Director independence: Going beyond misaligned incentives to resource dependence

Board director independence is critical to achieving and maintaining control to address the agency theory–based issue of interest misalignment between the principal (the organization) and the executives (agent). However, theoretical and empirical research and strategic risk considerations have brought into question the role or relevance that director independence plays in these control task and agency theory domains. We ask, using a quantitative survey method, whether board activity–based applications of independence may be associated with the service task of the board, namely its resource dependence mission. Our findings suggest that the resource dependence duty of the board may be positively associated with some autonomous activities, and yet other activities might be driven primarily by normative practices. Based on this, we suggest that a theoretical scope beyond and greater than agency theory may be needed when reassessing the role of director independence. JEL Classification: M1, O3

DETERMINAN PENGUNGKAPAN ISLAMIC SOCIAL REPORTING PERUSAHAAN YANG TERGABUNG DI JAKARTA ISLAMIC INDEX

This study aims to examine the determinants of the disclosure of Islamic social reporting of companies incorporated in the Jakarta Islamic Index. ISR determinants in this study are company size, profitability, leverage, board size, and company age. The population used in this study were all companies listed on the Jakarta Islamic Index (JII) for the period 2016 to 2018. The sampling method used was purposive sampling with a sample size of 51 company years. Data panel regression is used to achieve the goal. The results showed that company size, leverage, and the independent board of commissioners had a significant effect on the disclosure of Islamic social reporting. Meanwhile, profitability and company age show the opposite result.Keywords:Islamic Social Reporting; Firm Size; Leverage: Indepencent Board Director; Firm Age.

The effect of gender diversity of board directors and accounting conservatism on firm value

The study aims to investigate the relationship between the gender diversity of board director, the accounting conservatism and firm value in Iraqi firms. The sample was represented by 30 Iraqi firms listed on the Iraqi market over the period 2017. The research was based on the main hypothesis that gender diversity has a positive relationship with conservatism and firm value, that conservatism as an intermediate variable will enhance the positive relationship between gender diversity and firm value. The study reached results that support the research hypotheses. The appointment of females to the board helps improve the provision of conservative accounting information and avoids overstate when reporting earnings. Based on these results, Therefore, we recommend the Iraqi companies appoint between 15 to 30% of females on the board.

The Effect of Board of Director Composition and Audit Committee Expertise on The Real Earnings Management in Indonesia

The Objective of this research was to prove that the implementation of good corporate governance will have an effect on the real activities manipulation which was done by the management. The implementations of good governance used by this research are board of director composition and audit committee expertise. This research was conducted in Indonesia by using 306 firm years’ observations. The result of this research showed a different result from previous researches. This research showed that the implementation of good corporate governance in the form of board director composition and audit committee expertise do not impact the practice of real activities manipulation. Or, in other words some of the good corporate governance tool could not mitigate the real activities manipulation in the company.

Top management gender diversity and performance: in search of threshold effects

The impact of gender diversity on business performance has been featured prominently on the agenda of many politicians and business leaders in recent years. However, empirical results of the impact of gender diversity on firm performance have been ambiguous. This paper contributes to the literature by using propensity score-based estimation techniques on a large sample of UK firms to analyse the performance effect of appointing a first female board director. We look at financial and non-financial performance indicators and document significant effects on firm growth and labour cost efficiency, but rather fragile ones on accounting returns, such as profitability. We also document evidence of another threshold effect; namely, gender diversity appears to have its highest impact (its ‘ceiling’) when the proportion of female directors is approximately 30%. Carrying out a sensitivity analysis, we conclude that hidden bias must be implausibly high to be able to attribute the beneficial effects of boardroom gender diversity to unmeasured confounding.

Representative Board Governance: What Role Do Board Directors Have in Representing the Interest of Their Constituents?

The current ethos of most nonprofit boards of directors focuses on role clarity between board directors and the executive director. The board’s role is to collectively set strategic direction and provide oversight while leaving day-to-day operations to staff. Yet, many individual directors join a board to make an impact on the organization by addressing very specific operational concerns and/or to represent a stakeholder group, and this creates tension at the board table. This article explores whether there is necessarily a trade-off between the representative and good governance roles of a nonprofit board director. It will demonstrate that the tension between representing member interests and governing nonprofits is a false dichotomy. Reconciling these two interests offers some potential avenues for improved organizational accountability.

Pengaruh Fraud Pentagon dalam Mendeteksi Fraudulent Financial Reporting Menggunakan Beneish Model serta Implikasinya terhadap Nilai Perusahaan

Penelitian ini bertujuan untuk menguji secara empiris pengaruh unsur-unsur Pentagon Fraud dalam hal ini financial target (elemen pressure), ineffective monitoring (elemen opportunity), change in directors (elemen capability), koneksi politik (elemen arrogance terhadap terjadinya fraudulent financial reporting. Penelitian ini juga menguji lebih lanjut apakah praktik fraudulent financial reporting dapat memoderasi pengaruh elemen-elemen fraud pentagon terhadap nilai perusahaan. Populasi penelitian ini adalah perusahaan yang terdaftar di Bursa Efek Indonesia tahun 2012-2018 sebanyak 49 perusahaan. Pemilihan sampel dilakukan dengan metode purposive sampling didapatkan sampel sebanyak 22 perusahaan. Teknik analisis yang digunakan untuk menguji hipotesis adalah analisis regresi berganda dengan menggunakan software SPSS 21. Hasil dari penelitian ini menunjukkan bahwa hanya variabel change of board director berpengaruh positif signifikan te;rhadap kecurangan laporan keuangan, sedangkan variable lainnya tidak mempunyai pengaruh yang signifikan terhadap terjadinya kecurangan laporan keuangan. Hasil penelitian juga menunjukkan bahwa variable kualitas auditor eksternal berpengaruh positif signifikan terhadap nilai perusahaan. Lebih lanjut hasil peneloitian menunjukkan praktik fraudulent financial reporting memperkuat pengaruh fraud pentagon terhadap nilai perusahaan.

Analisis Faktor yang Mempengaruhi Non Performing Loan pada Bank Perkreditan Rakyat di Nusa Tenggara Barat

This study aims to provide empirical evidence about main cause of height Non Performing Loan (NPL) at Rural Bank in West Nusa Tenggara. The methodology used is Factor Analysis exploratory . Population in this research is all Rural Bank in West Nusa Tenggara. Total Respondent are 128 respondent which are Board Director, Marketing department, and Collection Department. Based on previous research found 38 variabel that causes NPL at Rural Bank. By using analysis factor the study found 10 major factors as the main cause of the NPL at Rural Bank in West Nusa Tenggara. The results of this research can be used as a reference for Rural Bank in an attempt to suppress the NPL in each Rural Bank. In addition, it can be used as a reference for financial Services Authority (OJK) in the surveillance institution to BPR. Keywords: Non Performing Loan; Rural Bank; Factors Analysis; Main factor.

What makes a board director better connected? Evidence from graph theory

We are interested in quantifying and uncovering the relationships that form between the board directors of companies. Using these relationships we compute three network centrality measures for each director in the network and employ them in the analysis of connectedness of directors. Our focus in this study is on the attributes that make a board member better connected. The biological, educational and experiential attributes are used as independent variables to develop a regression model measuring the impact on the three connectivity measures (degree, betweenness and closeness). Our results show that ?Age? has a direct significant impact on all connectedness measures of a board member. We also find that female directors have a higher measure of degree centrality and betweenness centrality, but lower closeness. The number of foreign degrees increases the degree centrality and betweenness centrality but not closeness. The three identified characteristics of ?Age?, ?Gender?, and ?Education? are supporting the idea that a high level of social connection can in part be expected by the characteristics of individual board members and can explain up to 25% of the board member?s connectivity.