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Journal of Indonesian Economy and Business
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THE IMPACT OF A DISAGGREGATION STRATEGY WITH SUPPLEMENTARY DISPLAYS TOWARDS BALANCED SCORECARD PERFORMANCE EVALUATION

Kasingku, Frisky Jeremy, ., Goedono

Journal of Indonesian Economy and Business Vol 32, No 3 (2017): SEPTEMBER
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

Balanced Scorecard has become a popular management tool around the world. Despite its benefits, the balanced scorecard creates a bias called the common- measures bias. The bias associated with a balanced scorecard should be eliminated so that the optimal benefits of the balanced scorecard can be obtained. To eliminate the bias, a disaggregation strategy is suggested. This disaggregation strategy is found to be a mitigation strategy to solve the common-measures bias. However, there is a small amount of empirical evidence about the quality of the decisions produced by using a disaggregation strategy. Furthermore, to increase the decisions’ quality, an information display was found to be helpful. Therefore, this study aimed to investigate the effect of a disaggregation strategy, in the context of a balanced scorecard, toward the decisions’ quality regarding the balanced scorecard’s performance evaluation with a different information display. This study used an experimental method with the design of 3x2x2 between the subject’s factorial designs. The results indicated that decision makers with supplementary tabular and graphic displays would exhibit a greater judgment consensus than decision makers who were given traditional separate displays. Moreover, those who received the supplementary table displays exhibit a greater judgment consensus and consistency than those who were given a graphical display. In conclusion, a disaggregation strategy with table and graphic displays could improve a judgment’s consensus, a traditional display can improve a judgment’s consistency, and a table display could exhibit greater judgmental consensus and consistency than a graphic display. This study contributed theoretically and practically.

TAX AVOIDANCE, RELATED PARTY TRANSACTIONS, CORPORATE GOVERNANCE AND THE CORPORATE CASH DIVIDEND POLICY

Sari, Dewi Kartika, Utama, Sidharta, Rossieta, Hilda

Journal of Indonesian Economy and Business Vol 32, No 3 (2017): SEPTEMBER
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

This study aims to investigate the relationship between tax avoidance, related party transactions and the corporate dividend policy. Furthermore, this study will also investigate the moderating effects of the implementation of Corporate Governance (CG) on the relationship between tax avoidance, Related Party Transactions (RPT) and corporate dividend policies. Our sample covers companies listed on the Indonesian Stock Exchange during 2011-2014. The results provide moderate support for the proposed hypotheses. First, the greater tax avoidance that a company makes will increase the size of the firms RPT. Second, the higher that the companys RPT is, this will lower the companys cash dividend payout rate. Third, the greater the tax avoidance is, the lower the companys cash dividend payout rate will be, which is done through a related party transaction.Fourth, the impact of the implementation of strong CG will weaken the positive relationship between corporate tax avoidance and the company’s RPT size, strengthen the negative relationship between the RPT’s size and the cash dividend payout policy of the firm, and strengthen the negative relationship between the company’s tax avoidance and the companys cash dividend payout policy which is mediated by the company’s RPT. This study makes three contributions. First, this study shows an indirect relationship between tax avoidance and cash dividend payments, mediated by RPT. Second, this study tries to examine the effect of CG’s moderation on the relationship between tax avoidance and RPT, as well as the effect of CG’s moderation on the relationship between tax avoidance and cash dividend payments, mediated by RPT. Third, this study developed RPT measurements by looking at the RPT’s components more specifically (looking at components of transactions outside of the main business of the company - the "others" component).

EFFECTS OF REMITTANCES ON POVERTY REDUCTION: THE CASE OF INDONESIA

Nahar, Faiza Husnayeni, Arshad, Mohd Nahar Mohd

Journal of Indonesian Economy and Business Vol 32, No 3 (2017): SEPTEMBER
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

Remittances have been reported as a tool for fighting poverty in some selected countries, such as Indonesia. An increase of income through remittances tends to improve the economic status of the migrant’s household. Once they get a high salary, they will remit money (a remittance) to their household in Indonesia via formal institutions, such as banks.  The migrant’s household can fulfil their basic needs and can use the remittance for educational investment and productive activities. The education investment aims to educate the children or grandchildren of migrants, which will be beneficial for the future generations of the family, allowing them the chance of a more prosperous life. The poverty rate would be reduced gradually, and economic welfare can be achieved. The main objectives of this paper are first to estimate the effects of remittances on poverty in Indonesia from 1983 to 2015 and second, to propose several strategic policies related to remittances and poverty reduction. Other variables considered include inflation, exchange rates, income, income inequality and the labor force participation rate. An Ordinary Least Square (OLS) method was used to explore the econometric and estimated results. The study found that an increase in remittances led to a reduction in poverty by 2.56%. Inflation and the exchange rate have positive and negative effects on poverty, respectively. The small effect of remittances on poverty’s reduction could possibly be explained by the low educational background of the migrants, low wage jobs, expensive remittance costs, and migrants not knowing how to remit money through formal financial institutions. Hence, to reduce the poverty level, the government needs to first facilitate skills training for the workers so that they could get a better job and earn more, second, lower the transaction costs of remittances, and lastly, provide agents at Indonesian banks overseas to provide better facilities to Indonesian workers to remit money back to their home country.

BUSINESS ETHICS FOR BUSINESS SUSTAINABILITY IN MUHAMMADIYAH HOSPITAL: EVIDENCE FROM PONOROGO, INDONESIA

Marina, Anna, Imam Wahjono, Sentot

Journal of Indonesian Economy and Business Vol 32, No 3 (2017): SEPTEMBER
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

The purpose of this study is to examine how business ethics can support business sustainability in hospitals. Business ethics is associated with: Hospital professional ethics, medical professional ethics, professional accounting ethics, and Islamic business ethics. This study used a qualitative approach with phenomenological analysis techniques to process the data collected from key informants, through Focus Group Discussions (FGD) with 20 supervisors, in-depth interviews with six members of the management, 11 outside observations, and documentation over a period of six months. The business ethics theory was used to guide the research’s findings. The business sustainability theory was used to find the relationship of the research’s findings with the opinions of four expert informants for the purpose of triangulation on the reasons for conducting Islamic business ethics for a sustainable business. The finding of this study is the reason for running the hospital ethically. The finding of this study can be used to redesign the vision and mission of the hospital as a basis for achieving better performance. The implication of the finding of this research is the need for business ethics in the design of internal systems.

DO PUBLIC AND PRIVATE DEBT LEVELS AFFECT THE SIZE OF FISCAL MULTIPLIERS?

Adi, Chairul

Journal of Indonesian Economy and Business Vol 32, No 3 (2017): SEPTEMBER
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

This paper investigates the effectiveness of fiscal policies – as measured by the impact and cumulative multipliers – and how they interact with public and private debt. Harnessing the moderated panel regression approach, based on the yearly data set of several economies during the period from 1996 to 2012, the analysis is focused on the impact of spending-and-revenue-based fiscal policies on economic growth and how these fiscal instruments interact with public and private indebtedness. The result of spending stimuli advocates the basic Keynesian theory. An increase in public expenditures contemporaneously generates a positive multiplier, of around 0.29 – 0.44 and around 0.45 – 0.58 during two years. Decomposing the expenditures into their elements, this paper documents a stronger impact from public investment than that from government purchases. On the other hand, the revenue stimuli seem to follow the Ricardian Equivalence Hypothesis (REH), arguing that current tax cuts are inconsequential. The impact and cumulative multipliers for this fiscal instrument have mixed results, ranging from -0.21 to 0.05 and -0.26 to 0.06, respectively. Moreover, no robust evidence is found to support the argument that government debt moderates the effectiveness of fiscal policies. The size of the multipliers for both spending and revenue policies remain constant with the level of public debt. On the other hand, private debt appears to show a statistically significant moderating effect on spending stimuli. Its impact on spending multipliers, however, is economically insignificant. The moderation effect of private debt on the revenue stimuli does not seem to exist. Finally, this paper documents that both public and private debt exhibit a negative and statistically significant estimation for economic output.

DID A CAPITAL DEEPENING PARADOX AND SWITCHING POINTS OCCUR IN INDONESIA?

Fitrady, Ardyanto

Journal of Indonesian Economy and Business Vol 32, No 2 (2017): MAY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

This paper discusses the empirical results of wage-profit rate schedules between 2000 and 2008 in Indonesia using input-output analysis. Using a mathematical approach, this paper has four main conclusions. First, there is a decrease in both wage share and profit margin in Indonesia. The decrease may be caused by the increase in relative prices of other inputs such as raw materials that generate inefficiency. Second, there is no proof of reverse capital deepening during the observed period and there is an indication that the capital was getting cheaper relative to other inputs during the period. Third, the capital-labor ratio tends to increase over time. Fourth, there is no proof of switching point and reswitching in technology during the period. However, this paper only provides us with an empirical result during the observed period. It is always possible to have a switching point or reswitching in the economy over a longer period.

TAX REFORM AND NONCOMPLIANCE IN INDONESIA

Iswahyudi, Heru

Journal of Indonesian Economy and Business Vol 32, No 2 (2017): MAY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

The purpose of this paper is to examine the impact of Indonesia’s tax reforms of 2000 and 2008/2009 on taxpayers’ noncompliance. Noncompliance is defined as the difference between the Value Added Tax (VAT) liability and the actual revenue. Data are mainly collected from the World Input-Output Database and Indonesia’s Central Board of Statistics. The methodology uses one of the ‘top-down’ approaches, in which national accounts figures are employed to arrive at an estimation of the VAT liability. It is found that compliance deteriorated when reform efforts were incomplete – that is when the reforms suffered from decelerations, setbacks or reversals. This paper contributes to the literature by providing a framework for analyzing the impact of tax reform on taxpayer’s compliance behavior.

THE IMPACT OF EARTHQUAKE ON CHILD TEST SCORE

Sulistyaningrum, Eny

Journal of Indonesian Economy and Business Vol 32, No 2 (2017): MAY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

Natural disasters always affect different aspects of individual life. They affect almost every part of life, such as the emotional, economic, physical, social, and environmental aspects. Children are believed to be very vulnerable to disasters. The increasing frequency of disasters and the intensity of their destruction motivate an analysis of the impacts of disasters, especially on education, for children. This paper uses a micro level survey data set from the Indonesian Family Life Survey (IFLS) which covers approximately 83% of the Indonesian population within the survey area. The main objective of this paper is to examine the effects of earthquakes on students’ performance, measured by their child test scores. This type of disaster was chosen because of its intensity, as measured by the percentage of people killed, and the percentage of people evacuated. Moreover, we also investigate the children who took the test immediately after the earthquake and compare their scores with those whose tests were a year after the earthquake. Arguably an earthquake is an exogenous event, so we use the exogenous variation of earthquake as a natural experiment design to estimate the effect of earthquakes on child test scores. A Difference in Difference model (DiD) can be used for estimating if a certain group is exposed to the causal variable of interest, such as an earthquake, and other groups are not. The results confirm that child test scores are significantly affected by earthquakes.

EFFECTS OF ETHICAL LEADERSHIP ON EMPLOYEE WELL-BEING: THE MEDIATING ROLE OF PSYCHOLOGICAL EMPOWERMENT

Rantika, Shania Dwi, yustina, andi ina

Journal of Indonesian Economy and Business Vol 32, No 2 (2017): MAY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

Leaders who promote ethical behavior are believed to affect their employees’ well-being. This study was conducted to examine psychological empowerment as the intervening variable that connects ethical leadership to employees’ well-being, work engagement, and emotional exhaustion. By using a mail survey, we distributed questionnaires to 219 auditors from 11 public accounting firms in Jakarta. All the hypotheses in this study were supported. Ethical leadership has a positive effect on psychological empowerment. Thus, psychological empowerment positively relates to work engagement and negatively relates to emotional exhaustion. The result demonstrated that psychological empowerment partially mediates the effect of ethical leadership on work engagement and fully mediates the effect on ethical leadership and emotional exhaustion. The findings reveal that ethical leadership stimulates the psychological empowerment of the employee, thus, it enhances work engagement and also minimizes emotional exhaustion.

THE IMPACT OF THE UNCONDITIONAL CASH TRANSFER PROGRAM (BLT) ON CIGARETTE CONSUMPTION IN INDONESIAN SOCIETY

Dwiputri, Inayati Nuraini

Journal of Indonesian Economy and Business Vol 32, No 2 (2017): MAY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

One of the purposes of the unconditional cash transfer program (Bantuan Langsung Tunai/BLT) was to help the poor and near-poor households to fulfill their basic needs. This study attempted to identify the impact of the BLT on cigarette consumption in society; as it is well known that smoking has more disadvantages than benefits. The study used data from the Indonesian Family Life Survey (IFLS) 2000 and 2007 to capture the impact of the BLT on the cigarette consumption of households. By controlling for the characteristics of the respondents, and using the fixed effect at household and village level as an estimation technique, the empirical results showed that in general there was a changing pattern of cigarette consumption in Indonesian society, to which the BLT program has contributed. By influencing the savings of households, the BLT program has significantly decreased cigarette consumption in Indonesia. It could be explained by the permanent income hypothesis, where the BLT transfer can be categorized as a transitory income in that hypothesis. This study can be an input and consideration for the transfer policy’s implementation in Indonesia in particular.

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