Development of Tunneling Detection Model: A New Corporate Performance Improvement

Ratna Candra Sari, P.L. Rika Fatimah, Hadrian Geri Djajadikerta

Abstract


ABSTRACT

Tunneling through related party transactions is one of the most challenging aspects in corporate governance. In addition, the impact of tunneling activities may affect to corporate governance’s performance in most of Asian countries. Yet, studies on the effectiveness of corporate governance in relation to tunneling are still limited and the results have been inconclusive. This study tries to develop a detection model to distinguish related party transactions that can be categorised as tunneling activities. Furthermore, this study also examines whether corporate governance mechanisms can explain the tunneling activities. The main findings of this study suggest that companies, in Indonesian listed companies, with concentrated ownerships have a greater tendency to conduct tunneling transactions compared to companies with dispersed ownerships, and the overall corporate governance mechanisms implemented by the companies could not be used as predictors for tunneling behaviour.

Keywords: Tunneling; corporate governance; related party transactions; asset tunneling; quality and performance improvement; Indonesian listed companies

ABSTRAK

Terowong melalui urus niaga dengan pihak berkaitan adalah salah satu aspek yang paling mencabar dalam tadbir urus korporat. Di samping itu, kesan aktiviti terowong boleh menjejaskan prestasi tadbir urus korporat di kebanyakan negara-negara Asia. Namun, kajian mengenai keberkesanan tadbir urus korporat berhubung dengan terowong adalah masih terhad dan keputusan belum meyakinkan. Kajian ini cuba untuk membangunkan model pengesanan untuk membezakan urus niaga pihak berkaitan yang boleh dikategorikan sebagai aktiviti terowong. Tambahan pula, kajian ini juga mengkaji sama ada mekanisme tadbir urus korporat tersebut dapat menjelaskan aktiviti terowong yang berlaku. Penemuan utama kajian ini menunjukkan bahawa syarikat-syarikat, iaitu syarikat Indonesia yang tersenarai, dengan pemilikan berpusat mempunyai kecenderungan yang lebih besar untuk menjalankan urus niaga terowong berbanding syarikat yang mempunyai pemilikan terpencar, dan mekanisme tadbir urus korporat yang menyeluruh dilaksanakan oleh syarikat-syarikat tidak boleh digunakan sebagai peramal bagi kelakuan terowong.

Kata kunci: Model terowong; tadbir urus korporat; urus niaga pihak berkaitan; terowong aset; kualiti dan peningkatan prestasi; syarikat tersenarai Indonesia


Keywords


Tunneling; corporate governance; related party transactions; asset tunneling; quality and performance improvement; Indonesian listed companies

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