RELATIONSHIP OF BOARD ATTRIBUTES WITH SUKUK RANKING IN INDONESIA AND COMPANY CHARACTERISTICS AS CONTROL VARIABLES

Authors

  • Putri Aryo JFK
  • Harjum Muharam

DOI:

https://doi.org/10.29040/ijebar.v6i3.5916

Abstract

The purpose of this study is to determine the effect of the board's attributes from the corporate governance mechanism on the rating of sukuk in Indonesia. This study was conducted to see whether companies that implement corporate governance correctly get higher ratings than companies with poor implementation of corporate governance. The method used is a quantitative research method with ordinal logistic regression test equipment. The research sample was obtained by using purposive sampling technique. The results showed that CEO tenure, board of commissioners size, firm size, and profitability had a significant positive effect on sukuk ratings. The size of the board of directors and leverage have a significant negative effect on sukuk ratings, while the proportion of independent commissioners has no significant effect on the sukuk rating. This study only covers the issuance of sukuk in Indonesia, and one rating agency. Nothing can compare to the issue of sukuk abroad. Keywords: term of office of CEO, board of directors, board of commissioners, proportion of independent commissioners, sukuk ratings

References

Alali, F., Anandarajan, A., & Jiang, W. (2012). The effect of corporate governance on firm's credit ratings: Further evidence using governance score in the United States. Accounting and Finance, 52(2), 291–312. https://doi.org/10.1111/j.1467-629X.20100.00396.x

Altwijry, OI 2015. The role of corporate governance and ownership in unconventional bond rating: empirical evidence from companies listed on Bursa Malaysia. Journal of Islamic Economics Banking and Finance, Vol. 11(2), 105-117.

Aman, H., & Nguyen, P. (2013). Does good governance matter to debtholders? Evidence from the credit ratings of Japanese firms. Research in International Business and Finance, 29(1), 14–34. https://doi.org/10.1016/j.ribaf.2013.02.002

Ashbaugh-Skaife, H., Collins, DW, & LaFond, R. (2006). The effects of corporate governance on firms' credit ratings. Journal of Accounting and Economics, 42(1–2), 203–243.https://doi.org/10.1016/j.jacceco.2006.02.003

Bhojraj, S., & Sengupta, P. (2003). Effect of Corporate Governance on Bond Ratings and Yields: The Role of Institutional Investors and Outside Directors. Journal of Business, 76(3), 455–475.https://doi.org/10.1086/344114

Bradley, M., Chen, D., 2011. Corporate governance and the cost of debt: evidence from director limited liability and indemnification provisions. Journal of Corporate Finance 17, 83-107.

Elhaj, MA. A., Muhamed, NA, Ramli, NM, & Zakaria, NB (2016). Ownership Monitoring Mechanism over Sukuk Credit Rating. International Journal of Academic Research in Business and Social Sciences, 6(12), 700–720. https://doi.org/10.6007/ijarbss/v6-i12/2530

Elhaj, MA, Muhamed, NA, & Ramli, NM (2017). The effects of board attributes on Sukuk rating. International Journal of Islamic and Middle Eastern Finance and Management, 11(2), 312–330.https://doi.org/10.1108/IMEFM-03-2017-0057

Fama, E. (2012). Agency problems and the theory of the firm. The Economic Nature of the Firm: A Reader, Third Edition, 88(2), 270–282. https://doi.org/10.1017/CBO9780511817410.022

Gillan, SL (2006). Recent Developments in Corporate Governance: An Overview. Journal of Corporate Finance, 12(3), 381–402. https://doi.org/10.1016/j.jcorpfin.2005.11.002

Gusni, Agustriyana, D., Tarmidi, D., & Anderson Butar Butar, DJ (2020). CEO power, corporate governance, auditors' reputation, and its effects on corporate Islamic bonds rating. International Journal of Psychosocial Rehabilitation, 24(2), 3339–3349. https://doi.org/10.37200/IJPR/V24I2/PR200647

Indriani, A., & Widyarti, ET (2013). Determinants of Capital Structure of Companies whose shares are included in the Jakarta Islamic Index. Journal of Management Dynamics, 4(2), 59–68. https://doi.org/10.1017/CBO9781107415324.004

Jensen, MC, & Meckling, WH (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.https://doi.org/10.1016/0304-405X(76)90026-X

Kusmayadi Dedi, Dedi Rudiana, & Badruzaman Jajang. (2015). GOOD CORPORATE GOVERNANCE (Firmansyah Irman (ed.)).

Liu, Y., & Jiraporn, P. (2010). The effect of CEO power on bond ratings and yields. Journal of Empirical Finance, 17(4), 744–762. https://doi.org/10.1016/j.jempfin.2010.03.003

Melzatia, S., Badaruddin, RFR, & Hammat, Z. (2019). Sukuk rating, the involvement of agency theory. International Journal of Innovation, Creativity and Change, 6(8), 139–155.

Pefindo. 2020. www.pefindo.com. Retrieved August 8, 2020, 10:30 am.

Sari, Leli Kurnia and Murtini, H. (2015). The Effect of Corporate Governance on. 1(1), 40–49.

Tertius, Agustina Melia and Christiawan, Yulius Jogi. 2015. The Effect of Good Corporate Governance on Company Performance in the Financial Sector. Business Accounting Review Vol. 3 No. 1, January 2015 223- 232.

Widuri, Shady and Asteria Paramita. 2008. "Analysis of the Relationship of the Role of Corporate Culture on the Implementation of Good Corporate Governance at PT various Tambang Tbk.". The 2nd National Conference UKWMS. Surabaya. September 6

Zhang, X., & Khurana, I. (2015). Does Ceo Tenure Influence Corporate Bond Rating Properties? University of Missouri-Columbia.

Downloads

Published

2022-07-06

How to Cite

JFK, P. A., & Muharam, H. (2022). RELATIONSHIP OF BOARD ATTRIBUTES WITH SUKUK RANKING IN INDONESIA AND COMPANY CHARACTERISTICS AS CONTROL VARIABLES. International Journal of Economics, Business and Accounting Research (IJEBAR), 6(3), 2281–2289. https://doi.org/10.29040/ijebar.v6i3.5916

Issue

Vol. 6 No. 3 (2022): IJEBAR, Vol. 6 Issue 3, September 2022

Section

Articles

Citation Check

License

Authors who publish with IJEBAR agree to the following terms: Authors retain copyright and grant the IJEBAR right of first publication with the work simultaneously licensed under a Creative Commons Attribution License (CC BY-SA 4.0) that allows others to share (copy and redistribute the material in any medium or format) and adapt (remix, transform, and build upon the material) the work for any purpose, even commercially with an acknowledgement of the work's authorship and initial publication in IJEBAR. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in IJEBAR. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).