Browse > Article
http://dx.doi.org/10.13106/jafeb.2021.vol8.no5.0231

The Effect of Risk-Based Efficiency Value on Firm Value: A Case Study in Indonesia  

JUNIAR, Asrid (Department of Management, Faculty of Economics and Business, Lambung Mangkurat University)
FADAH, Isti (Management Science, University of Jember)
UTAMI, Elok Sri (Management Science, University of Jember)
PUSPITASARI, Novi (Management Science, University of Jember)
Publication Information
The Journal of Asian Finance, Economics and Business / v.8, no.5, 2021 , pp. 231-239 More about this Journal
Abstract
The purpose of this study is to analyze the effect of risk efficiency, financial decisions, and financial performance on firm value due to advances in financial reporting technology. This research was conducted on all banking sub-sector companies listed on the Indonesian capital market during a period of eight years, namely 2012-2019 which were selected using the purposive sampling method. The advancement of financial reporting technology is measured by two indicators based on the Internet financial reporting approach. Risk efficiency is measured using three indicators with a risk proxy relative efficiency approach using value at risk. Financial decisions are measured by two indicators that represent funding decisions and investment decisions. Financial performance is measured by two indicators with the profitability approach, and firm value is measured by two indicators based on the investor perception approach. The data analysis technique in this study used multivariate analysis with SEM-PLS. The empirical findings of this study are the advances in financial reporting technology, financial decisions, and risk-based efficiency value have a significant effect on firm value, while financial performance does not have a significant effect on firm value. Banking companies reduce risk to achieve efficiency and result in lower profits.
Keywords
Risk-Based Efficiency Value; Financial Reporting Technology; Financial Decisions; Financial Performance; Firm Value;
Citations & Related Records
연도 인용수 순위
  • Reference
1 Jubaedah, J., Yulivan, I., & Abdul Hadi, A. R. (2016). The influence of financial performance, capital structure and macroeconomic factors on firm's value: Evidence from textile companies at Indonesia stock exchange. Applied Finance and Accounting, 2(2), 18-29. https://doi.org/10.11114/afa.v2i2.1403   DOI
2 Juniar, A., & Fadah, I. (2019). Efficient financial management strategy for Indonesian health BPJS. International Journal of Scientific and Technology Research, 8(7), 403-407. http://www.ijstr.org/final-print/july2019/Efficient-Financial-Management-Strategy-For-Indonesian-Health-Bpjs.pdf
3 Almilia, L. S., & Budisusetyo, S. (2008). Corporate Internet reporting of the banking industry and LQ45 firms: An Indonesia example. The 1st Parahyangan International Accounting & Business Conference, Bandung, Indonesia, 4-5 May 2017 (pp. 1-26). https://doi.org/10.2139/ssrn.1218947   DOI
4 Alsartawi, A. M. (2018). Online financial disclosure and firms' performance. World Journal of Entrepreneurship, Management, and Sustainable Development, 14(2), 178-190. https://doi.org/10.1108/wjemsd-11-2017-0082   DOI
5 Altman, E. I. (1968). Financial ratios, discriminant analysis, and the prediction of corporate bankruptcy. The Journal of Finance, 23(4), 589-609. https://doi.org/10.2307/2978933   DOI
6 Apergis, N., & Lau, C. K. M. (2017). How deviations from FOMC's monetary policy decisions from a benchmark monetary policy rule affect bank profitability: Evidence from U.S. Banks. Journal of Financial Economic Policy, 9(4), 354-371. https://doi.org/10.1108/JFEP-02-2017-0008   DOI
7 Arner, D., Barberis, J., & Buckley, R. (2017). FinTech, RegTech, and the reconceptualization of financial regulation. Northwestern Journal of International Law & Business, 37(3), 371-413. https://doi.org/10.1177/0027950111411368   DOI
8 Ashbaugh, H., Johnstone, K. M., & Warfield, T. D. (1999). Corporate reporting on the Internet. Accounting Horizons, 13(3), 241-257. https://doi.org/10.2308/acch.1999.13.3.241   DOI
9 Abdullah, M., Janor, H., Hamid, M., & Yatim, P. (2017). The effect of enterprise risk management on firm value: Evidence from Malaysian technology firms. Jurnal Pengurusan, 49, 3-11. https://doi.org/10.17576/pengurusan-2017-49-01   DOI
10 Adityawarman, A., & Khudri, T. B. Y. (2018). The impact of internet financial reporting practices on the company's market value: A study of listed manufacturing companies in Indonesia. In: 6th International Accounting Conference (IAC 2017), Yogyakarta, Indonesia, August 27-29, 2017 (pp. 48-53). https://doi.org/10.2991/iac-17.2018.9   DOI
11 Shahwan, Y. (2018). The mediating effect of investment decisions and financing decisions on the influence of capital structure against corporate performance: Evidence from Jordanian listed commercial banks. Academy of Accounting and Financial Studies Journal, 22(6), 1-20.
12 Iqbal, J., & Azher, S. (2014). Value-at-risk and expected stock returns: Evidence from Pakistan. The Lahore Journal of Economics, 19(2), 71-100. https://doi.org/10.35536/lje.2014.v19.i2.a3   DOI
13 Jaiyeoba, H., Adewale, A., & Ibrahim, K. (2018). Measuring efficiencies of Bangladeshi and Indonesian microfinance institutions: A data envelopment analysis and latent growth curve modeling approach. International Journal of Bank Marketing, 36(2), 305-321. http://irep.iium.edu.my/56333/   DOI
14 Vikas, & Bansal, R. (2019). Efficiency Evaluation of Indian Oil and Gas Sector: Data Envelopment Analysis. International Journal of Emerging Markets, 14(2), 362-378. https://doi.org/10.1108/IJoEM-01-2018-0016   DOI
15 Tupa, J., Simota, J., & Steiner, F. (2017). Aspects of risk management implementation for industry 4.0. Procedia Manufacturing, 11, 1223-1230. https://doi.org/10.1016/j.promfg.2017.07.248   DOI
16 Veeraraghavan, K. (2018). Effect of financial management practices on the financial performance of small and medium enterprises in Puducherry, India. International Journal of Management Studies, V(4), 51-63.   DOI
17 Sawik, B. T. (2012). Conditional value-at-risk vs. value-at-risk to multi-objective portfolio optimization. Applications of Management Science, 15, 277-305. https://doi.org/10.1108/s0276-897620140000017019   DOI
18 Senol, Z., Karaca, S. S., & Erdogan, S. (2017). The effects of financial risk management on firm's value: An empirical evidence from Borsa Istanbul stock exchange. Financial Studies, 4, 27-45. ftp://www.ipe.ro/RePEc/vls/vls_pdf/vol21i4p27-45.pdf
19 Sia, C. J., Brahmana, R., & Memarista, G. (2018). Corporate Internet reporting and firm performance: Evidence from Malaysia. Contemporary Economics, 12(2), 153-164. https://doi.org/10.5709/ce.1897-9254.269   DOI
20 Sucuahi, W., & Cambarihan, J. M. (2016). Influence of profitability on the firm value of diversified companies in the Philippines. Accounting and Finance Research, 5(2), 149-153. https://doi.org/10.5430/afr.v5n2p149   DOI
21 Fama, E. F. (1978). The effects of a firm's investment and financing decisions on the welfare of its security holders. The American Economic Review, 68(3), 272-284. https://www.jstor.org/stable/1805260?seq=1
22 Farrell, M. J. (1957). The measurement of productive efficiency. Journal of the Royal Statistical Society, 120(3), 253-290. http://goo.gl/AFhm2N   DOI
23 Hajering, M., Dani, I., & Su'un, M. (2018). The influence of investment decisions, funding decisions, and dividend policies on financial performance and the value of banking companies listed in the Indonesia Stock Exchange. International Journal of Business and Management Invention (IJBMI), 7(10 ), 63-71. http://www.ijbmi.org/papers/Vol(7)10/Version-1/G0710016371.pdf
24 Gaio, L. E., Pimenta Junior, T., Lima, F. G., Passos, I. C., & Stefanelli, N. O. (2018). Value-at-risk performance in emerging and developed countries. International Journal of Managerial Finance, 14(5), 591-612. https://doi.org/10.1108/IJMF-10-2017-0244   DOI
25 Gan, V. B. Y. (2018). Two sides of the same coin insolvency risk measurement and capital adequacy rules for Basel III. SSRN Electronic Journal, January 2017, 1-37. https://doi.org/10.2139/ssrn.2948855   DOI
26 Gandhi, A. V., & Sharma, D. (2018). Technical efficiency of private sector hospitals in India using data envelopment analysis. Benchmarking: An International Journal, 25(9), 3570-3591. https://doi.org/10.1108/BIJ-06-2017-0135   DOI
27 Horvat, D., Stahlecker, T., Zenker, A., Lerch, C., & Mladineo, M. (2018). A conceptual approach to analyzing manufacturing companies' profiles concerning industry 4.0 in emerging economies. 28th International Conference on Flexible Automation and Intelligent Manufacturing (FAIM2018), Columbus, OH, USA, June 11-14, 2018 (pp.419-426). https://doi.org/10.1016/j.promfg.2018.10.065   DOI
28 Sumani, S., & Suryaningsih, I. B. (2020). Intellectual capital, capital structure, and growth of the company and its implications on value index formers LQ-45. International Journal of Scientific and Technology Research, 9(1), 4182-4189. https://doi.org/10.31838/jcr.07.15.40   DOI
29 Sudiyatno, B., Puspitasari, E., & Sudarsi, S. (2017). Working capital, firm performance, and firm value: An empirical study in the manufacturing industry on the Indonesia stock exchange. Economics World, 5(5), 444-450. https://doi.org/10.17265/2328-7144/2017.05.007   DOI
30 Sullivan, E. J. (2008). A.D. Roy: The forgotten father of portfolio theory. Northeastern Association of Business, Economics, and Technology Proceedings, 255-260. https://doi.org/10.1108/s0743-4154(2011)000029a008   DOI
31 Tabash, M. I. (2019). An empirical investigation on the relation between disclosure and financial performance of Islamic banks in the United Arab Emirates. Journal of Asian Finance, Economics, and Business, 6(4), 27-35. https://doi.org/10.13106/jafeb.2019.vol6.no4.27   DOI
32 Tandiontong, M., & Rusdin. (2015). Funding policy, investment policy, and the implication to company's value. Australian Journal of Basic and Applied Sciences, 9(37), 57-64. https://repository.maranatha.edu/22802/
33 Taylor, F. W. (1911). The principles of scientific management. New York, NY: Harper and Brothers Publisher.
34 Teymouri, M., & Ashoori, M. (2011). The impact of information technology on risk management. Procedia Computer Science, 3, 1602-1608. https://doi.org/10.1016/j.procs.2011.01.056   DOI
35 Treynor, J. L. (1962). Toward a theory of market value of risky assets. Journal of Investment Management, 1(2), 6072-6091. https://faculty.fuqua.duke.edu/-charvey/Teaching/BA453_2006/French_Treynor_CAPM.pdf
36 Nassar, S. (2016). The impact of capital structure on the financial performance of the firms : Evidence from Borsa Istanbul business. Journal of Business & Financial Affairs, 5(2), 1-4. https://doi.org/10.4172/2167-0234.100017   DOI
37 Musallam, S. R. M. (2018). The direct and indirect effect of the existence of risk management on the relationship between the audit committee and corporate social responsibility disclosure. Benchmarking: An International Journal, 25(9), 4125-4138. https://doi.org/10.1108/BIJ-03-2018-0050   DOI
38 Myers, S. C. (1984). The capital structure puzzle. The Journal of Finance, 39(3), 575-592. https://doi.org/10.1111/j.1540-6261.1984.tb03646   DOI
39 Nanda, S. T., Zenita, R., Anita, R., & Abdillah, M. R. (2019). The role of the investment opportunity is set on a financially distressed firm's value. International Journal of Engineering & Technology, 8(1.8), 154-158. https://doi.org/10.14419/ijet.v8i1.8.26226   DOI
40 Nguyen, H. T., & Nguyen, A. H. (2020). The impact of capital structure on firm performance: Evidence from Vietnam. Journal of Asian Finance, Economics, and Business, 7(4), 97-105. https://doi.org/10.13106/JAFEB.2020.VOL7.NO4.97   DOI
41 Nguyen, P., & Nguyen, A. (2015). The effect of corporate social responsibility on firm risk. Social Responsibility Journal, 11(2), 324-339. https://doi.org/10.1108/SRJ-08-2013-0093   DOI
42 Ofori-Sasu, D., Abor, J. Y., & Mensah, L. (2019). Funding structure and technical efficiency: A data envelopment analysis (DEA) approach for banks in Ghana. International Journal of Managerial Finance, 15(4), 425-443. https://doi.org/10.1108/IJMF-01-2018-0003   DOI
43 Efni, Y. (2017). The mediating effect of investment decisions and financing decisions on the effect of corporate risk and dividend policy against corporate value. Investment Management and Financial Innovations, 14(2), 27-37. https://doi.org/10.21511/imfi.14(2).2017.03   DOI
44 Olowookere, T., & Agbesanya, E. O. (2018). Effect of internet financial reporting on stock prices and a dividend yield of quoted non-financial companies in Nigeria. Research Journal of Finance and Accounting, 9(8), 120-129. https://iiste.org/Journals/index.php/RJFA/article/view/42018
45 Desai, C., & Nguyen, K. (2015). What explains the change in a firm's idiosyncratic volatility after a dividend initiation? Managerial Finance, 41(11), 1138-1158. https://doi.org/10.4324/9780080938196   DOI
46 Deswanto, R. B., & Siregar, S. V. (2018). The associations between environmental disclosures with financial performance, environmental performance, and firm value. Social Responsibility Journal, 14(1), 180-193. https://doi.org/10.1108/SRJ-01-2017-0005   DOI
47 Devie, D., Liman, L. P., Tarigan, J., & Jie, F. (2019). Corporate social responsibility, financial performance, and risk in the Indonesian natural resources industry. Social Responsibility Journal, 16(1), 73-90. https://doi.org/10.1108/SRJ-06-2018-0155   DOI
48 Dinh, H. T., & Pham, C. D. (2020). The effect of capital structure on the financial performance of Vietnamese listing pharmaceutical enterprises. Journal of Asian Finance, Economics, and Business, 7(9), 329-340. https://doi.org/10.13106/JAFEB.2020.VOL7.NO9.329   DOI
49 Donaldson, G. (1961). Corporate debt capacity: A study of corporate debt policy and the determination of corporate debt capacity. The Journal of Finance, 17(3), 554-555. https://doi.org/10.2307/2977084   DOI
50 Dwijayani, H., Surachman, M., Sumiati, K., & Djawahir, A. (2017). The influence of the investment policy and information asymmetry. International Journal of Economic Perspectives, 11(3), 2036-2042. http://jemp.org/volume-11-issue-3-2036-2042/
51 Eldomiaty, T. I., Atia, O., Badawy, A., & Hafez, H. (2014). Mutual benefits of transferring stock risks to dividend policy. Journal of Economic and Administrative Sciences, 30(2), 131-158. https://doi.org/10.1108/jeas-05-2013-0016   DOI
52 Saksonova, S. (2014). The role of net interest margin in improving banks' asset structure and assessing the stability and efficiency of their operations. Procedia - Social and Behavioral Sciences, 150, 132-141. https://doi.org/10.1016/j.sbspro.2014.09.017   DOI
53 Omran, M. A., & Ramdhony, D. (2016). Determinants of Internet financial reporting in African markets: The case of Mauritius. The Journal of Developing Areas, 50(4), 1-18. https://doi.org/10.1353/jda.2016.0150   DOI
54 Ross, S. A. (1977). The determination of financial structure: the incentive-signaling approach. The Bell Journal of Economics, 8(1), 23-40. https://doi.org/10.2469/dig.v27.n1.2   DOI
55 Roy, A. D. (1952). Safety first and the holding of assets. Econometrica, 20(3), 431-449. https://doi.org/10.1177/002795018109800105   DOI
56 Sari, E., Suhadak, S., Rahayu, S. M., & Solimun. (2018). The effects of Tier-1 capital, risk management, and profitability on the performance of Indonesian commercial banks. International Journal of Law and Management, 60(5), 1074-1086. https://doi.org/10.1108/IJLMA-05-2017-0109   DOI
57 Jorion, P. (2001). Value at risk the new benchmark for managing financial risk. New York: McGraw-Hill Companies, Inc.
58 Khalil, S., & O'Sullivan, P. (2017). Corporate social responsibility: Internet social and environmental reporting by banks. Meditari Accountancy Research, 25(3), 414-446. https://doi.org/10.1108/MEDAR-10-2016-0082   DOI
59 Kavassalis, P., Stieber, H., Breymann, W., Saxton, K., Gross, F. J., & Joseph, F. (2017). An innovative regtech approach to financial risk monitoring and supervisory reporting. The Journal of Risk Finance, 19(1), 39-55. https://doi.org/10.1108/JRF-07-2017-0111   DOI
60 Keliwon, K. B., Shukor, Z. A., & Hassan, M. S. (2018). Internet financial reporting (IFR) disclosure position and firm value. Asian Journal of Accounting and Governance, 9, 111-121. https://doi.org/10.17576/ajag-2018-09-10   DOI
61 Khanifah, K., Hardiningsih, P., Darmaryantiko, A., Iryantik, I., & Udin, U. (2020). The effect of corporate governance disclosure on banking performance: Empirical evidence from Iran, Saudi Arabia, and Malaysia. Journal of Asian Finance, Economics, and Business, 7(3), 41-51. https://doi.org/10.13106/jafeb.2020.vol7.no3.41   DOI
62 Kwateng, K. O., Wusu, O. E. E., & Amanor, K. (2019). Exploring the effect of online banking on bank performance using data envelopment analysis. Benchmarking: An International Journal, 27(1), 137-165. http://jjmie.hu.edu.jo/vol13-1/jjmie_30_19-01.pdf   DOI
63 Lopez-Arceiz, F. J., Torres, L., & Bellostas, A. J. (2019). Is online disclosure the key to corporate governance? Online Information Review, 43(5), 893-921. https://doi.org/10.1108/OIR-06-2018-0191   DOI
64 Majumder, M. T. H., & Li, X. (2018). Bank risk and performance in an emerging market setting: The case of Bangladesh. Journal of Economics, Finance and Administrative Science, 23(46), 199-229. https://doi.org/10.1108/JEFAS-07-2017-0084   DOI
65 Affandi, M. A., Murwaningsari, E., Mayangsari, S., & Dwimulyani, S. (2020). Role of ABAS and bureaucratic reformation in improving governmental financial performance through financial decision making. Journal of Asian Finance, Economics, and Business, 7(11), 1069-1075. https://doi.org/10.13106/jafeb.2020.vol7.no11.1069   DOI
66 Maresova, P., Soukal, I., Svobodova, L., Hedvicakova, M., Javanmardi, E., Selamat, A., & Krejcar, O. (2018). Consequences of industry 4.0 in business and economics. Economies, 6(3), 1-14. https://doi.org/10.3390/economies6030046   DOI
67 Markowitz, H. (1952). Portfolio selection efficient diversification of investment. New York: John Wiley & Sons.
68 Muchtar, D., Nor, F. M., Albra, W., Arifai, M., Ahmar, A. S., & Elgammal, M. M. (2018). The dynamic performance of Indonesian public companies : An analysis of financial decision behavior. Cogent Economics & Finance, 6, 1-14. https://doi.org/10.1080/23322039.2018.1488343   DOI
69 Agyei-Mensah, B. K. (2018). Impact of corporate governance attributes and financial reporting lag on corporate financial performance. African Journal of Economic and Management Studies, 9(3), 349-366. https://doi.org/10.1108/AJEMS-08-2017-0205   DOI
70 Aghimien, P. A., Kamarudin, F., Hamid, M., & Noordin, B. (2016). The efficiency of Gulf Cooperation Council banks: Empirical evidence using data envelopment analysis. Review of International Business and Strategy, 26(1), 118-136. https://doi.org/10.1108/RIBS-11-2013-0111   DOI
71 Alali, S. M. (2017). The impact of capital structure on the financial performance of the Jordanian industrial companies listed on the Amman stock exchange for the period 2012-2015. Asian Journal of Finance & Accounting, 9(2), 369-386. https://doi.org/10.5296/ajfa.v9i2.12076   DOI
72 Birt, J. L., Muthusamy, K., & Bir, P. (2017). XBRL and the qualitative characteristics of useful financial information. Accounting Research Journal, 30(1), 107-126. https://doi.org/10.1108/ARJ-11-2014-0105   DOI
73 Banker, R. D., Charnes, A., & Cooper, W. W. (1984). Some models for estimating technical and scale inefficiencies in data envelopment analysis. Management Science, 30(9), 1078-1092. https://doi.org/10.1287/mnsc.30.9.1078   DOI
74 Beaver, W. H. (1966). Financial ratios as predictors of failure. Journal of Accounting Research, 4, 71-111. https://doi.org/10.2307/2490171   DOI
75 Best, P. (1998). Implementing value at risk. New York, NY: John Wiley & Sons. https://doi.org/.1037//0033-2909.I26.1.78
76 Dahir, A. M., Mahat, F. B., & Ali, N. A. Bin. (2018). Funding liquidity risk and bank risk-taking in BRICS countries: An application of system GMM approach. International Journal of Emerging Markets, 13(1), 231-248. https://doi.org/10.1108/IJoEM-03-2017-0086   DOI
77 Bukair, A. A. A. (2019). Factors influencing Islamic banks' capital structure in developing economies. Journal of Islamic Accounting and Business Research, 10(1), 2-20. https://doi.org/10.1108/JIABR-02-2014-0008   DOI
78 Charnes, A., Cooper, W. W., & Rhodes, E. (1978). Measuring the efficiency of decision-making units. European Journal of Operational Research, 2(6), 429-444. https://doi.org/10.1016/0377-2217(78)90138-8   DOI
79 Chong, L. L., Ong, H. B., & Tan, S. H. (2018). Corporate risk-taking and performance in Malaysia: The effect of board composition, political connections, and sustainability practices. Corporate Governance: The International Journal of Business in Society, 18(4), 635-654. https://doi.org/10.1108/CG-05-2017-0095   DOI
80 Babbage, C. (1832). The economy of machinery. Cambridge, UK: The University of Cambridge.