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Journal Cover Journal of Indonesian Economy and Business
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  This is an Open Access Journal Open Access journal
   ISSN (Print) 0215-2487 - ISSN (Online) 2085-8272
   Published by Universitas Gadjah Mada Homepage  [28 journals]
  • EFFECTS OF REMITTANCES ON POVERTY REDUCTION: THE CASE OF INDONESIA

    • Authors: Faiza Husnayeni Nahar, Mohd Nahar Mohd Arshad
      Pages: 163 - 177
      Abstract: Remittances have been reported as a tool for fighting poverty in some selected countries, such as Indonesia. An increase of income through remittances tends to improve the economic status of the migrant’s household. Once they get a high salary, they will remit money (a remittance) to their household in Indonesia via formal institutions, such as banks.  The migrant’s household can fulfil their basic needs and can use the remittance for educational investment and productive activities. The education investment aims to educate the children or grandchildren of migrants, which will be beneficial for the future generations of the family, allowing them the chance of a more prosperous life. The poverty rate would be reduced gradually, and economic welfare can be achieved. The main objectives of this paper are first to estimate the effects of remittances on poverty in Indonesia from 1983 to 2015 and second, to propose several strategic policies related to remittances and poverty reduction. Other variables considered include inflation, exchange rates, income, income inequality and the labor force participation rate. An Ordinary Least Square (OLS) method was used to explore the econometric and estimated results. The study found that an increase in remittances led to a reduction in poverty by 2.56%. Inflation and the exchange rate have positive and negative effects on poverty, respectively. The small effect of remittances on poverty’s reduction could possibly be explained by the low educational background of the migrants, low wage jobs, expensive remittance costs, and migrants not knowing how to remit money through formal financial institutions. Hence, to reduce the poverty level, the government needs to first facilitate skills training for the workers so that they could get a better job and earn more, second, lower the transaction costs of remittances, and lastly, provide agents at Indonesian banks overseas to provide better facilities to Indonesian workers to remit money back to their home country.
      PubDate: 2017-12-14
      DOI: 10.22146/jieb.28678
      Issue No: Vol. 32, No. 3 (2017)
       
  • BUSINESS ETHICS FOR BUSINESS SUSTAINABILITY IN MUHAMMADIYAH HOSPITAL:
           EVIDENCE FROM PONOROGO, INDONESIA

    • Authors: Anna Marina, Sentot Imam Wahjono
      Pages: 178 - 189
      Abstract: The purpose of this study is to examine how business ethics can support business sustainability in hospitals. Business ethics is associated with: Hospital professional ethics, medical professional ethics, professional accounting ethics, and Islamic business ethics. This study used a qualitative approach with phenomenological analysis techniques to process the data collected from key informants, through Focus Group Discussions (FGD) with 20 supervisors, in-depth interviews with six members of the management, 11 outside observations, and documentation over a period of six months. The business ethics theory was used to guide the research’s findings. The business sustainability theory was used to find the relationship of the research’s findings with the opinions of four expert informants for the purpose of triangulation on the reasons for conducting Islamic business ethics for a sustainable business. The finding of this study is the reason for running the hospital ethically. The finding of this study can be used to redesign the vision and mission of the hospital as a basis for achieving better performance. The implication of the finding of this research is the need for business ethics in the design of internal systems.
      PubDate: 2017-12-14
      DOI: 10.22146/jieb.17146
      Issue No: Vol. 32, No. 3 (2017)
       
  • TAX AVOIDANCE, RELATED PARTY TRANSACTIONS, CORPORATE GOVERNANCE AND THE
           CORPORATE CASH DIVIDEND POLICY

    • Authors: Dewi Kartika Sari, Sidharta Utama, Hilda Rossieta
      Pages: 190 - 208
      Abstract: This study aims to investigate the relationship between tax avoidance, related party transactions and the corporate dividend policy. Furthermore, this study will also investigate the moderating effects of the implementation of Corporate Governance (CG) on the relationship between tax avoidance, Related Party Transactions (RPT) and corporate dividend policies. Our sample covers companies listed on the Indonesian Stock Exchange during 2011-2014. The results provide moderate support for the proposed hypotheses. First, the greater tax avoidance that a company makes will increase the size of the firm's RPT. Second, the higher that the company's RPT is, this will lower the company's cash dividend payout rate. Third, the greater the tax avoidance is, the lower the company's cash dividend payout rate will be, which is done through a related party transaction.Fourth, the impact of the implementation of strong CG will weaken the positive relationship between corporate tax avoidance and the company’s RPT size, strengthen the negative relationship between the RPT’s size and the cash dividend payout policy of the firm, and strengthen the negative relationship between the company’s tax avoidance and the company's cash dividend payout policy which is mediated by the company’s RPT. This study makes three contributions. First, this study shows an indirect relationship between tax avoidance and cash dividend payments, mediated by RPT. Second, this study tries to examine the effect of CG’s moderation on the relationship between tax avoidance and RPT, as well as the effect of CG’s moderation on the relationship between tax avoidance and cash dividend payments, mediated by RPT. Third, this study developed RPT measurements by looking at the RPT’s components more specifically (looking at components of transactions outside of the main business of the company - the "others" component).
      PubDate: 2017-12-14
      DOI: 10.22146/jieb.28658
      Issue No: Vol. 32, No. 3 (2017)
       
  • DO PUBLIC AND PRIVATE DEBT LEVELS AFFECT THE SIZE OF FISCAL
           MULTIPLIERS'

    • Authors: Chairul Adi
      Pages: 209 - 233
      Abstract: This paper investigates the effectiveness of fiscal policies – as measured by the impact and cumulative multipliers – and how they interact with public and private debt. Harnessing the moderated panel regression approach, based on the yearly data set of several economies during the period from 1996 to 2012, the analysis is focused on the impact of spending-and-revenue-based fiscal policies on economic growth and how these fiscal instruments interact with public and private indebtedness. The result of spending stimuli advocates the basic Keynesian theory. An increase in public expenditures contemporaneously generates a positive multiplier, of around 0.29 – 0.44 and around 0.45 – 0.58 during two years. Decomposing the expenditures into their elements, this paper documents a stronger impact from public investment than that from government purchases. On the other hand, the revenue stimuli seem to follow the Ricardian Equivalence Hypothesis (REH), arguing that current tax cuts are inconsequential. The impact and cumulative multipliers for this fiscal instrument have mixed results, ranging from -0.21 to 0.05 and -0.26 to 0.06, respectively. Moreover, no robust evidence is found to support the argument that government debt moderates the effectiveness of fiscal policies. The size of the multipliers for both spending and revenue policies remain constant with the level of public debt. On the other hand, private debt appears to show a statistically significant moderating effect on spending stimuli. Its impact on spending multipliers, however, is economically insignificant. The moderation effect of private debt on the revenue stimuli does not seem to exist. Finally, this paper documents that both public and private debt exhibit a negative and statistically significant estimation for economic output.
      PubDate: 2017-12-14
      DOI: 10.22146/jieb.23172
      Issue No: Vol. 32, No. 3 (2017)
       
  • THE IMPACT OF A DISAGGREGATION STRATEGY WITH SUPPLEMENTARY DISPLAYS
           TOWARDS BALANCED SCORECARD PERFORMANCE EVALUATION

    • Authors: Frisky Jeremy Kasingku, Goedono .
      Pages: 234 - 246
      Abstract: Balanced Scorecard has become a popular management tool around the world. Despite its benefits, the balanced scorecard creates a bias called the common- measures bias. The bias associated with a balanced scorecard should be eliminated so that the optimal benefits of the balanced scorecard can be obtained. To eliminate the bias, a disaggregation strategy is suggested. This disaggregation strategy is found to be a mitigation strategy to solve the common-measures bias. However, there is a small amount of empirical evidence about the quality of the decisions produced by using a disaggregation strategy. Furthermore, to increase the decisions’ quality, an information display was found to be helpful. Therefore, this study aimed to investigate the effect of a disaggregation strategy, in the context of a balanced scorecard, toward the decisions’ quality regarding the balanced scorecard’s performance evaluation with a different information display. This study used an experimental method with the design of 3x2x2 between the subject’s factorial designs. The results indicated that decision makers with supplementary tabular and graphic displays would exhibit a greater judgment consensus than decision makers who were given traditional separate displays. Moreover, those who received the supplementary table displays exhibit a greater judgment consensus and consistency than those who were given a graphical display. In conclusion, a disaggregation strategy with table and graphic displays could improve a judgment’s consensus, a traditional display can improve a judgment’s consistency, and a table display could exhibit greater judgmental consensus and consistency than a graphic display. This study contributed theoretically and practically.
      PubDate: 2017-12-14
      DOI: 10.22146/jieb.30298
      Issue No: Vol. 32, No. 3 (2017)
       
 
 
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