18% increment in the bank’s market value. This result corresponds to the ones of similar studies done by Bai et.al. (2004), Chahine (2004) and Black et.al. (2003) as well as Indonesian authors, Isgiyarta and Tristiarini (2005). The GCG implementation means a lot for the banks to promote better performance and increase corporate value as explained by Thager et. al. (2003) that, theoretically, GCG practices can increase corporate valuation by improving financial performance, reducing possible risks caused by the committee’s decisions based on their self-interests.
2. The regression coefficient of the proportion of the government’s ownership is 0.0009, which means that every 1% increment of the proportion of the government’s ownership will cause 0.0009% increment of the bank’s market value. In the case of public banks in Indonesia, the proportion of the government’s equity participation on a national bank or private one gives statistically positive and significant influences on the bank’s market value. The result of the estimation in this study does not correspond to the work by Wei et, al, (2005) which concludes that the government’s equity participation give significant, negative influence on the company’s market value (Tobin’s Q). In this study the amount of proportion of the government’s equity participation are not only from the equity participation but also capital injection in the attempt of recovering national banks towards the private banks which experience capital problem through the recapitalization of banks to recover the banking equity. The program is assumed to be welcomed positively by the capital market in Indonesia although in its implementation there are pros and contras.
3. Based on the t-statistic test, by comparing t-test and t-table it can be derived that: first, the GCG implementation on each bank positively and significantly influences the bank’s market value. It was shown with the value of t- test > t-table (4.1672 > 1.711) that H0 is rejected and H1 is accepted. Second, the proportion of government ownership on each bank significantly and positively influence on the bank’s market value. It is shown with the values of t-test > t-table (2.7444 > 1.711), that H0 is rejected and H2 is accepted.
4. f-statistic test was used to examine the relationships among independent variables and dependent variable. It was performed by comparing f-test and f-table. The result shows that the value of f-tests 9.1332 while the value of f- table is 3.01 (9.1332 > 3.01). Therefore it can be concluded that H0 is rejected, or, in other words, along with the GCG variables, the proportion of government equity and the form of government ownership significantly influence the bank’s market value.
5. The value of R2 coefficient is 0.6308. It means that approximately 63.08% of the bank’s market value can be defined by the variation of GCG implementation, the proportion of the government ownership, while the remaining, 36,92%, is defined by the factors beyond the scope of the study.
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5. CONCLUSION
First, due to the implementation of GCG principles, descriptive statistic result show that generally the implementation of transparency, accountability, responsibility, independence, and fairness in the banking firms are good enough although there are gaps among the banks marked by the standard deviations which are relatively significant, especially on transparency and accountability principles. Second, the analysis results with multiple regression show that the GCG implementation positively and significantly influence the banking market value. In other words, the variable has an important role in increasing the banks’ market value. Third, the proportion of government ownership positively and significantly influence the banks’ market value. The variable has an important role in increasing the banks’ market value.
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