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Monday, May 10, 2010

DESIGNING THE BALANCED SCORECARD WEIGHT ON SYARIAH BANK BRANCHES THROUGH PERFORMANCE MEASUREMENT


SIMPOSIUM NASIONAL AKUNTANSI 9 PADANG

DESIGNING THE BALANCED SCORECARD WEIGHT ON SYARIAH BANK BRANCHES
THROUGH PERFORMANCE MEASUREMENT
(AN EMPIRICAL STUDY ON BANK SYARIAH MANDIRI)

UNGGUL PURWOHEDI
State University of Jakarta, Indonesia

IMAM GHOZALI
Diponegoro University, Indonesia

ABSTRACT

The objective of the study is to design the appropriate weight for each balanced scorecard perspectives (financial, customer, internal-business process, and learning and growth). To achieve that objective, this study is trying to analyze the relationships between Balanced Scorecard perspectives with organizational and managerial performance. Therefore, this study has two hypotheses, first the BSC usage is positively associated with organizational performance. Secondly, the BSC usage is positively associated with managerial performance.

In order to test the hypotheses, this study used the Structural Equation Model by AMOS 4.0. This study analyze managers in Bank Syariah Mandiri as the respondents. Fifty one respondents through out Indonesia were used in this study which are consists of branch mangers, operational managers and marketing managers. The questionnaires were sent by email.

Using Structural Equation Modeling (SEM), the results of the study indicated that each perspective has different relationship to organizational and managerial performance, either positive or negative. Internal business perspective supported the first hypothesis, meanwhile, financial and internal business perspective supported second hypothesis. This study is also gives a recommendation related with weight design for each BSC perspectives.

Key words : Balanced Scorecard Weight, Organizational Performance, Managerial Performance



I. INTRODUCTION
1.1. Research Background

The development of syariah banking has shown its great contribution to community. Syariah banking is an intermediary and trustee of other people’s money with the difference that it shares profit and loss with its depositors. Syariah banking introduces an element of mutuality between depositors and bank. Both of them have the same right in distributing the return. However, in practice, most syariah banks have an organizational set-up similar to their conventional counterparts.

One of the most beneficial function in an organization is related to control system. Syariah banking control systems may be divided into internal and external. The former includes managerial remuneration and constitution of Board of Directors. The markets for corporate control and managerial labor, product market competition, juridical constraints, and exit and voice strategies are examples of external control (Dar & Presley, 2000).

One of the control mechanism in organization is performance measurement. It contains the method of re-numeration packages for management. Including, incentives strategy includes salary incentives, share options, executive presentations and discussions, and active employment market for senior executives whose salary may be determined by past performance (Dar & Presley, 2000).

The main focus on performance measurement issues is how to seek the best underlying measures in evaluating process. In the early of performance measurement, people tend to rely on financial measures especially accounting performance (Otley & Fakiolas, 2000). This began with Hopwood’s pioneering work on the role of accounting data in performance evaluation. Hopwood’s (1972) work identified three distinct evaluative styles used by senior managers in holding subordinates accountable for their performance.

*SIMPOSIUM NASIONAL AKUNTANSI 9 PADANG
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THE EFFECT OF COGNITIVE AND AFFECTIVE ASPECTS IN DECISION MAKING USING BALANCED SCORECARD


SIMPOSIUM NASIONAL AKUNTANSI 9 PADANG


THE EFFECT OF COGNITIVE AND AFFECTIVE ASPECTS IN DECISION MAKING USING BALANCED SCORECARD

JESICA HANDOKO1
Unika Widya Mandala Surabaya

GUDONO
Universitas Gadjah Mada Yogyakarta
ABSTRACT

This study examines the effect of decision makers’ cognitive and affective aspects in decision making, especially when a firm implementing Balanced Scorecard (BSC). Cognitive aspect deals with decision makers’ cognitive capabilities and characteristics in utilizing all kinds of BSC measures, including common and unique measures. Affective aspect deals with negative emotions that often present in interpersonal relationships. There were three hypotheses being tested in a laboratory experiment using 2x2x2x2 mixed-subjects design. 168 Accountancy and Management graduate students from Gadjah Mada University were randomly assigned in one of eight treatment cells.

The results show that common and unique measures do have statistically significant effects on performance evaluation judgment and bonus allocation, and decision makers place greater emphasis on common than unique measures. These findings consistent with prior research that suggest sample with BSC knowledge will be able to utilizing both kinds of BSC measures. Although there were no statistically significant support for affect effect, this study provide important evidences for the BSC adopters to consider the makers’ cognitive (and affective) aspects if they want to pursue effective Balanced Scorecard.

Keywords: Balanced Scorecard, Cognitive, Affective, and Decision Making.

[Acknowledgements: M.G. Lipe (University of Oklahoma) and S.E. Salterio (University of Waterloo); T.E. Kida (University of Massachusetts), K.K. Moreno (Virginia Polytechnic Institute and State University), and J.F. Smith (University of Massachusetts) for sharing their experimental instruments with us.
1 Jl. Ngagel Tama Utara III/8, Surabaya-60283, Telp. (031) 5020135; email: smallbink@yahoo.com]



INTRODUCTION

Swa Sembada’s (2005) survey result concluded that Balanced Scorecard (BSC) concept were being adopted by many Indonesian companies and was known as the second most popular strategic management concepts. Being BSC adopters mean that organizations use financial, customer relation, internal business process, and learning and growth performance measures (Kaplan and Norton, 1996b). Chosen performance measures were those that best reflected organization, business unit, and its individual members’ objectives and strategies, that probably similar and/or different one another. As performance and strategy determinants, adopting this large set of BSC measures could be relatively complex and costly.

We will conduct an experimental research (in BSC implementation context) to investigate the effect of decision makers’ cognitive and affective aspects in making performance evaluation and bonus allocation judgments, that will be adopted from Lipe and Salterio’s (2000) and Kida et al.’s (2001) instruments. Kida et al.’s (2001) instruments will be used to extent Lipe and Salterio’s (2000) research, which only investigate decision makers’ cognitive aspect. Cognitive aspect deals with decision makers’ cognitive capabilities and characteristics in benefiting all BSC measures, and affective aspect deals with negative emotions that often present in organizational interpersonal relationships. Affect effect need to be considered, beside cognition effect, because Allred et al. (1997), Betancourt and Blair (1992) in Kida et al. (2001) indicates that interpersonal relations will often generate affective reactions, including in BSC context which is conditional on team interactions (Kaplan and Norton, 1993; Hughes et al., 2005).

*SIMPOSIUM NASIONAL AKUNTANSI 9 PADANG
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THE SEARCH OF AN ECONOMIC STATE VARIABLE FOR INTER-TEMPORAL ASSET PRICING: EVIDENCE FROM JAKARTA STOCK EXCHANGE


THE SEARCH OF AN ECONOMIC STATE VARIABLE FOR INTER-TEMPORAL ASSET PRICING: EVIDENCE FROM JAKARTA STOCK EXCHANGE

ERNI EKAWATI1
Universitas Kristen Duta Wacana

ABSTRACT

Three-factor capital asset pricing model (CAPM)-beta, size, and book-to-market equity appears to dominate most other variables in the empirical explanation of cross-sectional returns. This study attempts to find a link between the prominent three-factor CAPM and the dynamic feature of inter-temporal CAPM by searching a simple ex-ante economic state variable. Using data from Jakarta Stock Exchange, this study finds that the three-factor CAPM holds in the full sample. After separating the samples into stable and unstable economic conditions, the result indicates that the risk premiums associated with the three-factor CAPM do vary, but the magnitudes of the variation cannot be observed due to some statistical problems. However, an ex-ante economic state variable, growth of change in money supply, proposed in this study fails to capture the time varying risk premiums attached in the three-factor CAPM.

1 Fakultas Ekonomi UKDW, Jl. Dr. Wahidin 5-21 Jogjakarta 55224.Telpon: (0274) 563929 pswt. 221.
HP: 0811255921

SIMPOSIUM NASIONAL AKUNTANSI 9 PADANG

I. INTRODUCTION

The relationship between risk and return has been the focus of recent capital market research. Numerous papers have derived various version of the capital asset pricing model (CAPM), ranging from single-factor CAPM (Sharpe-Lintner and Black versions), conditional CAPM (Engle, 1982 and Bollerslev, 1986), Arbitrage Pricing Theory (Ross, 1976, Huberman, 1982, Chamberlain and Rothschild, 1983, Lehman and Modest, 1988), three-factor CAPM (Fama and French, 1992, 1995; Chan, Jagedeesh, and Lakonishok, 1995), intertemporal CAPM (Merton, 1973, and Breeden’s, 1979), to international CAPM (Solnik, 1974, Korajczyk and Viallet, 1989). The role of beta in explaining the cross-sectional variation in stock returns are well documented. In fact, beta has a rich theoretical foundation but lacks empirical support. Two variables found to be prominent in explaining the cross-sectional variation of return are size, as measured by market value of equity, and book-to-market equity. These two variables combined with beta (three-factor CAPM) appear to dominate most other variables in the empirical explanation of cross-sectional returns.

The purpose of this study is to find a link between the prominent three-factor CAPM and the dynamic feature of inter-temporal CAPM. In a dynamic economy, it is often believed that if an investor anticipate information shifts, he will adjust his portfolio to hedge these shifts. To capture the dynamic hedging effect, Merton (1973) develops a continuous-time asset pricing model which explicitly takes into account hedging demand. In contrast to the APT framework (employing undefined numbers of state variables), there are only two factors which are theoretically derived from Merton’s model (1973): a market factor and a hedging factor. However, an empirical investigation is not easy to implement for the continuous-time model.

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*SIMPOSIUM NASIONAL AKUNTANSI 9 PADANG
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THE EFFECT OF EXCHANGE RELATIONSHIP QUALITY....


THE EFFECT OF EXCHANGE RELATIONSHIP QUALITY ON MANAGER’S TASK PERFORMANCE IN MULTI-NATIONAL OPERATIONS: THE ROLE OF BUDGET EMPHASIS AS MODERATOR

Yuningsih
Universitas Muhammadiyah Malang

Abstract

The purpose of this study is to examine the impact of exchange relationship level on the rigidity of budget emphasis and to assess the interaction effect of these variables on manager’s task performance. Data for testing two hypotheses are collected from 69 Indonesian middle managers working in three of U.S.-, Switzerland-, and France- owned construction/mining firms in Indonesia. Questionnaires were mailed to the respondents who were requested to respond to questionnaires designed to measure their level of exchange relationship, rigidity of budget emphasis and task performance.

Results of the analyses indicate that the quality of exchange relationship between leaders and their subordinates was not directly associated with level of budget emphasis used. However, the results indicated that the combination of high (low) level of exchange relationship and high (low) budget emphasis had a positive impact on manager’s task performance. These results have implications for the design of management accounting systems and personnel management.

SIMPOSIUM NASIONAL AKUNTANSI 9 PADANG


1. Introduction
Prior research used subjective superior ratings as measures of performance to confirm the relationship between level of leader-member exchange and performance (e.g. Bauer & Green, 1996; Deluga, 1998; Deluga & Perry, 1994, Duarte et al., 1994; Dunegan et al., 1992; Dunegan et al., 2002; Graen et al., 1982; Jansen & Van Yperen, 2004; Lagace et al., 1993; Schreisheim et al., 1998; Varma & Stroh, 2001; Vecchio & Gobdel,1984; Vecchio, 1998; Wayne et al., 2002). These studies found that the quality of exchanges between leaders and their subordinates (high versus low quality) had an influence on the leaders when assessing their subordinates’ performance: subordinates who have a high-quality exchange tend to be rated higher than those with a low-quality exchange.

In relation to objective performance, Duarte et al. (1994) found that the subordinate performances in high-quality exchange were rated high, regardless of their objectively measured performance. On the contrary, the ratings of subordinates with low-quality exchange were consistent with their objective performance (especially in the short run). In other words, when the exchange relationship is high, the objective performance of subordinates is not the only factor considered by the superiors in evaluating their subordinate’s performance (Duarte et al., 1994). Objective performance may be considered as just one of the criteria of acceptable performance. As a variety of factors are considered, it is proposed that in high-quality exchange, the leaders will be more flexible in evaluating their subordinates.

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*SIMPOSIUM NASIONAL AKUNTANSI 9 PADANG
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PROFITABILITY AND CORPORATE GOVERNANCE DISCLOSURE


PROFITABILITY AND CORPORATE GOVERNANCE DISCLOSURE:
AN INDONESIAN STUDY

Dwi Novi Kusumawati
Prasetya Mulya Business School

Abstract

This research aims to test empirically the relationship between profitability and the level of corporate governance voluntary disclosure. There are two streams of research regarding the direction of relationship between those two variables, making it interesting to be test statistically in the context of corporate governance disclosure. The GCG disclosure level is measured using 161 items recommended by GCG Codes which are developed by KNKCG (2001).

Data are taken from annual reports 2002. The result shows that, after controlling the model by several variables usually used in the disclosure research, profitability are negatively correlated with GCG disclosure. In other words, companies tend to give more comprehensive GCG disclosure when facing a slowdown in profitability measurements. Therefore, market have to take cautious in considering the GCG disclosure given by public companies since it could be used by management to cover bad performance.

Keywords: Corporate Governance, Voluntary Dislcosure, Profitability

SIMPOSIUM NASIONAL AKUNTANSI 9 PADANG

1. INTRODUCTION

Disclosure management is one of strategic planning that has to be carefully considered by management, especially for management of public companies. Any information published to the market could create market perception which, afterwards, could give an advantage or disadvantage for the company itself. Many researches have been conducted in the field of disclosure. Those researches could be divided into two categories. The first category is studies examining factors affecting management disclosure decision, and the second one is studies examining effect of disclosure to various evonomic events or market reaction to the disclosure.

Based on the type of disclosure, previous studies could also be divided into studies examined disclosure in general, both mandatory and voluntary, and studies examined certain type of disclosure, such as financial disclosure, social responsibility disclosure, environmental disclosure, etc. This study investigates one kind of disclosure that has not been researched much but getting more attention recently, which is good corporate governance (GCG) disclosure.

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*SIMPOSIUM NASIONAL AKUNTANSI 9 PADANG
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MEKANISME CORPORATE GOVERNANCE, MANAJEMEN LABA DAN KINERJA KEUANGAN

Simposium Nasional Akuntansi 10 Makassar

MEKANISME CORPORATE GOVERNANCE, MANAJEMEN LABA
DAN KINERJA KEUANGAN
( Studi Pada Perusahaan go publik Sektor Manufaktur )

MUH. ARIEF UJIYANTHO
STIE Muhammadiyah Pekalongan
BAMBANG AGUS PRAMUKA
Universitas Jenderal Soedirman Purwokerto

ABSTRACT

The objective of this study is to examine the influence of corporate governance mechanism, namely institutional ownership, managerial ownership, presence of independent of director and size of director to earnings management. This study also examines influence concequensies of earnings management to financial performance. This study takes sample from 30 companies in the manufacturing sector at the Jakarta Stock Exchange, which were published in financial report from 2001-2004. The method of analysis of this research used multi regression and single regression.

The results of this study show that (1) institutional ownership had not significant influence to earnings management, (2) managerial ownership had negative significant influence to earnings management, (3) presence of independent of director had positive significant influence to earnings management, (4) size of director had not significant influence to earnings management, (5) simultaneously of institutional ownership, managerial ownership, presence of independent of director and size of director had significant influence to earnings management, and (6) earnings management had not significant influence to financial performance.

Key Words: Corporate Governance Mechanism, Earnings Management, Financial Performance

I. INTRODUCTION

In agency theory (agency theory), the agency relationship arises when one or more persons (principals) hire another person (agent) to provide a service and then delegate authority to the agent the decision-making (Jensen and Meckling, 1976). Manager as the manager of the company know more internal information and the company's prospects in the future than the owners (shareholders). Therefore, as manager, the manager is obliged to give a signal about the condition of the company to the owners. However, sometimes the information is not received in accordance with the actual condition of the company. This condition is known as asymmetric information or asymmetric information (asymmetric information) (Haris, 2004). Asymmetry between management (agent) with the owners (principals) can provide the opportunity for managers to manage earnings (earnings management) (Richardson, 1998).

Measures of earnings management has led to several cases of accounting reporting scandals, is widely known, among others, Enron, Merck, World Com and the majority of other companies in the United States (Cornett, Marcuss, Saunders and Tehranian, 2006). Some cases that occurred in Indonesia, including PT. Lippo Tbk and PT. Kimia Farma Tbk also involve financial reporting (financial reporting) which originated from undetected manipulation (Gideon, 2005).


*Simposium Nasional Akuntansi 10 Makassar*
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