Ratna Wardhani and Yan Rahadian
Global palm oil production is growing rapidly, especially in Southeast Asia, with Indonesia and Malaysia as the biggest producers. Despite significant contributions to these…
Abstract
Purpose
Global palm oil production is growing rapidly, especially in Southeast Asia, with Indonesia and Malaysia as the biggest producers. Despite significant contributions to these countries’ economies, environmental and social aspects continue to be debated within this industry. The sustainability strategy is very important for the palm oil industry. This study aims to explore the sustainability strategy using six elements, namely, stakeholder engagement, governance and leadership, sustainability view and the economic, environmental and social strategies of Indonesian and Malaysian palm oil companies.
Design/methodology/approach
This study observes 21 Indonesian palm oil companies and 44 Malaysian palm oil companies from 2014 to 2018 with a total observation of 280 firm years. The methodology used in this study is a qualitative content analysis of six themes based on the sustainability strategy elements, which was further developed into 40 indicators. Content analysis is carried out on information published in annual reports and sustainability reports.
Findings
The study results indicate that stakeholder engagement, governance and leadership and strategic view of the palm oil companies in Indonesia and Malaysia are still likely to be weak. Palm oil companies have not demonstrated their focus on implementing economic, environmental and social strategies. Although the results indicate that there is a greater emphasis on environmental and social strategies than on economic issues, attention to both issues is still very low.
Practical implications
Palm oil companies need to integrate sustainability strategies in their business models and communicate them well to stakeholders to increase their competitive advantage in the palm oil industry. The government also needs to issue stricter rules and incentives to encourage companies to implement sustainability strategies.
Social implications
The study results provide implications for the communities around palm oil plantations to provide better social control so that companies can implement sustainability strategies in their business processes.
Originality/value
This study highlights the importance of sustainability practices integrated into palm oil companies’ business models, which have not been well implemented in the palm oil industry in the world’s largest producing countries.
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Ferdinand Siagian, Sylvia V. Siregar and Yan Rahadian
The purpose of this paper is to investigate whether corporate governance practices and the quality of reporting are associated with firm value for public firms in Indonesia.
Abstract
Purpose
The purpose of this paper is to investigate whether corporate governance practices and the quality of reporting are associated with firm value for public firms in Indonesia.
Design/methodology/approach
The authors hypothesize that there are positive associations between firm value and corporate governance practices and reporting quality. For the authors’ proxies for corporate governance and reporting quality they develop two new indices. First, they develop a corporate governance index (the CGI) to measure corporate governance practices by Indonesian firms. Second, they develop a reporting quality index (the RQI) to measure the firms’ quality of reporting and disclosures. To examine the associations the authors run multivariate regressions of their proxies for firm value on the two indices.
Findings
Consistent with the first hypothesis, the paper finds positive associations between corporate governance and different proxies of firm value. These findings suggest that firms that implement better corporate governance have higher values. Contrary to the second hypothesis, the paper finds negative associations between reporting quality and the proxies for firm value. These findings indicate that lower value firms tend to disclose more information that is consistent with the P3LKE than higher value firms.
Research limitations/implications
The results suggest that corporate governance practice by Indonesian public firms is value relevant and therefore, should provide incentives to the firms to improve their governance. This shows that the Indonesian government's efforts to promote corporate governance provide benefits to publicly traded firms. The results also indicate that firms with low values are more likely to disclose information that is consistent with the P3LKE. This warrants further research because this finding is inconsistent with the contention that more disclosures should result in higher value.
Practical implications
The authority needs to put more efforts in promoting good corporate governance implementations and making sure that public firms improve their disclosures and reporting quality in order to provide benefits to the users of financial information.
Originality/value
Corporate governance index for public firms is not readily available in Indonesia. Therefore, the authors develop an index to measure corporate governance implementations by Indonesian public firms. To the authors’ knowledge, this is the first paper that develops an index to measure adherence to the P3LKE, which is a comprehensive measure of the quality of reporting.
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Elijah Kusi, Isaac Boateng and Humphrey Danso
Using building information modelling (BIM) technology, a conventional structure in this study was converted into a green building to measure its energy usage and CO2 emissions.
Abstract
Purpose
Using building information modelling (BIM) technology, a conventional structure in this study was converted into a green building to measure its energy usage and CO2 emissions.
Design/methodology/approach
Digital images of the existing building conditions were captured using unmanned aerial vehicle (UAV), and were fed into Meshroom to generate the building’s geometry for 3D parametric model development. The model for the existing conventional building was created and converted to an energy model and exported to gbXML in Autodesk Revit for a whole building analysis which was carried out in the Green Building Studio (GBS). In the GBS, the conventional building was retrofitted into a green building to explore their energy consumption and CO2 emission.
Findings
By comparing the green building model to the conventional building model, the research found that the green building model saved 25% more energy while emitting 46.8% less CO2.
Practical implications
The study concluded that green building reduces energy consumption, thereby reducing the emission of CO2 into the environment. It is recommended that buildings should be simulated at the design stage to know their energy consumption and carbon emission performance before construction.
Social implications
Occupant satisfaction, operation cost and environmental safety are essential for sustainable or green buildings. Green buildings increase the standard of living and enhance indoor air quality.
Originality/value
This investigation aided in a pool of information on how to use BIM methodology to retrofit existing conventional buildings into green buildings, showing how green buildings save the environment as compared to conventional buildings.
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Rayenda Khresna Brahmana and Doddy Setiawan
This study investigates how the quality of corporate governance practices reduces the likelihood of firms becoming Zombie companies. By developing a Corporate Governance Index…
Abstract
Purpose
This study investigates how the quality of corporate governance practices reduces the likelihood of firms becoming Zombie companies. By developing a Corporate Governance Index (CGI) based on 52 criteria from the regulatory framework, the hypothesis is tested that companies with higher CGI scores are less prone to becoming Zombie companies. The study aligns with the agency theory framework, highlighting the significance of effective governance in mitigating financial distress and preventing firms from becoming Zombies.
Design/methodology/approach
The study uses a sample of 3,051 listed Indonesian firms from 2014 to 2022, excluding financial and utility companies. Data were sourced from the Bursa Indonesia website, focusing on annual reports. Continuous variables were winsorized at the 1st and 99th percentiles. The analysis involves developing a CGI tailored to the Indonesian context and examining its impact on the likelihood of firms becoming Zombie companies. Endogeneity concerns are addressed to ensure robustness. Post-hoc analyses investigate the roles of political connections and family ownership in the firm’s propensity to become Zombie firms.
Findings
The results demonstrate that higher CGI scores are associated with a reduced likelihood of firms becoming Zombie companies, supporting the agency theory. Post-hoc analysis reveals that political connections and family ownership significantly contribute to a firm’s Zombie status. However, the influence of CGI remains crucial regardless of these factors. The findings are consistent with the literature, emphasizing the importance of effective corporate governance in preventing Zombification.
Research limitations/implications
The study contributes to the academic literature by highlighting the importance of using a governance index to assess the impact of governance practices on firm dynamics. It highlights the relevance of corporate governance quality in understanding and mitigating Zombie theory. The research suggests further investigation into the role of CGI in helping companies transition from Zombie status to financial health and exploring the influence of upper-echelon variables on the CGI-Zombieness relationship.
Practical implications
From a practical standpoint, the findings advocate for the enhancement of control and monitoring mechanisms in firms, particularly regarding debt risk-taking decisions. Policymakers are encouraged to institutionalize the use of governance indices to evaluate firm performance. The study suggests extending such regulations to non-listed firms and SMEs to prevent the proliferation of Zombie companies. Effective governance practices are crucial for mitigating risks associated with political connections and family ownership.
Originality/value
This study provides a fresh perspective on the impact of the Corporate Governance Index on firm Zombieness within the Indonesian context. By tailoring the CGI to the specific regulatory framework, it offers reliable insights into the role of governance quality in preventing firms from becoming Zombies. The study bridges a gap in the literature by linking agency theory with Zombie theory, emphasizing the necessity of effective control and monitoring to avoid financial distress. The research highlights the pivotal role of corporate governance, even in the presence of political connections and family ownership.
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Cong Doanh Duong, Thanh Hieu Nguyen, Thi Viet Nga Ngo, Thu Van Bui and Nhat Minh Tran
The current study aims to investigate the impact of perceived blockchain-related information transparency on consumers’ intention to purchase organic food. This study examines how…
Abstract
Purpose
The current study aims to investigate the impact of perceived blockchain-related information transparency on consumers’ intention to purchase organic food. This study examines how perceived blockchain- related information transparency, directly and indirectly, affects purchase intentions through attitudes, perceived behavioural control and subjective norms. Additionally, the study explores how blockchain-based trust moderates the influence of perceived blockchain-related information transparency on these factors and the intention to purchase organic food.
Design/methodology/approach
Based on the theory of planned behaviour framework and a sample of 5,326 consumers, this study uses partial least squares structural equation modelling to test the research model.
Findings
This study finds that perceived blockchain-related information transparency directly enhances consumers’ attitudes towards organic food purchase, perceived behavioural control, subjective norms and intention to purchase organic food. Additionally, perceived blockchain-related information transparency indirectly affects consumers’ intention to buy organic food through three antecedents of the theory of planned behaviour model. Notably, these indirect effects were moderated by consumers’ blockchain-based trust.
Practical implications
This study provides recommendations for leveraging blockchain to enhance transparency and build trust, which could boost consumer engagement and organic food purchases.
Originality/value
This research contributes to blockchain literature by empirically examining the role of perceived blockchain-related transparency and blockchain-based trust in consumers’ purchasing decisions regarding organic food. It provides valuable insights into the consumer-centric benefits of blockchain technology. Furthermore, this study also contributes to the literature on organic food, particularly its promotion through blockchain technology.
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Majdi Anwar Quttainah and Yosra BenSaid
The purpose of this study is to investigate internal governance mechanisms factors, focusing on Shari’ah-based governance mechanisms that affect the price synchronicity of Islamic…
Abstract
Purpose
The purpose of this study is to investigate internal governance mechanisms factors, focusing on Shari’ah-based governance mechanisms that affect the price synchronicity of Islamic banks (IBs).
Design/methodology/approach
This study analyzes and compares the effect of Shari’ah and regular governance mechanisms on stock price synchronicity over 2013–2022 using a sample of 51 listed IBs in 13 countries in the Middle East and South Asia region. Using generalized least square method, this paper tests nine hypotheses addressing Shari’ah and regular governance mechanisms.
Findings
The findings generally reveal that Shari’ah-based governance mechanisms have a significant impact on the stock price synchronicity of IBs. The main determinants of stock price synchronicity among IBs are SSB size, SSB diversity, SSB members’ qualifications in finance Islamic jurisprudence and SSB interlocks. Shari’ah governance plays a detrimental role in improving the association between bank stock price synchronicity and transparency.
Research limitations/implications
This paper includes three main limitations that may affect the accuracy of the findings. First, this paper relied on publicly available financial statements of IBs online. Hence, the data in this study is from few IBs in each country, which limits the analysis given the reliance is on the best-performing IBs in the country. Second, the results are restricted to the Middle East and South Asia and may not be generalized to other regions. Third, the sample is dominated by Middle East countries (i.e. 37 IBs out of 51).
Practical implications
Both Shari’ah governance and regular governance have an impact on the transparency of IBs. Policymakers or regulators could encourage IBs to embed SSBs into their internal governance structure for the positive impact the SSBs attributes have on stock price synchronicity and transparency.
Originality/value
This research studies IBs, unlike most other works that focus on firms.
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Saarce Elsye Hatane, Jennie Winoto, Josua Tarigan and Ferry Jie
This study examines the effect of working capital management and board diversity on firm profitability and firm value for a sample of Indonesian firms listed in the LQ45 index…
Abstract
Purpose
This study examines the effect of working capital management and board diversity on firm profitability and firm value for a sample of Indonesian firms listed in the LQ45 index. The interaction of board diversity components with working capital management adds a comprehensive discussion to enhancing working capital management efficiency.
Design/methodology/approach
This study engages a panel multiple regression method. Data from a sample of LQ45 companies from 2010 to 2016 are analysed using a fixed and a common effect model. Board diversity is further analysed in interaction variables, whether it holds the moderating role in the relationship of working capital and firm performances. This study operates return on capital employed (ROCE) as the proxy of profitability performance and EVA-Spread for the firm's value performance. The simultaneous effect test is used for the robustness test.
Findings
The results indicate that working capital management and board diversity have no significant impact towards profitability. However, they significantly positively impact firm value, meaning that the market is attracted by effective working capital management and board diversity. However, the interaction variable analysis shows that gender diversity and education level diversity weaken the impact of working capital management towards firm value.
Research limitations/implications
This study is not limited to one industry; therefore, future studies may focus on one industry and detect the pattern of working capital components in the particular industry. This study focuses on quantitative numbers to explain board diversity's interaction in working capital management to maximise shareholders' wealth. Future studies may consider a qualitative discussion to describe the quality of women's presence on the board, education level and educational background of board members.
Originality/value
Unlike most studies in which authors relate working capital and board diversity to firm performances separately, this study combines both components and analyses whether board diversity can act as a moderator effect. As part of corporate governance, it is expected that board diversity can enhance working capital management efficiency.