The long-term performance of post-merger and acquisition: evidence from Indonesia's stock market
Josua Tarigan; Jacqueline Evania; Devie Devie; Saarce Elsye Hatane
Afro-Asian J. of Finance and Accounting, Vol. 12, No. 3 (2022) pp. 399 - 412
This study evaluates the long-term share performance of firms over three years after they underwent merger and acquisition (M&A). This is happening since researchers failed to find answers in the short-term analysis and began looking for answers through long-term analysis. Most previous studies have been done either in big capital markets (US and the UK) or smaller capital markets such as Greece and Malaysia but not Indonesia. The share performance was measured through cumulative market adjusted abnormal return (CMAR) and buy and hold abnormal return (BHAR). The result of this study provides evidence of the presence of negative abnormal returns of the merged and acquiring firms. Moreover, the results show that cash payments are preferable in comparison to the share settlement. The results also reveal that the firms which are owned by families tend to outperform the firms which are not owned by families.
Tag: Indonesia
Performance of conventional banks vs. Islamic banks: evidence from Indonesia
Performance of conventional banks vs. Islamic banks: evidence from Indonesia
Nevi Danila; Yousef Shahwan; Adeastri Aulia
Afro-Asian J. of Finance and Accounting, Vol. 12, No. 2 (2022) pp. 202 - 215
A sound banking system is crucial for the stability of the economy. This paper investigates the determinants of bank performance from the bank-specific and macroeconomic perspective. A fixed-effects model is used to analyse panel data on conventional and Islamic banks from 2010 to 2016. The data reveals that of the top ten private and non-government owned banks, an Islamic bank ranks as the number one performing bank. Macroeconomic variables are the only variables to have an impact on bank performance for both conventional and Islamic banks. While bank-specific variables do not influence performance, operating efficiency was shown to have an impact on Islamic banks.
Investigation on leveraging effect of women directors on board to R&D investment and firms’ financial performance in the context of developing countries: evidence from Indonesia
Investigation on leveraging effect of women directors on board to R&D investment and firms' financial performance in the context of developing countries: evidence from Indonesia
Sita Deliyana Firmialy; Akbar Adhiutama
Afro-Asian J. of Finance and Accounting, Vol. 10, No. 4 (2020) pp. 480 - 493
This study examines the leveraging effect of gender diversity, specifically women directors on board (WDB), to the relationship between research and development (R&D) investment to the financial performance. Additionally, the study aims to deepen our understanding of the main behavioural driver of corporate financial performances in Indonesia, one of the fast developing countries within South East Asia. Data from 227 public companies listed in Indonesian stock exchange (IDX) are extracted from their 2015 annual reports and corporate websites. Tobin's Q is employed as the dependent variable, along with R&D investment and WDB as main testing variables. Using regression, the study finds that firms' with higher number of women directors on board and more focus on their R&D investment activities, will be able to generate higher financial performance than those firms with lower gender diversity and R&D investments. This paper contributes to literature on R&D investment in Indonesia, which is still limited, to the best of the authors' knowledge. The reported findings also uncover the main important finding of leveraging effect of number of WDB to the relationship between R&D investment and firms' financial performance in Indonesia.
The effect of audit committee characteristics on earnings management: the case of Indonesia
The effect of audit committee characteristics on earnings management: the case of Indonesia
Doddy Setiawan; Lian Kee Phua; Hong Kok Chee; Irwan Trinugroho
Afro-Asian J. of Finance and Accounting, Vol. 10, No. 4 (2020) pp. 447 - 463
We investigate the effectiveness of audit committee in mitigating earnings management in the context of Indonesia. Audit committee is expected to reduce earnings management. This study examines the effect of several audit committee characteristics: independence of audit committee members, number of audit committee members, number of meetings, expertise in finance and gender on earnings management. We study 393 Indonesian listed firms during the 2006-2010 period. Results show that female member(s) of audit committee mitigate earnings management. However, financial expertise and number of meetings have positive effect on earnings management. This result shows that both variables might not be effective to constraint earnings management. On the other hand, number of audit committee members and independence of audit committee member do not have any significant influence on earnings management. Further, this study shows that audit firms and leverage have negative effect on earnings management. However, institutional investors tend to push earnings management higher and growth has no significant effect on earnings management.
Macroprudential policy and financing behaviour in emerging markets: bank-level evidence from Indonesian dual banking
Macroprudential policy and financing behaviour in emerging markets: bank-level evidence from Indonesian dual banking
Muhamed Zulkhibri; Muhammad Rizky Prima Sakti
Afro-Asian J. of Finance and Accounting, Vol. 10, No. 4 (2020) pp. 514 - 536
The loan-to-funding ratio-based reserve-requirement (RR-LFR) is a macroprudential instrument used by Bank Indonesia (central bank) to maintain the stability of Indonesian financial system by considering the bank liquidity conditions. This paper examines the impact of RR-LFR on financing behaviour in a dual banking system (Islamic and conventional banks) using generalised method of moment estimation (GMM) technique to address the endogeneity of explanatory variables and reduce the possible biases from residual correlation. Using bank-level data for both Islamic and conventional banks covering the period 2001-2015, we analyse the reaction of bank financing behaviour toward RR-LFR policy. The findings indicate that RR-LFR is effective in curtailing financing behaviour of banking institutions. Further, we show that RR-LFR exerts more impacts on managing credit expansion of conventional banks than of Islamic banks. The study suggests that a specific macroprudential framework should be put in place to address systemic concerns for each type of banks. Hence, the supervisory authorities will be able to identify the channel of macroprudential transmission and to devise an optimum policy mix for their banking system.
Should Indonesia adopt a basket currency regime?
Should Indonesia adopt a basket currency regime?
Ahmad Danu Prasetyo; Camelia Magdalena; Brian Charvia; Mandra Lazuardi Kitri
Afro-Asian J. of Finance and Accounting, Vol. 10, No. 4 (2020) pp. 494 - 513
Exchange rate regime is a system in which a country manages its currency about other currencies and the foreign exchange market. Currently, there are two major types of exchange rate regimes, i.e., free-float system and pegged system. Many countries, including Indonesia, adopted the free-float system since it is believed as the best regime for absorbing external economic shocks. However, some economists argued that a moderate exchange rate regime, such as currency basket system, is a better approach for achieving the government's goals. The research aims to provide an arrangement for optimal basket weights of Indonesian currency basket to minimise GDP volatility as well as exchange rate volatility. We develop an optimisation model in the extension of Yoshino et al. (2017) by adding five currencies in the basket. We found that the weight currencies in the free-float regime would reflect the trade intensities of the respective countries. Further, the government should monitor the change of exchange rates of currencies in the foreign reserves and change the weight accordingly. In addition, we also found that, whether the government implementing basket currency regime or free-float regime, it will make no significant differential effect on GDP gap volatility.
Empirical tests of the Fama-French five-factor model in Indonesia and Singapore
Empirical tests of the Fama-French five-factor model in Indonesia and Singapore
Irwan Adi Ekaputra; Bambang Sutrisno
Afro-Asian J. of Finance and Accounting, Vol. 10, No. 1 (2020) pp. 85 - 111
We examine the performance of the Fama-French three-factor (FF3) and five-factor (FF5) models in Indonesia and Singapore markets. We also investigate whether the book-to-market factor (HML) is redundant in both markets if profitability and investment factors are present. Different from previous studies, our empirical findings highlight that FF5 does not perform better than FF3 in explaining excess portfolio returns in both markets. Unlike the US market, we find that HML factor is not redundant in both markets. The results are robust for equally-weighted and value-weighted portfolios and also for various factor construction methods.