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Sunk Cost Dilemma Behavior: The Contribution Marketing Expenses towards Financial Performance

Memarista, Gesti ( Department of Management, Faculty of Economics, Petra Christian University Jl. Siwalankerto 121-131 Surabaya, 60236 ) , Gestanti, Lila ( Department of Management, Faculty of Economics and Business, Universitas Airlangga Jl. Airlangga No.4, Surabaya, 60286 )

Jurnal Keuangan dan Perbankan Vol 22, No 4 (2018): October 2018
Publisher : UNIVERSITY OF MERDEKA MALANG

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Abstract

Marketing expenses can drove the financial performance of a company, but sometimes it was only a sunk cost. The sunk cost dilemma behavior can confuse a financial manager, confounding decisions about whether to invest in marketing. Thus, this study aimed to explain the relationship between marketing expenses and profitability. The research subjects were manufacturing firms listed on the Indonesia Stock Exchange between 2012 and 2016. The results showed that marketing-related research and development expenses, selling expenses, and operating cash flow had a significant positive relationship with return on assets (ROA) and return on equity (ROE). Moreover, lagged research and development expenses—specifically, expenses from the previous four years (RnDt-4)—had a significant effect on ROA and ROE. Leverage had a significant negative effect on ROA and ROE. On the other hand, firm size had no significant impact on profitability. The findings showed that marketing expenses were not a sunk cost; they were an investment that leads to good financial performance. Greater investments in marketing expected to entice consumers bought a company’s products and created more profitability, leading to improved financial performance.JEL Classifications: L25, M31, M37 DOI: https://doi.org/10.26905/jkdp.v22i4.1871 

Value Relevance Human Capital Information on the Annual Report of Indonesia Listed Companies

Feliana, Yie Ke ( Department of Accounting, Faculty of Economics and Business, University of Surabaya Jl. Kali Rungkut Surabaya, 60293 ) , Novita, Ester ( Department of Accounting, Faculty of Economics and Business, University of Surabaya Jl. Kali Rungkut Surabaya, 60293 )

Jurnal Keuangan dan Perbankan Vol 22, No 4 (2018): October 2018
Publisher : UNIVERSITY OF MERDEKA MALANG

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Abstract

Human resources at the companies in Indonesia should be an important focus for investors, due to the general complaints of low labor productivity compared to other countries. This study aimed to investigate the value relevance of human capital disclosure and changes of human capital disclosure to share price and share return on listed companies at Indonesia Stock Exchange from all industrial sectors in 2016. Human capital information measured by word counting of information related to human capital in the firm annual report. The results showed that the disclosure information of human capital was value relevant with share price but only from qualification/ competencies category. For the disclosure changes in human capital, the information did not show any significant effect to return per share. Thus, generally Indonesia investors only focus on information on qualification/competency human resources in companies at that time, other information was ignored.JEL Classification: G11, G14, J24DOI: https://doi.org/10.26905/jkdp.v22i4.1945 

The Integration of ASEAN-5 Capital Market after the Donald Trump Election

Suganda, Tarsisius Renald ( Department of Accounting, Faculty of Economics and Business, Universitas Ma Chung Villa Puncak Tidar N-01, Malang, 65151 ) , Hariyono, Anneth Regina ( Department of Accounting, Faculty of Economics and Business, Universitas Ma Chung Villa Puncak Tidar N-01, Malang, 65151 )

Jurnal Keuangan dan Perbankan Vol 22, No 4 (2018): October 2018
Publisher : UNIVERSITY OF MERDEKA MALANG

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Abstract

Donald Trump’s victory as the 45th President of the United States had negative responses on the ASEAN countries, especially on the stock market performance. This study conducted to investigate the existence of integration and contagion effect on the capital market of the ASEAN-5 countries after the election of Donald Trump. The five countries used in the research were Indonesia, Singapore, Malaysia, Thailand, and the Philippines. The five countries selected based on the highest FDI (foreign direct investment) flows among other ASEAN countries. Vector Error Correction models (VECM) and Granger Causality tests used as the analysis tools in the study. The daily closing stock price index of ASEAN-5 countries in 2016–2017 collected to be analyzed. The result of VECM model analysis and Granger causality test found the integration and contagion effect of the capital market in ASEAN-5 countries. The Granger Causality test showed that the Philippines had a contagion effect from other ASEAN-5 countries after the election of Donald Trump as the 45th President of the United States. In addition, it also found a two-way causal relationship between Singapore and Thailand, which showed that these two countries gave each other contagion effects.JEL Classification: G31, G32, G34DOI: https://doi.org/10.26905/jkdp.v22i4.1990  

The Contagion Effect of Muslim Street Rallies on Stocks’ Volatility: Is it a Political Risk for Investors?

Adawiyah, Wiwiek Rabiatul ( [SCOPUS Author ID: 57000534900] Department of Management, Faculty of Economics and Business, Universitas Jenderal Soedirman Jl. Prof. Dr. HR. Boejamin 708 Purwokerto, 53122 ) , Pramuka, Bambang Agus ( [SCOPUS Author ID: 57000578200] Department of Accounting, Faculty of Economics, Universitas Jenderal Soedirman Jl. Prof. Dr. HR. Boejamin 708 Purwokerto, 53122 )

Jurnal Keuangan dan Perbankan Vol 22, No 4 (2018): October 2018
Publisher : UNIVERSITY OF MERDEKA MALANG

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Abstract

Muslim street rallies refer to the super-peaceful mass street mobilizations to pressure law enforcement against a blasphemer, the Governor of Jakarta. The Event was organized by the National Movement to Safeguard the Indonesian Muslim Scholar Council’s Fatwa (GNPF-MUI) on the 4th of November (411) and 2nd of December (212) 2016 at the capital city of Indonesia. We compare the performance of stock returns and shares trading volume on the Indonesian Stock Exchange (IDX) before and after the events. The observations were made stock performance seven days before and after the events. We found that the event had a significant influence on the abnormal return of stocks sold in the Indonesian Stock Exchange during the first event held on November 4th, but the case was different on the second event. Thus, investors do not consider the event as a political risk for portfolio investment. This study contributes to existing literature as the first to analyze the impact of the super peaceful rally on the pattern of stock price and trading volume in the Indonesian stock market.JEL Classification: G14, G32DOI: https://doi.org/10.26905/jkdp.v22i4.2123  

The Effect of Tax Avoidance and Tax Risk on Corporate Risk

Firmansyah, Amrie ( Polytechnic of State Finance STAN Jl. Bintaro Utama Sektor V, Bintaro Jaya, Tangerang, 15222 ) , Muliana, Rizka ( Polytechnic of State Finance STAN Jl. Bintaro Utama Sektor V, Bintaro Jaya, Tangerang, 15222 )

Jurnal Keuangan dan Perbankan Vol 22, No 4 (2018): October 2018
Publisher : UNIVERSITY OF MERDEKA MALANG

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Abstract

Tax avoidance could increase the corporate risk for several reasons. First, tax avoidance increases the uncertainty of future corporate tax payments, second, the tax avoidance rate could serve as a leading indicator of the company's investment risk. We examined tax avoidance and tax risk on corporate risk. Corporate risk is uncertainty about the future net cash flows of the company as well as a type of risk inherent in management's decision-making arrangements. The sample used in this study were non-financial companies listed on the Indonesia Stock Exchange (IDX). The study used the method of purposive sampling; selected corporate data amounted to 80 so that the sample in this study amounted to 240 firm-years. The method examination in this research used multiple regression analysis with panel data. We found that tax avoidance is not associated with corporate risk. This result indicated that the company that conducts tax avoidance is not related to corporate risk.  Furthermore, tax risk is not associated with corporate risk. Thus, tax risk could not capture corporate risk because corporate external factors may cause it. JEL Classification: C33, H26, G31DOI: https://doi.org/10.26905/jkdp.v22i4.2237 

Issuers’ Insight for Identifying Choice of Sukuk Structuring

Utami, Datien Eriska ( Department of Sharia Business Management, Faculty of Economics and Islamic Business, IAIN Surakarta Jl. Pandawa, Pucangan, Kartasura, 57168, ) , Irawati, Zulfa ( Department of Management, Faculty of Economic and Business, Universitas Muhammadiyah Surakarta Jl. A. Yani, Mendungan, Kartasura, Sukoharjo, 57162 )

Jurnal Keuangan dan Perbankan Vol 22, No 4 (2018): October 2018
Publisher : UNIVERSITY OF MERDEKA MALANG

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Abstract

One of the common problems that occur in Indonesia concerning the issuance of Sukuk is the limited issuance of Sukuk by companies. There were only two types of Sukuk issuance issued by companies, namely Mudaraba Sukuk and Ijarah Sukuk, and based on the data of OJK Sukuk Statistics, as of 2017 the issuance of Ijarah Sukuk still dominates Sukuk issuance. We investigated to discover how issuers of Sharia bonds (Sukuk) choose between the issuance of Mudaraba Sukuk and Ijarah Sukuk structures, based on the determinant factors of company characteristics, variables related to Sharia, and type of company industry. The population in this study were companies that issue Mudaraba Sukuk and Ijarah Sukuk. The sampling technique used is purposive sampling. The selection of the research sample consists of 27 issuers that issued 59 Ijarah Sukuk and 31 Mudaraba Sukuk during the period of observation. By implementing a probit regression analysis, the results showed that leverage level, Sharia compliance, and financial industry type might all influence the choice of companies to issue Mudaraba Sukuk.JEL Classification: G12, G23, O16DOI: https://doi.org/10.26905/jkdp.v22i4.2402

Non-Linear Impact of Growth Opportunity and Firm Size on the Capital Structure

Suk, Kim Sung ( Department of Management, Business School, Universitas Pelita Harapan Jl. MH. Thamrin Boulevard 1100, Tangerang, 15811 ) , Juliana, Rita ( Department of Management, Business School, Universitas Pelita Harapan Jl. MH. Thamrin Boulevard 1100, Tangerang, 15811 ) , Ekaputra, Irwan Adi ( [SCOPUS Author ID: 55545530000] Department of Management, Faculty of Economics and Business, Universitas Indonesia Kampus Widjojo Nitisastro, Jl. Prof. Dr. Sumitro Djojohadikusumo, Depok, 16424 )

Jurnal Keuangan dan Perbankan Vol 22, No 4 (2018): October 2018
Publisher : UNIVERSITY OF MERDEKA MALANG

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Abstract

One of the focuses on capital structure studies is to identify economic forces influencing corporate capital structure. We investigated the non-linear effects of the firm-specific factors to the leverage of the firm of the US-listed firms. In the partial-adjusted model, growth opportunity and the size of the firm had non-linear effects on the leverage of the firm. Growth opportunity showed quadratic effects on leverage with a negative linear term but a positive quadratic term. It meant if the growth opportunity of a firm reached a certain level, fund providers can relatively detect it and subsequently causes a decrease in asymmetric information. This detection of ample growth opportunity will increase the accessibility of external funding. Firm size also exhibits quadratic effects on leverage with a positive linear term but a negative quadratic term. In other words, if the firm size as a proxy of various omitted variables was imminent, the financial market has been applied the diversification discount that will decrease the accessibility of external funding.JEL Classification: G32, D92DOI: https://doi.org/10.26905/jkdp.v22i4.2402  

Does Working Capital Management Affect the Profitability of Property and Real Estate Firms in Indonesia?

Firmansyah, Johan ( Business School, Institut Pertanian Bogor, Pajajaran Street, Bogor, 16151 ) , Siregar, Hermanto ( Department of Economics, Institut Pertanian Bogor, Kampus Dramaga, Bogor, 16680 ) , Syarifuddin, Ferry ( Business School, Institut Pertanian Bogor, Pajajaran Street, Bogor, 16151 )

Jurnal Keuangan dan Perbankan Vol 22, No 4 (2018): October 2018
Publisher : UNIVERSITY OF MERDEKA MALANG

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Abstract

During 2013-2017, the increase in net profit of property companies in Indonesia was accompanied by an increase in the cash conversion cycle and net working capital ratio which indicated that performance was increasing but not in cash flow and management of working capital was not productive. The purpose of the study to determine the significant effect of working capital management on profitability and working capital element which has the dominant effect. This study used control variables of sales growth, company size, interest rate, and exchange rate. This study used a descriptive approach and panel data regression. The results showed that the Cash Conversion Cycle (CCC) had a significant negative effect on OPM, ROA, and ROE. Current asset to total assets ratio (CATAR) had a significant positive effect on ROA and ROE. Current liabilities to total assets ratio (CLTAR) have a positive effect significant to OPM and debts to total asset ratio (DTA) have a significant negative effect on OPM and ROA. While CLTAR had the most dominant effect on OPM because it has the highest estimation coefficient among others and the company more aggressive in implementing its working capital policy to achieve higher operating profit.JEL Classification: C33, G31, E43, F31DOI: https://doi.org/10.26905/jkdp.v22i4.2438

Family Ownership, Women in Top Management and Risk-Taking: Evidence from Indonesia

Widyawati, Novi ( Master of Management, Universitas Sebelas Maret Jl. Ir. Sutami No.36A Surakarta, 57126 ) , Trinugroho, Irwan ( [SCOPUS Author ID: 56178586300] Department of Management, Faculty of Economics and Business, Universitas Sebelas Maret Jl. Ir. Sutami No.36A Surakarta, 57126 ) , Untoro, Wisnu ( Department of Management, Faculty of Economics and Business, Universitas Sebelas Maret Jl. Ir. Sutami No.36A Surakarta, 57126 )

Jurnal Keuangan dan Perbankan Vol 22, No 4 (2018): October 2018
Publisher : UNIVERSITY OF MERDEKA MALANG

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Abstract

Family firms were widely recognized to have a substantial contribution to the economy, especially in emerging economies. However, some previous studies reveal that family firms tend to be conservative and unwilling to take more risks. We extended the literature by investigating whether there was a difference in risk-taking behavior between family and non-family firms in the context of Indonesia. Moreover, the presence of women in the top management also considered negatively correlated with risk-taking strategy. Therefore, this study empirically examined the effects of family ownership and women in top management on a risk-taking strategy of firms. Using data of 336 publicly traded firms in Indonesia over 2012-2016, this study confirmed the negative effect of family ownership and women in top management on corporate risk-taking. Family ownership and involvement as the CEO of the firms negatively associated with the level of risk taking. Moreover, our results reveal that the presence of women was a matter more to decrease corporate risk-taking when they served in the board of directors rather than in the board of commissioners.JEL Classification: G32, M14DOI: https://doi.org/10.26905/jkdp.v22i4.2452 

Good Corporate Governance: Firm Performance and Ownership Causality Test

Gunarsih, Tri ( Department of Accounting, Faculty of Economics, Universitas Teknologi Yogyakarta Jl. Siliwangi, Ring Road Utara, Sleman, Yogyakarta, 55285 ) , Setiyono, Setiyono ( Department of Accounting, Faculty of Economics, Universitas Teknologi Yogyakarta Jl. Siliwangi, Ring Road Utara, Sleman, Yogyakarta, 55285 ) , Sayekti, Fran ( Department of Accounting, Faculty of Economics, Universitas Teknologi Yogyakarta Jl. Siliwangi, Ring Road Utara, Sleman, Yogyakarta, 55285 ) , Novak, Tamas ( Budapest Business School H-1051 Budapest, Marko Street 29-31 )

Jurnal Keuangan dan Perbankan Vol 22, No 4 (2018): October 2018
Publisher : UNIVERSITY OF MERDEKA MALANG

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Abstract

Ownership structure, among other things, is one mechanism in corporate governance. In this context, ownership has a monitoring function. Another corporate governance mechanism is the market for corporate control. If managers did not act in the best interest of shareholder, then firm performance will decrease. The changing in ownership will follow the decreasing of firm performance. This will raise an interesting question, whether ownership caused by firm performance or vice versa. The objectives of this study to test whether monitoring function or market for corporate control that was implemented as a corporate governance mechanism in Indonesia using causality model. A panel Granger-causality test base on Ganger (1969) applied to test the causality. Samples in this study were manufacture listed companies in Indonesia Stock Exchange during 2012-2016. Ownership concentration was proxy by the Herfindahl Index of Domestic Institution ownership. The firm performance indicators in this study were efficiency, measured by Operating cost to Sales ratio, and Sales to Asset ratio and Tobin’s Q. The results of the study showed that there was a bi-causality relationship between ownership concentration and both firm performance indicators. These suggested that the monitoring function and the market for corporate control were implemented as a corporate governance mechanism in Indonesia.    JEL Classification: G32, G34, G23DOI: https://doi.org/10.26905/jkdp.v22i4.2469