The Implication of Political Governance in Preventing Fraud of Indonesian SOEs

Geraldina, Ira and Walad, Javier Rasyadputra and Syahputra, Rafly Raditya (2022) The Implication of Political Governance in Preventing Fraud of Indonesian SOEs. GATR Journal of Management and Marketing Review, 7 (3). pp. 91-97. ISSN 2636-9168

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Objective - This study examines one of the political governance pillars, namely the Party's cadre management system, on fraud in Indonesian SOEs. In the context of Indonesia, SOEs' executives are not officially the cadre of the Party, but some of them have a political connection to the ruling Party. We use BOC's Duality and BOCs political connection as proxies of the Party's cadre management system due to their potential affiliation to the ruling Party. Methodology/Technique - This study used 86 observations of SOEs listed on the Indonesia Stock Exchange during 2015-2019. Using panel data estimation, this study surprisingly finds that BOC's Duality has a negative effect on fraudulent financial statements. Findings – The political connection positively affects the fraudulent financial statement. These findings suggest that independent boards with dual positions are incentivized to maintain their reputation, thereby decreasing fraudulent financial statements. Novelty - However, independent boards with political connections cannot overcome their conflicts of interest, so they cannot properly carry out their supervisory functions. These findings become the main contribution of this study that explains the implication of political governance in preventing fraud in Indonesian SOEs.

Item Type: Article
Additional Information (ID): 23/B0078.pdf
Uncontrolled Keywords: BOC's Duality; fraudulent financial statement; political connection; corporate governance.
Subjects: 300 Social Science > 320-329 Political and Government Science (Ilmu Politik dan Pemerintahan) > 320 Political dan Government Science (Ilmu Politik dan Ilmu Pemerintahan)
600 Technology and Applied Sciences > 650-659 Management and Auxiliary Service (Manajemen dan Ilmu yang Berkaitan) > 657.3 Financial Reporting (Laporan Keuangan, Laporan Finansial)
Divisions: Koleksi Digital > Artikel
Depositing User: CR Cherrie Rachman
Date Deposited: 24 May 2023 01:34
Last Modified: 26 Sep 2023 06:29

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