International Journal of Financial, Accounting, and Management

An assessment of banking sector performance in Indonesia

Tue, 05 Mar 2024 00:00:00 +0700

Purpose: This study examines the effect of dividend pay-out ratio (DPR), total assets, and asset growth on banking company performance, measured by return on assets (ROA) and net profit margin (NPM).

Research methodology: Using purposive sampling, we obtained 67 banking companies as samples, comprising 33 unlisted firms and 34 listed firms on the IDX. This study observed a 9-year period from 2011 to 2019; thus, the total sample comprises 603 firm-year observations. Linear regression analysis was used to analyze the data.

Results: The results show that DPR and total assets, namely ROA and NPM, have a significant effect on the performance of banking companies. Asset growth had a significant effect on NPM. However, asset growth has no significant effect on ROA.

Limitations: We acknowledge that we solely used a banking corporation in Indonesia. Nevertheless, to demonstrate the bigger picture of the study findings in terms of banking performance, further studies should employ banking corporations in all emerging countries.

Contribution: The results enrich the theoretical knowledge about these factors in financial performance, particularly in the Indonesian banking industry.

Practical Implications: Corporation management might consider this finding when making decisions regarding dividend ratios, asset size, and asset growth. Further, management needs to pay attention to these factors when planning business strategies and making decisions to achieve higher financial performance.

Novelty: To the best of our knowledge, this is the first study to examine the relationship between DPR, total assets, and asset growth to performance that employs samples of the banking industry from listed and unlisted companies on the IDX.

The role of earnings quality in the impact of earnings management and leverage on firm value

Jouzar Farouq Ishak — Wed, 06 Mar 2024 00:00:00 +0700

Purpose: This study examines the impact of earnings management and leverage on firm value with earnings quality as an intervening variable.

Research methodology Quantitative methods were used in this study, which employed path analysis to examine the relationships between variables. Samples were taken from state-owned enterprises in Indonesia, with a particular focus on those listed on the 2017-2021 BUMN 20 Index of the Indonesia Stock Exchange.

Results: The results show that earnings quality mediates the relationship between leverage and firm value. Specifically, leveraging through earnings quality was found to maximize firm value, as profitable businesses prioritized internal financing because of their high rate of return.

Limitations: This study was limited to the IDX BUMN 20 index between 2017 and 2021.

Contribution: The findings suggest that management should consider leveraging to optimize firm value. In addition, it provides valuable insights into firm value, particularly for firms that rely heavily on internal financing.

Novelty: This research is the first study to specifically focus on the IDX BUMN 20 index, covering both the periods before and during the Covid-19 pandemic.

How e-human resource management can increase employee productivity in F&B in Batam

Evi Silvana Muchsinati, Adeline Oktalia, Yuddy Giovanna Priscilla — Thu, 07 Mar 2024 00:00:00 +0700

Purpose: The purpose of this study was to determine the impact of E-Human Resource Management (E-HRM) had on Batam’s F&B productivity.

Research methodology: A total of 395 respondents were included in the study. Four populations were used in this study, namely Starbucks, McDonalds, Mixue, and KFC, located in Batam City, Riau Islands, Brazil. The obtained data were processed using the PLS SEM application.

Results: The results suggest that the implementation of E-HRM has a significant positive impact on employee productivity in the F&B companies studied.

Limitations: There are many limitations when conducting this study due to difficulties in collecting data, information, and respondents at KFC, Mixue, Starbucks, and McDonalds. This causes this research to be suboptimal because the company maintains its data privacy. Therefore, this study only obtained respondent data internally. Then, with limited time, the time to distribute questionnaires to respondents was very short.

Contribution: This research provides a deep understanding of the importance of implementing E-HRM (E-Job Analysis, E-Training & Development, E-Performance Appraisal, E-Recruitment, and E-Communication) in increasing employee productivity in F&B companies in Batam City. The results show that e-HRM has a positive impact on Behavioral Intention, which contributes to increased employee productivity.

Audit committee characteristics and firm financial performance of quoted industrial goods firms in Nigeria

Samuel Enejoh Abu — Fri, 08 Mar 2024 00:00:00 +0700

Purpose: This study examines the effects of audit committee characteristics on the financial performance of listed industrial goods firms in Nigeria.

Research methodology: This study used an ex-post factor research design and utilized secondary data collected from the annual reports and accounts of thirteen (13) sampled industrial goods firms for a period of 10 years (2013-2022). The sample of firms was obtained using a purposive sampling technique. Data were analyzed using descriptive statistics, correlation, and regression analysis (GLS Random Effect) with the aid of Stata 13.

Results: The findings reveal that an insignificant positive effect exists between audit committee size and financial performance (ROA and ROE), while audit committee independence has a significant negative effect on return on assets (ROA) and a negative insignificant effect on return on equity (ROE), and audit committee meetings have a positive significant effect on asset (ROA) and a positive insignificant effect on return on equity (ROE).

Limitations: The research is limited to only those companies in the industrial goods sector listed on the Nigerian Stock Exchange from 2013 to 2022 and only focuses on the effect of audit committee characteristics on firm financial performance. There was also incomplete data, which did not allow for a complete and thorough analysis of the entire sector.

Contribution: This study contributes to the existing body of literature on the effect of audit committees on the financial performance of Nigeria’s listed industrial goods sector. It provides insights that can assist the board in formulating appropriate strategies to improve their performance.

Is depreciation fraud detectable using ADTFA and DAAT financial models? A case study

Sunil Kumar — Fri, 08 Mar 2024 00:00:00 +0700

Purpose: Financial statement fraud, which is usually committed by insiders, aims to present a company positively and benefit fraudsters. Insiders commit fraud to deceive investors or hide their mistakes. This occurs in companies with weak control and unethical leaders. Prevention is important; however, early detection is crucial. Depreciation fraud manipulates the depreciation schedule to make financial statements look better. This involves inflating asset values and reducing expenses. Detecting depreciation fraud is difficult, and has severe consequences. Such activities can lead to penalties for both individuals and companies. Companies require accurate records, and auditors must review statements thoroughly to prevent and uncover fraud. New models were used to identify depreciation fraud in defaulting companies.

Research methodology: Forensic accountants may analyze depreciation fraud. We use Depreciation Accumulated after Tax (DAAT) to accurately find depreciation fraud by the company. A comparatively low or negative impact indicates depreciation fraud. The ADTFA and DAAT financial models can be used to trace depreciation fraud.

Results: The results are remarkable and should be tested in further depreciated fraud companies to detect their financial health position early.

Limitations: Detecting depreciation fraud is difficult because of various factors, including complex accounting methods, subjective estimates, and lack of external verification.

Contribution: This helps to account for users and investors, researchers detect depreciation fraud earliest, and present its financial accounting report.

Novelty: The researcher may adopt and push validated reliability through ADTFA and DAAT tests to detect depreciation fraud.

"Black-Scholes-Artificial Neural Network": A novel option pricing model

Milad Shahvaroughi Farahani, Shiva Babaei, Amirhossein Esfahani — Wed, 13 Mar 2024 00:00:00 +0700

Purpose: This study conducts a comparative study of various options pricing models and introduces a new model.

Research methodology: This paper reviews eight option pricing models, including the Black-Scholes-Merton model (BSM), Monte Carlo simulation (MC), Heston, GARCH, Lattice, Jump Diffusion models (JDM), Normal Inverse Gaussian-Cox-Ingersoll-Ross Model, and a novel model called Black-Scholes-Artificial Neural Network (BSANN). The objective is to predict the European call and put options using a payoff calculation. The underlying asset is Khodro, a famous automobile producer company in Iran, for the last year. The daily prices were also used as historical data. The primary software used for the calculations and plots was MATLAB. An Excel option pricing toolbox was used to obtain more accurate and improved results.

Results: Based on the results, it can be concluded that the proposed model, BS-ANN, provides the most accurate estimation with the lowest standard deviation.

Limitations: There are several limitations to be considered when choosing an underlying asset. An important factor is the availability of sufficient data on the number of shared transactions. Another limitation of this study is the absence of trading halts. Additionally, caution is crucial when selecting an appropriate number of estimated parameters.

Contribution: By utilizing the presented model, researchers, individuals, investors, and stock market analysts interested in trading can enhance their estimations.

Novelty: The most significant novelty of this study is the presentation of a hybrid model incorporating unique features.

Audit committee attributes, audit quality and performance of oil and gas companies

Paul Matudi Bako — Mon, 18 Mar 2024 00:00:00 +0700

Purpose: This study examines the audit committee attributes, audit quality, and financial performance of listed oil and gas companies in Nigeria.

Research methodology: Audit committee attributes were measured by audit committee size, audit committee independence, and audit committee financial expertise, and audit quality was measured by audit fees charged by an external auditor. Financial performance is measured in terms of earnings per share. The researcher used secondary data extracted from the ten listed oil and gas firms annual reports, and the accounts were analyzed using Panel Least Square.

Results: This study reveals a positive and statistically significant relationship between audit committee independence and earnings per share. It also shows that audit quality moderates audit committee attributes significantly and increases firm performance. This study recommends that maintaining high audit quality within the audit committee is crucial for a firm if it aims to offer increased assurance to investors and stakeholders concerning the precision and dependability of its financial statements.

Limitations: This study was limited to listed oil and gas companies in Nigeria ranging from to 2016-2022.

Contribution: This study examined factors that can moderate the relationship between audit committees and the financial performance of listed oil and gas companies in Nigeria. One such factor is audit quality, which can potentially enhance or diminish the impact of audit committee effectiveness on financial performance. No study conducted in Nigeria has examined this relationship specifically in the oil and gas sector. This knowledge gap served as the rationale for conducting this study.