Purpose The purpose of this study is to investigate simultaneous relations between corporate governance (CG) practice and cash flow right, cash flow leverage (the divergence between control right and cash flow right of controlling shareholders). The two ownership measures reflect alignment and expropriation incentives of controlling shareholders. This study also examines the effect of multiple large shareholders (MLSs) on CG practice. Design/methodology/approach The study uses publicly listed companies (PLCs) excluding those from the Indonesian finance sector during 2011-2013 as the samples of the study. Two-stages least squares regression models were used to test the simultaneous relations between CG practice and ownership structure variables. The study develops a CG instrument to measure CG practice based on ASEAN CG Scorecard, that comprehensively covers OECD CG principles and that can be used for panel data. Findings CG practice has a positive influence on cash flow right and has a marginally negative impact on cash flow leverage, while cash flow right and cash flow leverage have a marginally negative impact on CG practice. Further, the existence of large MLS complements CG practice, but as the control right of the second largest shareholders becomes closer to the largest shareholder, the complement relation becomes less important. State- or foreign-controlled PLCs practice better CG than other PLCs. Research limitations/implications Studies on CG/ownership structure need to treat CG and ownership structure as endogenous variables in their research design. In addition, the level of rule of law in a country should be taken into account when examining the relation between CG and ownership structure. The interrelation among CG, ownership structure, capital structure and firm performance has been studied in the context of dispersed ownership structure and strong rule of law. Thus, future study needs to examine the interrelation among these four concepts in countries with high concentrated ownership and weak rule of law. Practical implications To minimize the risk of expropriation, investors in the capital market need to select shares of PLCs that practice CG suitable for the ownership structure of PLCs, have high ownership by the largest shareholder and have no divergence between control and ownership right, and or have MLSs. PLCs may need to choose the level of CG mechanism in the context of their ownership structure and consider the benefits and costs implementing them. Social implications The study supports the “one size does not fit all” perspective on CG and, thus, it supports the recently enacted financial service authority (FSA) rule requiring PLCs to follow the “comply or explain” rule on the CG code for PLCs. The FSA needs to enforce the compliance of PLCs with CG rules and encourage PLCs to implement CG in substance, not just in form. To strengthen the positive impact of good CG practice in attracting investments in capital market, the regulator needs to improve investor protection rules and ensure strong rule of law. Originality/value The study is the first to examine the simultaneous relation between CG practice and both cash flow right and cash flow leverage of the largest shareholder. It is also the first that investigates the impact of MLS on CG practice. It explores the complement and substitution relation between the two concepts in reducing agency costs. In term of research design, the study develops a CG instrument that is based on OECD CG principles, that can be used for panel data and that uses public information.

Purpose -The purpose of this paper is to provide empirical evidence about the influence of the size of local government, the quality of local government financial statements, the level of local government response to the disclosure of financial information and the local political environment on the transparency of local government in Indonesia. Design/methodology/approach -The study sample consisted of 34 regional governments (provinces) in Indonesia in 2016, using purposive sampling and multiple regression analysis. Findings -The results showed that the quality of financial reporting through the audit opinion and political environment have a significant positive effect on the transparency of local government in Indonesia. On the other hand, the size of the local government and local government response rate on the regulation do not affect the transparency of local government in Indonesia. Originality/value -The agency, legitimacy and institutional theory have an important role in the underlying local government transparency practices in Indonesia. The results of this study should be used as the basis of thought and study to determine the factors that affect the performance of local governments from the financial and non-financial aspects.

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This study aims to examine a contingent factor of business strategy decisions, namely environmental uncertainty. The study applies secondary data as an alternative method to analyze technological uncertainty: a component of environmental uncertainty. To examine environmental uncertainty, this study develops an Environmental Uncertainty Index (EUI). Utilizing a sample of manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the period from 2009 to 2012 and a multinomial logistic regression, this study finds that the probability of a company pursuing a prospector strategy is greater than an analyzer strategy. Notwithstanding, the study fails to prove that the probability of a company opting for a defender strategy is greater than an analyzer approach. The findings suggest that the new measure of technological uncertainty is more applicable than the other existing measures. Furthermore, EUI measures the environmental uncertainty objectively, therefore, this new measure could be applied to future research. In general, this study broadens understanding concerning the relationship between business strategy and its contingent factors, namely environmental uncertainty. KeywordsBusiness strategy, contingent factor, environmental uncertainty, Indonesia. AbstractThis study aims to examine a contingent factor of business strategy decisions, namely environmental uncertainty. The study applies secondary data as an alternative method to analyze technological uncertainty: a component of environmental uncertainty. To examine environmental uncertainty, this study develops an Environmental Uncertainty Index (EUI). Utilizing a sample of manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the period from 2009 to 2012 and a multinomial logistic regression, this study finds that the probability of a company pursuing a prospector strategy is greater than an analyzer strategy. Notwithstanding, the study fails to prove that the probability of a company opting for a defender strategy is greater than an analyzer approach. The findings suggest that the new measure of technological uncertainty is more applicable than the other existing measures. Furthermore, EUI measures the environmental uncertainty objectively, therefore, this new measure could be applied to future research. In general, this study broadens understanding concerning the relationship between business strategy and its contingent factors, namely environmental uncertainty.JEL Classification: L10, L20, M14.

is a research fellow at FEUI. She is also a lecturer in the Bachelor and Master programs at FEUI. Her areas of interest include investment in capital markets, corporate finance and corporate governance. She has authored a number of articles and papers and has presented her research works in international as well as national conference/seminars. Sidharta Utamais a full professor at the University of Indonesia (UI) and is the chairman of the management board of the Indonesian Institute for Corporate Directorship, an NGO aiming to advance good corporate governance practices in Indonesia. He obtained his undergraduate degree in accounting from UI, MBA in finance and information systems from Indiana University, and PhD in accounting from Texas A&M University in 1996. He obtained professional certification as a chartered financial analyst in 1999. At present, he serves as a member of the Tax Oversight Committee, Ministry of Finance, and as a member of the audit committee in a number of listed companies in Indonesia.ABSTRACT This study aims to investigate whether (a) corporate governance (CG) practice has a negative impact on size of Related Party Transactions (RPTs); (b) size of RPTs affects firm value; and (c) better corporate governance practice and higher disclosure on RPTs reduce the negative impact of size of RPTs on firm value. Our sample covers listed companies at the Indonesian Stock Exchange during 2005-2007. We document that better CG significantly reduces the size of RP liabilities and marginally lowers the size of RP assets. Consistent with these findings, we find that size of RPTs has a positive impact on firm value when the transaction involves loans/borrowings from related parties and that it has no impact on firm value when the transaction involves asset placements in related parties. Finally, we find that for companies with less than full disclosure of RPTs, size of RP assets has a negative effect on firm value.