Gadjah Mada International Journal of Business
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The Moderating Effect of Procedural Justice on the Effectiveness of the Balanced Scorecard in Improving Managerial Performance through Organizational Commitment
Get PDFThis study extends prior studies on the effectiveness of theBalanced Scorecard (BSC) to improve managerial performancedone by Lau and Mosser (2008) and Lau and Sholihin (2005).Specifically, the study empirically tests the moderating effects ofprocedural justice on the relationship between the financial andnonfinancial dimensions of BSC and managerial performance. Italso tests the impact of organizational commitment on performance.Based on survey data from 76 respondents, the results indicate thatperceived procedural justice in the use financial and nonfinancialdimensions of the BSC is associated with managers’ organizationalcommitment. It further finds that organizational commitment ispositively related to performance. The study extends the literatureby providing empirical evidence about the moderating effect ofprocedural justice on the relationship between the financial andnonfinancial dimensions of BSC and organizational commitment.Keywords: balanced scorecard; organizational commitment; financial measures;managerial performance; moderating effect; nonfinancial measures;procedural justic
Unusual Market Activity Announcements: A Study of Price Manipulation on the Indonesian Stock Exchange
Get PDFWe investigate stocks involved in the Unusual Market Activity (UMA) Announcements. The Indonesian Stock Exchange occasionally issues UMA announcements when it suspects that there are unusual price increases (positive UMAs) or price decreases (negative UMAs), as well as unusual increases in trading volumes. We believe that UMA announcements signal a high probability that stocks are being manipulated. We find no differences in fundamentals and trading variables between stocks in the UMA announcements and those not in the UMA announcements. Any stock is vulnerable to market manipulation. Stocks in the UMA announcements do not exhibit reversal patterns, suggesting that price effect is permanent. UMAs seem to convey relevant information, which is most likely in the form of insider type of information.Keywords: emerging market; price manipulation; unusual market activity announcement
What Drive the Damage to Post-Merger Operating Performance?
No full textThis study examines whether bidders’ post-merger operat-ing performance are affected by their CEO behavior, premiumspaid to the target firms, the period of mergers, the method ofpayment, the industry of merged firms, capital liquidity, andtheir pre-merger operating performance. Testing the U.S. suc-cessful merger and acquisition data for the period of 1990s, thisstudy finds that in-wave mergers, intra-industry mergers, thepayment of lower premiums, and better pre-merger operatingperformance drive the bidders to produce better post-mergeroperating performance. Three measures of CEO behavior—themain predictor scrutinezed in this study—are proposed andexamined, and the results demonstrate that the effects of thesemeasures on post-merger operating performance are mixed,suggesting that each of the behavioral measures designed in thisstudy may capture CEO behavior in different ways.Keywords: capital liquidity; CEO overconfidence; merger waves, method of pay-ment operating performanc
Accounting Fundamentals and the Variation of Stock Price: Factoring in the Investment Scalability
Get PDFThis study develops a new return model with respect to accounting fundamentals. The new return model is based on Chen and Zhang (2007). This study takes into account theinvestment scalability information. Specifically, this study splitsthe scale of firm’s operations into short-run and long-runinvestment scalabilities. We document that five accounting fun-damentals explain the variation of annual stock return. Thefactors, comprised book value, earnings yield, short-run andlong-run investment scalabilities, and growth opportunities, co associate positively with stock price. The remaining factor,which is the pure interest rate, is negatively related to annualstock return. This study finds that inducing short-run and long-run investment scalabilities into the model could improve the degree of association. In other words, they have value rel-evance. Finally, this study suggests that basic trading strategieswill improve if investors revert to the accounting fundamentals.Keywords: accounting fundamentals; book value; earnings yield; growth opportunities; shortrun and longrun investment scalabilities; trading strategy;value relevanc
The Importance and Usefulness of Corporate Annual Reports in Malaysia
Get PDFThe purpose of this study is to examine the perceived importance and usefulness of corporate annual reports in Malaysia and to determine if there is a difference between the perceptions of preparers and users of corporate annual reports. Data for this study were collected using a questionnaire survey conducted in late 2006 and early 2007. Preparers are represented by chief financial officers while users by investment analysts. The mean scores for preparers and users are compared using the independent samples t test and the non-parametric Mann-Whitney test to determine if there are any statistically significant differences in their opinions. The findings reveal that preparers rank the annual report as the most important source of corporate information. Users, on the other hand, rank the annual report as the second most important after the visits to companies. However, the difference in the mean scores of preparers and those of users on the importance of annual reports is not significant at 5 percent level. The difference in the mean scores for the visits to companies is, on the other hand, statistically significant at 5 percent level. An implication for this finding is whether the annual report serves the information needs of analysts for decision-making purposes. An opportunity thus arises for future research to examine information needs of analysts and if there is a gap between information provided in annual reports and that required by analysts. Keywords: corporate annual reports; disclosure; Malaysia; transparenc
An Empirical Assessment of the Role of Organizational Citizenship Behavior in Explaining Academic Success: Some Evidence from East Malaysian Sample
Get PDFManagement researchers have consistently reported the significant role of organizational citizenship behavior (OCB) in predicting individual success in organizational settings. This topic, however, has been largely ignored in the business education environment. Given the demonstrable benefits of OCB enactment in terms of influencing performance evaluations and organizational rewards, we emphasize the importance of examining the role of OCB in predicting student performance and their eventual career success. This endeavor holds important implications for students who are on the threshold of entering the industry. Using a self-administered questionnaire, we collected data from a total of 177 undergraduate students from two different schools in a Malaysian public university. Analysis reveals that of the three distinct dimensions of OCB, only one (consisting of altruism and courtesy items) has influences on both measures of student performance (i.e., productivity and cumulative grade point average). Implications of these findings are discussed
The Application of Choice-Based Conjoint Model to Study Government Authorities Preference: A Case of Traffic-Subsidy-Pollution Related Policy in Indonesia
Get PDFAccording to the UN, air pollution kills more than 3 millionpeople each year (UN-Habitat 2007). Despite the magnitude ofthe impact, delays in making decisions about the environmentare quite common among governments worldwide. The purposesof this study are twofold. First, the study is to investigate therelative strength of attributes of environmental policy such asmethods of vehicle restriction, percentage of reduction in lead (and CO2) content, and percentage of subsidy reduction. Second, the study is to test government choice when it facesconservative, “scientific,” and popular policy alternatives. Toachieve both objectives this research uses an experimentalmethod. The orthogonal design is adopted for stimuli presenta-tion and conjoint analysis is used for data analysis. The re-search participants are students of an accounting graduateprogram of a state university in Java (Indonesia).The results suggest CO2/lead reduction has the strongesteffect on policy maker preference. In addition, those policymakers tend to prefer the status quo condition which indicatesconservative views. This is demonstrated by the tendency of theirchoice on an alternative policy package which requires minimum changes compared with the existing policies (a maximumutility of 64.3 percent vs. 28.6 percent and 7.1 percent of otheralternatives). In addition, bureaucrats tend to play “safe”(namely the reduction of lead content in gasoline) when thepossibility of resistance is imminence. Some consequences of theresearch findings are also discussed. Keywords: conjoint analysis; mixed environmental; public policy; utility functio
Mediation Analysis Using the Hierarchical Multiple Regression Technique: A Study of the Mediating Roles of World-Class Performance in Operations
Get PDFThe changing environment in an organization is forcing the organization to find a plan of integrated management framework and adequate performance measurement. Failure to plan basically means planning failure for the business. Finding the critical factors of quality management practices (QMP), themediating roles of the contextual factors of world-class performance in operations (i.e., world-class company practices or WCC, operational excellence practices or OE, company nonfinancial performance or CNFP), and the company financial performance would enable the company to facilitate the sustainability of TQM implementation model.This empirical study aims to assess how TQM—a holistic management philosophy initially developed by W. Edward Deming, which integrates improvement strategy, management practices, and organizational performance—is specifically implemented in the oil and gas companies operating in Indonesia. Relevant literature on the TQM, the world-class performance in operations (world-class company and operational performance), the company performance (financial and non-financial performances), and the amendments of the Law of the Republic of Indonesia concerning the oil and gas industry, and related research on how the oil and gas industry in Indonesia develops sustainable competitive advantage and sustainable development programs are reviewed in details in our study. The findings from data analysis provide evidence that there is a strong positive relationship between the critical factors of quality management practices and the company financial performance mediated by the three mediating variables, i.e., world-class company practices, operational excellence practices, and company non-financial performance
The Conceptual Framework of a Knowledge-Based Performance Management System
Get PDFDesigning a Performance Management System (PMS) is anintegral part of management control systems. This paper presents ahybrid framework for the design of a PMS for the Indonesiancontext, and the tailor-made design is expected to overcome theshortcomings of earlier models. The present hybrid PMS modelseeks to improve the earlier research models using the followingnovel approaches: (1) implementation of a Knowledge-Based (KB)expert system, (2) Gauging Absences of Prerequisite (GAP) analysis, and (3) Analytical Hierarchy Process (AHP) methodology in anintegrated KBPMS. The paper shows that the present hybrid (KB-AHP-GAP) approach to developing a PMS model is a realisticmethodology. The combination of the KB-AHP-GAP approachallows detailed benchmarking of the PMS existing in an Indonesiancompany. Furthermore, this approach can assist in identifying andprioritising the key decisions that need to be executed to overcomethe existing PMS shortcomings.symbiotic strategic alliances. Con-versely, affiliate firms prefer competitive strategic alliances withcompetitors when they are not dependent on the parent firm
An Analytical Assessment of Assurance Practices in Social Environmental and Sustainable Reporting in the United Kingdom and North America
Get PDFThe objective of this study is to continue and extend previous studies in evaluating the extent to which current assurance practices promote transparency and accountability to stakeholders. This is carried out by conducting an empirical analysis of the content of assurance statements accompanying a sample of non-financial reports short-listed for the Association of Chartered Certified Accountants (ACCA) U.K. Sustainability Reporting Award and the CERES-ACCA Sustainability Reporting Award from 2006 to 2008. The findings of this study show that several new trends in social, environmental and sustainability assurance can be observed. Firstly, accountants tend to limit their intended readership to management only and state a disclaimer for other potential readers. This diminishes the transparency and stakeholder accountability of the reporting. Secondly, there is even stronger evidence that management has the control over the scope of the assurance engagement and over what information gets publicly disclosed. The evidence is shown in the fact that in many assurance statements prepared by accountants, only selected parts of the reports are being assured, with no indication that it is not management who selects these parts. Finally, the recent practices of assurance engagements represented by the sample in this study have not improved the transparency and stakeholder accountability of social, environmental and sustainable reporting. Similar to the two previous studies, we assert that a generally accepted standard is needed to promote assurance statements that add meaningful values to the reliability of social, environmental and sustainability reporting