Research Article
Analysis of the Indication of Islamic Label on Good Corporate Governance (GCG) of Islamic Entities in Indonesia
@INPROCEEDINGS{10.4108/eai.27-7-2021.2316888, author={Khairun Amala and Junino Jahja}, title={Analysis of the Indication of Islamic Label on Good Corporate Governance (GCG) of Islamic Entities in Indonesia}, proceedings={Proceedings of the 4th International Conference on Economics, Business and Economic Education Science, ICE-BEES 2021, 27-28 July 2021, Semarang, Indonesia}, publisher={EAI}, proceedings_a={ICE-BEES}, year={2022}, month={3}, keywords={agency problems corporate governance (cg) islamic finance leverage}, doi={10.4108/eai.27-7-2021.2316888} }- Khairun Amala
Junino Jahja
Year: 2022
Analysis of the Indication of Islamic Label on Good Corporate Governance (GCG) of Islamic Entities in Indonesia
ICE-BEES
EAI
DOI: 10.4108/eai.27-7-2021.2316888
Abstract
Researchers examine the Islamic label on corporate governance in Indonesia. Listed companies under the Islamic label (sharia-based entities) are characterized by low debt. Recent evidence shows that leverage can be used as a substitute for good governance. This encourages researchers to see whether these sharia-based entities have better governance than non-Islamic ones. The data of this research are collected through Refinitiv Eikon screener. The selection of observations is based on the financial ratios as stated by IDX Islamic; (1) interest-based liabilities to Total Assets is no more than 45%, and (2) interest income and other non-Islamic income to Total Revenue is no more than 10%. The analytical methods this research used is Panel-based Regression for testing hypothesis (α=5%). After controlling for the variables that affect governance, the results show that the Islamic label on companies with Islamic stocks has no significant effect on governance. This is due to the calculation of the CG score has implicitly accommodated ethical business conduct which is the framework of business based on Islamic values, so that the CG variable contains information similar to the Islamic dummy. This might cause the results of this study is insignificant.