Corporate Governance Practices  and Disclosure of Risk Management  Sharia Bank in Asean

Wiwik Utami; Lin Oktris; Rini Rini; Nur Wachidah Yulianti

Corporate Governance Practices and Disclosure of Risk Management Sharia Bank in Asean

Wiwik Utami, Lin Oktris, Rini Rini, Nur Wachidah Yulianti

Abstract

Abstract. The risks faced by Islamic banks are similar to conventional banks. Therefore, Sharia Banks must also carry out risk management disclosures. This study aims to examine the effect of governance, including the Sharia Supervisory Board, Independent Commissioner, Audit Committee, Risk Committee, the doubling of the Sharia Supervisory Board Position, and the frequency of meetings on the quality of risk management disclosures. The population is Sharia Banks in ASEAN; samples are selected purposively according to the data's completeness that can be accessed through the capital market website. Risk management disclosures are measured using the index of completeness of risk items revealed. Data analysis was performed using multiple regression analysis. The study found that the number of audit committees and meeting frequency had a significant and positive effect on the quality of risk management disclosures. The number of Sharia supervisory boards has a significant effect on the negative coefficient. Other governance variables do not affect risk management disclosures.

Abstrak. Risiko yang dihadapi bank syariah hampir sama dengan bank konvensional. Oleh karena itu, Bank Syariah juga wajib melakukan pengungkapan manajemen risiko. Penelitian ini bertujuan untuk menguji pengaruh tata kelola antara lain Dewan Pengawas Syariah, Komisaris Independen, Komite Audit, Komite Risiko, penggandaan Jabatan Dewan Pengawas Syariah, dan frekuensi rapat terhadap kualitas pengungkapan manajemen risiko. Populasinya adalah Bank Syariah di ASEAN. Sampel dipilih secara purposif sesuai dengan kelengkapan data yang dapat diakses melalui website pasar modal. Pengungkapan manajemen risiko diukur dengan menggunakan indeks kelengkapan item risiko yang diungkap. Analisis data dilakukan dengan menggunakan analisis regresi berganda. Hasil penelitian menyimpulkan bahwa jumlah komite audit dan frekuensi rapat berpengaruh signifikan dan positif terhadap kualitas pengungkapan manajemen risiko. Jumlah dewan pengawas syariah berpengaruh signifikan dengan koefisien negatif. Variabel tata kelola lainnya tidak mempengaruhi pengungkapan manajemen risiko.

Keywords

Sharia Bank; Corporate Governance; Risk Management; Disclosure

References

Amran, A., Fauzi, H., Purwanto, Y., Darus, F., Yusoff, H., Zain, M. M., … Nejati, M. (2017). Social responsibility disclosure in Islamic banks: a comparative study of Indonesia and Malaysia. Journal of Financial Reporting and Accounting, 15(1): 99–115. https://doi.org/10.1108/JFRA-01-2015-0016

Arena, M., Arnaboldi, M., & Azzone, G. (2010). The organizational dynamics of Enterprise Risk Management. Accounting, Organizations and Society, 35(7): 659–675. https://doi.org/10.1016/j.aos.2010.07.003

Asif, M., Ahmed, U., Zahid, M., & Khan, A. (2017). Motives Behind the Transfer of a Bank From Conventional Banking to Islamic Banking in Pakistan. Journal of Business and Tourism, 3(2): 225–234.

Barua, A., Rama, D. V., & Sharma, V. (2010). Audit committee characteristics and investment in internal auditing. Journal of Accounting and Public Policy, 29(5): 503–513. https://doi.org/10.1016/j.jaccpubpol.2010.09.001

Bastomi, M., Salim, U., & Aisjah, S. (2017). The Role of Corporate Governance and Risk Management on Banking Financial Performance in Indonesia. Jurnal Keuangan Dan Perbankan, 21(4): 589–599.

Darmadi, S. (2013). Corporate governance disclosure in the annual report: An exploratory study on Indonesian Islamic banks. Humanomics, 29(1): 4–23. https://doi.org/10.1108/08288661311299295

Darussamin, A. M., Ghani, E. K., & Mara, U. T. (2018). The Effect of Corporate Governance Mechanisms on Level of Risk Disclosure: Evidence from Malaysian Government. Journal of Management Information and Decision Sciences, 21(1): 1–19.

Deborah, S., Todd, F., & Travis, P. (2008). The Need for an Internal Auditor Report to External Stakeholders to Improve Governance Transparency. Accounting Horizons, 22(4): 375–388.

Disemadi, H. S. (2019). Risk Management in The Provision of People's Business Credit as Implementation of Prudential Principles. Diponegoro Law Review, 4(2): 151–165.

Fama, E. F. (1980). Banking in the theory of finance. Journal of Monetary Economics, 6(1): 39–57. https://doi.org/10.1016/0304-3932(80)90017-3

Faozan, A. (2013). Implementasi Good Corporate Governance dan Peran Dewan Pengawas Syariah di Bank Syariah. La_Riba: Jurnal Ekonomi Islam, 7(1): 1–14.

Ghosh, A. (2018). What drives banking industry competition in developing countries? Journal of Economic Development, 43(4): 1–20.

Gond, J., & Piani, V. (2012). Enabling Institutional Investors' Collective Action: The Role of the Principles for Responsible Investment Initiative. Business & Society, 52(1): 64–104. https://doi.org/10.1177/0007650312460012

Hidayah, N., Badawi, A., & Nugroho, L. (2019). Implementation of Good University Governance and Intellectual Capital in University Context. International Journal of Commerce and Finance, 5(2): 1–7.

Imaniyati, N. S., Nu, A. H., & Jamilah, L. (2019). Analysis of The Role and Responsibility of Sharia Supervisory Board (DPS) on Sharia Compliance Supervision in Islamic Banks in Indonesia. Journal of Legal, Ethical and Regulatory Issues, 22(3): 1–13.

Isnaini, A. M. (2018). The Existence of Sharia Supervisory Board in Maintaining the Purpose of Sharia Principles in Sharia Banking. Journal of Legal, Ethical and Regulatory Issues, 21(3): 1–7.

Jensen, M., & Meckling, W. (1976). Theory of the firm: Managerial behaviour, agency costs and ownership. Strategic Management Journal, 21(4): 1215–1224. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=12243301&site=ehost-live

Kedir, H., & Knapkova, A. (2016). The Impact of Total Risk Management on Company’s Performance. Procedia - Social and Behavioral Sciences, 220: 271–277. https://doi.org/10.1016/j.sbspro.2016.05.499

Morrison, J. (2004). Legislating for Good Corporate Governance: Do We Expect Too Much? Journal of Corporate Citizenship, Autumn, 15: 121–133. https://doi.org/10.9774/gleaf.4700.2004.au.00012

Nugroho, L. (2020). Sejarah Perkembangan Bank Syariah di Indonesia. In Pengantar Perbankan Syariah: Konsep, Regulasi dan Praktis (1st ed., pp. 89–106). Bandung: Widina Bhakti Persada Bandung.

Nugroho, L., & Nezzim Bararah, H. (2018). Pengaruh Good Corporate Governance dan Biaya Operasional dan Pendapatan Operasional (BOPO) terhadap stabilitas keuangan bank umum syariah di Indonesia Tahun 2012–2017. Jurnal Inovasi dan Bisnis, 6(2): 160–169. Retrieved from www.ejournal.polbeng.ac.id/index.php/IBP

Nugroho, L., Wicaksono, B. R., & Utami, W. (2018). Analysis of Taxes Payment, Audit Quality and Firm Size to the Transfer Pricing Policy in Manufacturing Firm in Indonesia Stock Exchange. International Journal of Business Society, 2(8): 83–93. https://doi.org/10.30566/ijo-bs/2018.288

Nurhisam, L. (2016). Kepatuhan Syariah (Sharia Compliance) dalam Industri Keuangan Syariah. Jurnal Hukum Ius Quia Iustum, 1(23): 77–96.

Nurkhin, A., Rohman, A., Rofiq, A., & Mukhibad, H. (2019). The role of the Sharia Supervisory Board and corporate governance mechanisms in enhancing Islamic performance – evidence from Indonesia. Banks and Bank Systems, 13(4): 86–95. https://doi.org/10.21511/bbs.13(4).2018.08

Olson, D. L., & Wu, D. D. (2008). A review of enterprise risk management in supply chain. Enterprise Risk Management, 39(5): 694–706. https://doi.org/10.1108/03684921011043198

Pernamasari, R. (2018). Implementation of Good Corporate Governance and Voluntary Disclosure Compliance: 100 Compass Index Companies Listed Indonesian Stock Exchange (IDX) 2015–2016. International Journal of Academic Research in Accounting, Finance and Management Sciences, 8(2): 235–249. https://doi.org/10.6007/IJARAFMS/v8-i2/4316

Platonova, E., Asutay, M., Dixon, R., & Mohammad, S. (2018). The Impact of Corporate Social Responsibility Disclosure on Financial Performance: Evidence from the GCC Islamic Banking Sector. Journal of Business Ethics, 151(2): 451–471. https://doi.org/10.1007/s10551-016-3229-0

Rahmat, M. M., Iskandar, T. M., & Saleh, N. M. (2009). Audit committee characteristics in financially distressed and non-distressed companies. Managerial Auditing Journal, 24(7): 624–638. https://doi.org/10.1108/02686900910975350

Safieddine, A. (2009). Islamic Financial Institutions and Corporate Governance: New Insights for Agency Theory. Corporate Governance: An International Review, 17(2): 142–158. https://doi.org/10.1111/j.1467-8683.2009.00729.x

Sari, S. P., & Sholikhah, H. (2019). Liquidity Risk Disclosure: A Review of Corporate Governance. Riset Akuntansi dan Keuangan Indonesia, 4(2): 147–155. https://doi.org/10.23917/reaksi.v4i2.8723

Satibi, E., Utami, W., & Nugroho, L. (2018). A Comparison of Sharia Banks and Conventional Banks in Terms of Efficiency, Asset Quality and Stability in Indonesia for the Period 2008–2016. International Journal of Commerce and Finance, 4.

Soltani, B. (2014). The Anatomy of Corporate Fraud: A Comparative Analysis of High Profile American and European Corporate Scandals. Journal of Business Ethics, 120(2): 251–274. https://doi.org/10.1007/s10551-013-1660-z

Thijssens, T., Bollen, L., & Hassink, H. (2015). Secondary Stakeholder Influence on CSR Disclosure: An Application of Stakeholder Salience Theory. Journal of Business Ethics, 132(4): 873–891. https://doi.org/10.1007/s10551-015-2623-3

Tulung, J. E., Saerang, I. S., & Pandia, S. (2018). The Influence of Corporate Governance on the Intellectual Capital Disclosure: A Study on Indonesian Private Banks. Banks and Bank Systems, 13(4): 61–72. https://doi.org/10.21511/bbs.13(4).2018.06

Utami, W. (2000). Analisis Determinan Audit Delay: Kajian Empiris di Bursa Efek Jakarta. Bulletin Penelitian, 9(1): 1–29.

Utami, W., Nugroho, L., & Farida. (2017). Fundamental Versus Technical Analysis of Investment: Case Study of Investors’ Decision in Indonesia Stock Exchange. The Journal of Internet Banking and Commerce, 22(8): 1–18. Retrieved from http://www.icommercecentral.com/open-access/fundamental-versus-technical-analysis-of-investment-case-study-of-investors-decision-in-indonesia-stock-exchange.php?aid=86055

Utami, W., Nugroho, L., Mappanyuki, R., & Yelvionita, V. (2020). Early Warning Fraud Determinants in Banking Industries. Asian Economic and Financial Review, 10(6): 604–627. https://doi.org/10.18488/journal.aefr.2020.106.604.627

Utami, W., & Gumanti, T. A. (2014). Company Name Change and Stock Returns: The Case of Indonesian Public Companies. The Indonesian Journal of Accounting Research, 17(2): 143–158.

Wajdi Dusuki, A. (2008). Understanding the Objectives of Islamic Banking: A Survey of Stakeholders’ Perspectives. International Journal of Islamic and Middle Eastern Finance and Management, 1(2): 132–148. https://doi.org/10.1108/17538390810880982

Watts, R. L., & Zimmerman, J. L. (1978). Towards a Positive Theory of the Determination of Accounting Standards. The Accounting Review, 53(1): 112–134.

Full Text: PDF

DOI: 10.15408/aiq.v13i1.19712