The Financial Crisis Impact on Firm Performance, Financial Decision and Corporate Governance of Indonesia Listed Firms

Darmawati Muchtar; Agung I Gusti Ngurah; Fauzias Mat Nor; Izani Ibrahim; Mohsen Jafarian

Proceedings of the 1st Workshop on Multidisciplinary and Its Applications Part 1, WMA-01 2018, 19-20 January 2018, Aceh, Indonesia

Research Article

The Financial Crisis Impact on Firm Performance, Financial Decision and Corporate Governance of Indonesia Listed Firms

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@INPROCEEDINGS{10.4108/eai.20-1-2018.2282453,
    author={Darmawati  Muchtar and Agung I Gusti  Ngurah and Fauzias  Mat Nor and Izani  Ibrahim and Mohsen  Jafarian},
    title={The Financial Crisis Impact on Firm Performance, Financial Decision and Corporate Governance of Indonesia Listed Firms},
    proceedings={Proceedings of the 1st Workshop on Multidisciplinary and Its Applications Part 1, WMA-01 2018, 19-20 January 2018, Aceh, Indonesia},
    publisher={EAI},
    proceedings_a={WMA-1},
    year={2019},
    month={9},
    keywords={firm performance financial decision corporate governance two-way anova},
    doi={10.4108/eai.20-1-2018.2282453}
}

Darmawati Muchtar
Agung I Gusti Ngurah
Fauzias Mat Nor
Izani Ibrahim
Mohsen Jafarian
Year: 2019
The Financial Crisis Impact on Firm Performance, Financial Decision and Corporate Governance of Indonesia Listed Firms
WMA-1
EAI
DOI: 10.4108/eai.20-1-2018.2282453

Darmawati Muchtar¹^,*, Agung I Gusti Ngurah², Fauzias Mat Nor³, Izani Ibrahim⁴, Mohsen Jafarian⁵

1: Faculty of Economic and Business, Universitas Malikussaleh, Aceh, Indonesia
2: Faculty of Economic and Business, University of Indonesia, and The ArySuta Center, Jakarta, Indonesia
3: Faculty of Economic and Muamalat, Islamic Science, University of Malaysia, Nilai, Malaysia
4: Department of Finance, College of Business, Prince Sultan University, Riyadh, Saudi Arabia
5: Graduate School of Business, National University of Malaysia, Bangi-Selangor, Malaysia

*Contact email: darmawati@unimal.ac.id

Abstract

The purpose of this study is to investigate the impact of global financial crisis on firm performance, financial decision and corporate governance of the Indonesian listed firms. The financial data are retrieved from Reuters Data stream and annual reports for 212 firms over the period 2003-2013. Hence, the data is a balanced panel data with 2332 observations. The impacts of the financial crises on the research variables are tested using a special two-way cell-means (ANOVA) model of each of the research variables by Time-Period, and Sectors. Meanwhile, accounting performance (ROA) appears to have lower mean parameter during crisis period compared to after crisis. However, based on the coefficient of firm performance, the impact of financial crisis is more on the market performance and less on the accounting performance. The findings also show that investment is lower during crisis period compared to before and after crisis period, while leverage is lower during crisis compared to before crisis period for both sectors. Interestingly, the results show that financial crisis had no impact on dividend per share, while free cash flow and corporate governance are less impacted by the financial crisis. This study extends the current understanding of firm performance, financial decision and corporate governance by providing new empirical evidence of the impact of financial crisis by sector.

Keywords: firm performance financial decision corporate governance two-way anova

Published: 2019-09-20
Publisher: EAI

: http://dx.doi.org/10.4108/eai.20-1-2018.2282453