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Article
Publication date: 8 May 2023

Suherman Suherman, Titis Fatarina Mahfirah, Berto Usman, Herni Kurniawati and Destria Kurnianti

The purpose of this study was to investigate how chief executive officer (CEO) characteristics, including age, education, nationality and particularly gender, influence firm…

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Abstract

Purpose

The purpose of this study was to investigate how chief executive officer (CEO) characteristics, including age, education, nationality and particularly gender, influence firm performance in a developing Southeast Asian Country (Indonesia).

Design/methodology/approach

The study uses balanced firm-level panel data for 203 nonfinancial companies listed on the Indonesia Stock Exchange from 2010 to 2020. Return on assets, return on equity and Tobin’s Q were used to measure firm performance. The data were analyzed using panel data regression analysis, including a fixed effects model with clustered standard errors.

Findings

The results indicate that female CEOs, education and nationality enhance firm performance, while CEO age can either improve or reduce firm performance. Numerous robustness checks were performed; the results were consistent with those in the main analysis.

Research limitations/implications

Individual characteristics should be considered when appointing CEOs. Some CEO characteristics enhance firm performance. Female CEOs bring new perspectives, while older CEOs’ longer experience adds a competitive advantage. More educated CEOs have a better ability to deal with challenging intellectual activities, and CEOs from foreign countries better understand international market regulations. However, some characteristics may reduce firm performance, for example, older CEOs are more conservative and unable to adapt to changing business environments.

Originality/value

This study contributes to corporate governance studies by synthesizing CEO characteristics and investigating their relationship with firm performance. Moreover, it emphasizes that developing countries such as Indonesia have different economic, legal, social and cultural environments than developed countries, especially Western countries.

Details

Corporate Governance: The International Journal of Business in Society, vol. 23 no. 7
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 27 November 2023

Muhammad Edo Suryawan Siregar, Suherman Suherman, Titis Fatarina Mahfirah, Berto Usman, Gentiga Muhammad Zairin and Herni Kurniawati

This study aims to investigate how the presence of female executives on the board affects a company’s capital structure decisions. The critical mass of female executives on the…

480

Abstract

Purpose

This study aims to investigate how the presence of female executives on the board affects a company’s capital structure decisions. The critical mass of female executives on the board was also considered to observe their impact on capital structure.

Design/methodology/approach

Samples were taken from nonfinancial sector companies listed on the Indonesia Stock Exchange between 2012 and 2021 (3,707 firm-year observations). Capital structure was measured using four approaches, namely, debt-to-total asset ratio (DAR), debt-to-equity ratio (DER), short-term debt-to-total assets (STD) and long-term debt-to-total assets (LTD). The data were analyzed using panel data regression analysis, including a fixed effects model with clustered standard errors.

Findings

The presence of female executives on the board is significantly negatively related to capital structure as measured by DER and STD. The critical mass of women provided no evidence of a relationship with a firm’s capital structure. Robustness checks were performed, and the results were consistent with those in the main analysis.

Research limitations/implications

Female executives can be appointed to management boards when determining a strategy to achieve the capital structure desired by a company.

Originality/value

This study increases the diversity of research in corporate governance by synthesizing various indicators from female executives into a single study to determine their relationships with companies’ capital structures. In addition, this study stands out by incorporating four distinct indicators for assessing capital structure and diverging from the norm observed in many other studies, many of which rely on just two indicators: DAR and DER. Moreover, it strongly emphasizes the unique economic, legal, social and cultural landscapes of developing countries like Indonesia in comparison to their developed counterparts, particularly Western nations.

Details

Corporate Governance: The International Journal of Business in Society, vol. 24 no. 4
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 29 November 2024

Diana Riyana Harjayanti, Suherman Suherman and Gatot Nazir Ahmad

This study investigated the impact of board gender diversity on initial public offering (IPO) underpricing in Indonesia. Additionally, the moderating role of Chief Executive…

101

Abstract

Purpose

This study investigated the impact of board gender diversity on initial public offering (IPO) underpricing in Indonesia. Additionally, the moderating role of Chief Executive Officer (CEO) ownership on the relationship between female executives and IPO underpricing was examined.

Design/methodology/approach

A sample of 384 IPO firms listed on the Indonesian stock exchange from 2010 to 2022 was used. Board gender diversity was measured using three approaches: the presence of female executives, percentage of female executives and number of female executives on the management board. CEO ownership was a dummy variable measured as 1 if the CEO owned shares of the company and 0 otherwise. IPO underpricing was measured as the ratio of the difference between the closing price and offer price to the offer price. This study used moderated multiple linear regression analysis.

Findings

The presence and number of female executives on the board of management were significantly and negatively associated with IPO underpricing. The moderating effect of CEO ownership on the relationship between IPO underpricing and board gender diversity was significant, as measured by the presence, percentage and number of female executives. Robustness checks were performed and the results were consistent with those of the main analysis.

Research limitations/implications

Recommendations for future studies include further exploration by comparing the nexus between board gender diversity and IPO underpricing in different sectors (nonfinancial IPO firms versus financial IPO firms). Nonfinancial IPO firms are less regulated compared with financial IPO firms so the degree of IPO underpricing between them may be quite different. Additionally, future research can use endogeneity tests such as instrumental variables (IVs) and propensity score matching. Endogeneity means that a regression is misspecified in a way that makes identifying a causal effect between two economic variables difficult, if not impossible. IVs are used to control for confounding and measurement errors in observational studies. Like propensity scores, IVs can adjust for both observed and unobserved confounding effects.

Practical implications

Managers and shareholders can adequately classify board gender diversity levels to improve a firm’s financial performance. Specifically, more gender-diverse boards can reduce IPO underpricing so that the firms can generate more cash when they sell their shares in the primary market. Policymakers and regulators can specify governance mechanisms to promote diversity on the management board because board diversity can carry the information, capabilities and experience of diverse group members, which will ultimately boost firm performance.

Social implications

The role of women in society may be boosted if such initiatives are taken to increase their representation in top jobs in society.

Originality/value

To the best of the authors’ knowledge, this study is among the first to investigate the moderating role of CEO ownership on the relationship between board gender diversity and IPO underpricing. This study increases the research on diversity in corporate governance by synthesizing various indicators for female executives into a single study to determine their relationships with IPO underpricing. Moreover, this study adds to the body of knowledge on signaling theory by providing empirical evidence on the relationship between female executives on management boards and IPO underpricing.

Details

Corporate Governance: The International Journal of Business in Society, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1472-0701

Keywords

Available. Open Access. Open Access
Article
Publication date: 19 September 2023

Suherman S.H. and Heru Sugiyono

This research is very important to conduct to review government policy on Indonesian contract law that still uses contract law inherited from Dutch product (BW) and review which…

1963

Abstract

Purpose

This research is very important to conduct to review government policy on Indonesian contract law that still uses contract law inherited from Dutch product (BW) and review which regulations are to be adapted to current development of contract law. This research’s novelty is that new rules will be found in Indonesian contract law.

Design/methodology/approach

This research used normative and empirical methods. Normative research is dogmatic research or one that analyzes legislation using secondary data consisting of primary, secondary and tertiary legal materials. Besides the normative method, the research was also conducted using empirical method through direct interview and observation in some government agencies, such as the Directorate General of Legislation, Ministry of Law and Human Rights (HAM) and Chairman of Legal Product Formation Division, House of People’s Representatives of the Republic of Indonesia and the Civil Law Teaching Association (APHK).

Findings

This research found that new Indonesian contract law is very important to give legal certainty and justice to the people, and the contract law must regulate important matters related to the sources of contract besides agreement and law, related to termination, unjust enrichment, negotiation, good faith, public contract and private contract and related to legal act and validity of electronic contract.

Research limitations/implications

The novelty of this research is that new rules will be found in Indonesian contract law. This research is different from previous researches conducted by Sigit Irianto (2013) and Deviana Yuanitasari (2020), that discuss only on contract law development related only to the good faith principle.

Practical implications

Drafting contract law is a relatively heavy duty due to the factor of law pluralism that contains contract aspect in Indonesia such as customary law aspect, Islamic law aspect, regional aspect, international aspect and other aspects. In fact, meanwhile, there is rapid development in the community with regard to business transactions that are also followed with contract law development. Therefore, amendment is needed for the Indonesian contract law to adapt to the people’s need for law, and this change agenda is also addressed to updating the contract law.

Social implications

Civil law reform, especially contract law, is deemed very important for Indonesia, because based on field fact, people do their business contract by applying contract law that is not yet regulated in the contract law in KUHPerdata; thus, new contract law is needed that regulates important matters related to sources other than agreement and law.

Originality/value

It is very important to conduct this research to review government policy in Indonesian contract law that still uses the contract law inherited from Dutch product (BW) and review what regulations should have been adjusted to current development of contract law. The novelty of this research is that new rules will be found in Indonesian contract law. This research is different from previous researches conducted by Sigit Irianto (2013) and Deviana Yuanitasari (2020), that discuss only on contract law development related only to the good faith principle.

Details

International Journal of Law and Management, vol. 66 no. 1
Type: Research Article
ISSN: 1754-243X

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Article
Publication date: 12 March 2024

Anu Mohta and V. Shunmugasundaram

This study aims to assess the risk profile of millennial investors residing in the Delhi NCR region. In addition, the relationship between the risk profile and demographic traits…

126

Abstract

Purpose

This study aims to assess the risk profile of millennial investors residing in the Delhi NCR region. In addition, the relationship between the risk profile and demographic traits of millennial investors was also analyzed.

Design/methodology/approach

Data was collected using a structured questionnaire segregated into two sections. In the first section, millennials were asked questions on socio-demographic factors, and the second section contained ten Likert-type statements to cover the multidimensionality of financial risk. Factor analysis and one-way ANOVA were used to analyze the primary data collected for this study.

Findings

The findings indicate that the risk profile of millennials is mainly affected by three factors: risk-taking capacity, risk attitude and risk propensity. Except for educational qualification and occupation, all other demographic features, such as age, gender, marital status, income and family size, seem to significantly influence the factors defining millennials' risk profile.

Originality/value

Uncertainty is inherent in any financial decision, and an investor’s willingness to deal with these variations determines their investment risk profile. To make sound financial decisions, it is mandatory to understand one’s risk profile. The awareness of millennials' distinctive risk profile will come in handy to financial stakeholders because they account for one-third of India’s population, and their financial decisions will shape the financial world for the decades to come.

Details

Global Knowledge, Memory and Communication, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2514-9342

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Article
Publication date: 1 August 2023

Biswajit Prasad Chhatoi and Munmun Mohanty

This paper aims to identify the variables responsible for classifying the investors into risk takers (RT) and risk avoiders (RA) across their economic perspectives.

130

Abstract

Purpose

This paper aims to identify the variables responsible for classifying the investors into risk takers (RT) and risk avoiders (RA) across their economic perspectives.

Design/methodology/approach

The research offers a novel and unobtrusive measure of classifying investors into RT and RA based on a set of financial risk tolerance (FRT) questions. The authors have investigated the causes of discrimination across economic perspectives over a sample of 552 investors exposed to market risk.

Findings

The authors identify that out of the total of 11 risk assessment variables, only three are responsible for classifying investors into RA and RT. The variables are risk return trade-off, comfort level dealing with risk, and understanding short-term volatility. Financial literacy is considered as an emerging cause of discrimination. Further, the authors highlight the most striking finding to be the discriminating factors across wealth and source of income of the investors.

Originality/value

Existing research on FRT can be loosely segregated into three groups: the relationship between an individual's financial and non-FRT, estimation of FRT score (FRTS), and perceived self-assessed FRTS. The current research roughly falls into the third category of study where the authors have not only studied the self-assessed risk tolerance but also evaluated the predictors. Most of the studies have focussed on estimating self-assessed FRT with the help of one direct question to the respondent. However, the uniqueness of this study is that the researchers have used an instrument comprising a series of direct and indirect questions that can easily estimate the self-assessed risk perception and also discriminate the role of the economic factors that have any impact on self-assessed FRTS.

Details

Journal of Economic and Administrative Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2054-6238

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Article
Publication date: 11 April 2021

Suherman Suherman, Berto Usman, Titis Fatarina Mahfirah and Renhard Vesta

This paper aims to investigate the relationship between female executives, chief executive officer (CEO) tenure and corporate cash holdings in the context of the developing…

779

Abstract

Purpose

This paper aims to investigate the relationship between female executives, chief executive officer (CEO) tenure and corporate cash holdings in the context of the developing Southeast Asian capital market (Indonesia).

Design/methodology/approach

The sample was screened from 231 publicly listed companies in the Indonesian Stock Exchange. The period of observation was 2011–2017. Two measures were applied for corporate cash holdings: the ratio of cash and cash equivalent to total assets and cash and cash equivalent to net assets. Three surrogate indicators were used for female executives: female CEO, the proportion of female members in the board of management and the number of female members in the board of management. CEO tenure is the length of time a CEO has been a member of the board of management. This study uses panel data regression analysis, including the fixed effect model with clustered standard errors.

Findings

The empirical evidence indicates that female executives and CEO tenure are positively and negatively associated with corporate cash holdings, respectively, and both are significantly related. Additional analysis using lagged independent variables remains consistent with the main analysis, suggesting that corporate cash holding becomes higher as a female presence in the board of management increases.

Research limitations/implications

Empirical tests set in Indonesia suggest that female executives are more conservative and risk-averse, thereby holding more cash with a precautionary motive. The findings also imply that CEOs with long tenure focus on long-term performance such as increasing research and development investments or capital expenditure, thus holding less cash. Accordingly, policymakers and regulators should promote diversity issues proportionally and advance to the board level.

Originality/value

This study contributes to the field of executive and CEO studies by enriching the empirical findings in related topics. In addition, to the best of the authors’ knowledge, this is one of the first studies applying two measures of cash holdings in the setting of a developing Southeast Asian capital market (Indonesia).

Details

Corporate Governance: The International Journal of Business in Society, vol. 21 no. 5
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 25 July 2024

Moncef Guizani and Chouayb Larabi

This study aims to examine the relationship between CEO characteristics and the value of excess cash holdings from the perspective of resource-based view (RBV) theory in the…

88

Abstract

Purpose

This study aims to examine the relationship between CEO characteristics and the value of excess cash holdings from the perspective of resource-based view (RBV) theory in the context of Malaysia.

Design/methodology/approach

The analyses were made using ordinary least squares across 173 non-financial firms listed in Bursa Malaysia over the period of 2015–2021. The authors address potential endogeneity through the generalized method of moments. The results are also robust to alternative measures of excess cash holdings.

Findings

The results showed that female CEOs and CEOs’ educational level are significantly positively related to the value of excess cash holdings. In contrast, CEO tenure and CEO age negatively affect a firm’s excess cash valuation. The results are robust to measurement error and endogeneity issues.

Practical implications

The empirical results have useful policy implications. For practitioners, firms are recommended to prioritize the selection of female CEOs and CEOs with high education levels within their top management, as this initiative can result in improved value associated with excess cash holdings. In addition, policymakers are recommended to guide programs that attempt to improve educational attainment and gender diversity in business leadership. This study also provides investors with insightful information about the possible relationship between CEO traits and company performance, especially with regard to measures for managing surplus capital.

Originality/value

To the best of the authors’ knowledge, this study is the first to explore the role of CEO characteristics in the value of excess cash holdings based on the RBV theory.

Details

Corporate Governance: The International Journal of Business in Society, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1472-0701

Keywords

Available. Open Access. Open Access
Article
Publication date: 11 February 2025

Blessing Oyinlola

This study investigates the impact of chief executive officers (CEOs’) and board members’ personal characteristics on their firms’ environmental, social and governance (ESG…

67

Abstract

Purpose

This study investigates the impact of chief executive officers (CEOs’) and board members’ personal characteristics on their firms’ environmental, social and governance (ESG) performance.

Design/methodology/approach

Using a sample of 120,834 firm-year observations, this study used fixed-effect ordinary least squares regression analysis to empirically identify which characteristics of the CEO and board members are linked to ESG performance.

Findings

The results from analyzing archival data of privately held Finnish firms show that education level positively influences ESG performance, while age and income negatively affect total ESG performance.

Research limitations/implications

The findings highlight the importance of these characteristics in promoting ESG practices in private firms. Therefore, it will enable regulators to encourage diversity among the board members and the CEO, thereby helping to identify potential areas for improvement in corporate governance and leadership practices. The results also provide insights into how organizations can better align their actions with their values and goals.

Originality/value

This study adds to existing literature on corporate governance and ESG performance by identifying the specific personal characteristics of the directors, such as previous conviction, age, income and marital status, and their influences on ESG performance in privately held firms in Finland.

Details

Corporate Governance: The International Journal of Business in Society, vol. 25 no. 8
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 25 April 2022

Hanady Bataineh, Sinan Suleiman Abbadi, Enas Alabood and Amneh Alkurdi

This study aims to investigate the effect of intellectual capital components on firms’ performance, and also examines the influence of the mediating role of family management on…

1079

Abstract

Purpose

This study aims to investigate the effect of intellectual capital components on firms’ performance, and also examines the influence of the mediating role of family management on such a relationship.

Design/methodology/approach

The hypotheses are tested using structural equation modeling for a sample of 46 Jordanian service listed firms during 2014–2019.

Findings

The results indicate that intellectual capital efficiency is a key factor that enables firms to achieve higher financial performance and higher market value. Human capital efficiency has a significant positive effect on firms’ profitability as measured by return on assets and earnings per share. No evidence is shown to support that family management has a mediating role on the relationship between intellectual capital and firms’ performance.

Practical implications

The results indicate strong evidence of the important role of intellectual capital on firm performance. Accordingly, this study recommends that the managers of service firms should continue to enhance and improve the components of intellectual capital, especially investing more in the competencies and capabilities of employees, including their skills, education and training programs to achieve competitive advantage and ensure continued success in the future, and investors to pay special attention to the components of intellectual capital to predict the performance of the firm and be able to choose the best investment opportunities.

Originality/value

This study provides additional insights into the literature of both intellectual capital and family businesses by analyzing data from an emerging market.

Details

Journal of Islamic Accounting and Business Research, vol. 13 no. 5
Type: Research Article
ISSN: 1759-0817

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