What Drives Firm-level Anti Corruption and Bribery Mechanism in Indonesia?

Tanjung, Miranda

doi:10.5220/0009401801870196

Cited by 1 publication

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“…The current study expands on prior research that constructed CG indices (Arora and Bodhanwala, 2018; Iqbal et al. , 2019; Tanjung, 2020), by taking into account additional CG factors reflecting the compliance of Indonesian enterprises. The CG index (GOVINDEX) in this study is constructed using 15 Indonesian CG elements or attributes.…”

Section: Model Development and Econometric Methodologymentioning

confidence: 96%

“…This mechanism is concerned not only with management's efficacy in achieving corporate objectives but also plays an important role in strategic investment decision-making. Following earlier research (Tanjung, 2020), this study constructs a comprehensive CG index by identifying 15 governance elements or variables that are considered to be significant determinants of high compliance. These variables are grouped into four clusters: (1) firm type and ownership structure, (2) family control, (3) financial characteristics and (4) financial crisis.Firm type and ownership structure…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

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Determinants of corporate governance compliance: what matters and what does not?

Tanjung

2023

JBSED

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PurposeThe objective of this study is to assess the level of corporate governance (CG) compliance and identify determinants of high compliance in Indonesian publicly listed corporations including family and nonfamily firms. The country uses a voluntary disclosure approach to enforce its regulations; thus, it is important to identify the factors affecting compliance.Design/methodology/approachEmploying a logistic regression model, this paper analyzes the CG index of high-compliance vs. poor-compliance companies and emphasizes factors that contribute to better governance compliance. The CG index of high-compliant firms is almost twice as high as that of low-compliant firms.FindingsThe study explores factors that contribute to high CG in an emerging market like Indonesian corporations. The study's findings indicate that family-owned businesses predominate in the low-compliance group. High-compliance firms are older and larger with higher financial performance, free float and leverage, as well as a positive influence of the founder's great leadership. The results support theoretical arguments that concentrated ownership and excessive majority shareholder control are key factors in determining the likelihood of good governance practices by firms. Hence, the market and regulators should devise effective strategies to encourage and reward high compliance.Research limitations/implicationsThe findings of the research offer several implications for the academic community and policymakers. Improving CG at the firm level is a viable goal, even though the agenda to reform minority investor protection laws and increase judicial quality is challenging and may take a long time to show significant results. Moreover, this study has some limitations that could be addressed in future research. The study focuses on a single-country setting, Indonesia. There are cultural aspects and governance settings that may be unique in the Indonesian context, which may limit the applicability of the findings to other countries with their own cultural settings and institutional legal framework.Originality/valueThe study investigates the factors that influence high governance compliance in specific CG regulations designed for the emerging Indonesian market. The study also discovers evidence that the crisis period has a favorable impact on the firm's decision to comply with governance provisions.

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Section: Model Development and Econometric Methodologymentioning

confidence: 96%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%