The Impact of Cost of Capital On Financi PDF

International Management &
Accounting Conference (IMAC) 10

Revisiting Business and Accounting
Perspective in New Era
13-14th October 2021
CONFERENCE PROCEEDINGS
IMAC – 13-14 October 2021 (Online Conference) https://www.ukm.my/imac/
TABLE OF CONTENTS
The Influence of Tax Credit on Participation of Employers in the Structured Internship
Program (SIP) and its Impacts on Job Creation
Fatin Nabilah binti Norzihad and Mohd Rizal Palil……………………………………………………………………. 9
Tax Knowledge, Tax Awareness, and Tax Behaviour of Social Commerce Owners: Evidence
from Indonesia
Arya Zulfikar Akbar and Mohd Rizal Palil…………………………………………………………………………………. 11
A Review of Method, Challenges and Accounting Issues in Agricultural Cooperative

Mohammed, I. U., Mustafa, H., Lau, Y. W, and Sidek, S……………………………………………………………. 13
Fair Value Accounting and Abnormal Audit Fees: Empirical Evidence from Amman Stock
Exchange-Listed Companies
Esraa Esam Alharasis……………………………………………………………………………………………………………….. 15
Ciri Lembaga Pengarah dan Kualiti Pelaporan Kewangan: Satu Tinjauan Literatur
Maliza Mohd Nor dan Zaini Embong………………………………………………………………………………………… 19
Factors Affecting Financial Distress of Non-Financial Companies

Tjhen Lili, Debora……………………………………………………………………………………………………………………… 21
The Influence of Power of Tax Administrator on Tax Compliance: The Mediating Role of
Cognitive and Affective Attitude
Siti Fatimah Abdul Rashid, Rosiati Ramli, Amizawati Mohd Amir, and Mohd Rizal Palil……………. 23
The Influence of Corporate Governance, ESOP and other Factors on Income Management
Muhammad Bitsca Basyara and Annisa Kanti………………………………………………………………………….. 25
Affecting Factors Quality of Income to the Company Registered Manufacturing in Indonesia

Stock Exchange
Nur Elvy Syahra and Arwina Karmudiandri……………………………………………………………………………….. 27
Factors that Affect Income Smoothing

Inayah Hafzah Anggita and Julisar……………………………………………………………………………………………. 29
The Role of Family on the Effect of Ownerships on Earnings Management

Cindy Paramitha and Novia Wijaya………………………………………………………………………………………….. 32
The Impact of Cost of Capital on Financial Performance: Evidence from Listed Non-Financial
Firms in Nigeria
Mohammed Ibrahim, Habib Abdulkarim, Jamila Muktar, and Zakariya’u Gurama…………………… 35
SME Categories and Practices of Management Accounting

Noor Raudhiah Abu Bakar, Nor Suhaily Bakar, Noor Suhaila Shaharuddin, and Nur Ayuni Iylia
Yahya……………………………………………………………………………………………………………………………………….. 36
Effectiveness of Internal Audit and other Factors in Fraud Detection

Gita Prajna Paramita and Friska Firnanti………………………………………………………………………………….. 38
1
Can Corporate Governance Minimize Tax Avoidance?

Dhian Ari Febriyanti and Nico Alexander………………………………………………………………………………….. 43
Revisiting Corporate Ownership and Earnings Quality Linkage: A Quantile Regression

Approach
Saleh Abd Alhadi, Rosmila Senik, Jalila Johari, Hairul Suhaimi Nahar, and Ridzwana Mohd
Said………………………………………………………………………………………………………………………………………….. 45
A Review of GLC Performance: Multi-theory Perspectives

Ervina Alfan, Azlina Abdul Jalil, and Elaine Yen Nee Oon…………………………………………………………… 48
Management Accounting Practices and the Financial Performance of Malaysian Hotels

Salumah Nain, Rasid Mail, and Nelson Lajuni…………………………..………………………………………………. 50
Measuring Qualitative Characteristics of Internet Financial Reporting: Evidence from Malaysia

Mathew Kevin Bosi, Mohd Noor Azli Bin Ali Khan, Nelson Lajuni, and Melissa Della Joy…………… 55
Theories of Earnings Management: A Theoretical Review

Zuraina Sal Salbila Mohamed, Mohamad Fairuz Md. Salleh, Azlina Ahmad, and Ruzita Abdul 59
Rahim……………………………………………………………………………………………………………………………………….
Internal Audit Investment and Cash Conversion Cycle of Malaysian Public-Listed Firms
Hari Haran A/L Karnanidi and Amirul Hafiz Mohd Nasir…………………………………………………………… 62
Corporate Governance and Financial Distress in Malaysian Shipping Industry - The Moderating
Role of Leverage
Zhou Wenyu and Ervina Alfan…………………………………………………………………………………………………… 64
Best Practice for Business Opportunities through Converting Food Waste into Compost
among Public
Zaleha Mohamad, Fadzilah Adibah Abdul Majid, and Rokiah Hassan………………………………………. 66
The Effectiveness of Social Media Influencer on Purchasing Behavior

Brahim Chekima, Suddin Lada, Azaze-Azizi Adis, and Kelvin Yong…………………………………………….. 68
Meneroka Proses Paling Kritikal dalam Pelaksanaan Pelan Pewarisan

(Exploring the Most Critical Processes in Succession Planning)
Fatimah Othman, Rosmah Mat Isa, Rohayu Abdul Ghani, and Norhafizah Abu Hasan……………… 70
The Co-Movement of China and US Stock Indices: A Portfolio Diversification Analysis

Ahmad Monir Abdullah, Hishamuddin Abdul Wahab, Abul Mansur M. Masih, Mariani Abdul
Majid, and Wai-Yan Wong……………………………………………………………………………………………………….. 72
The Impact of Internet Finance on Bank Performance based on Behavioral Finance

Perspective
Pu Weiwei, Ruhanita Maelah, and Mohd Dan bin Jantan…………………………………………………………. 74
Factors Affecting the Intention of a Cashless Payment usage Among University Students
Sayed Muhammad Amir Firdaus Sayed Abdullah, Teh Zaharah Yaacob, and Siti Suraya Abd
Razak……………………………………………………………………………………………………………………………………….. 76
2
The Relationships of Monetary Policy, Stock Markets, Main Commodities and Covid-19 on
Cryptocurrency Performances: The US, China & Malaysia
Noor Azryani Auzairy………………………………………………………………………………………………………………… 83
The Impact of Digital Technology and Business Regulations on Financial Inclusion and Socio-
Economic Development in Low-Income Countries
Yusef Ali Yusef Yakubi, B. Basuki, Rudi Purwono, and Indrianawati Usman………………………………. 85
Monetary Policy and Bank Performance: The Case of Sub-Saharan Africa

Adamu Yahaya…………………………………………………………………………………………………………………………. 91
Profitability Factors of Insurance Companies Listed on Indonesia Stock Exchange

Jonathan Teopilus and Stella……………………………………………………………………………………………………. 93
Assessment of Risk Factors in Developing Diabetes Among Public in Malaysia and their
Willingness to Pay for Takaful
Sharifah Fairuz Syed Mohamad, Mohd Radzniwan A Rashid, Zurina Kefeli, Nurul Aini
Muhamed, Azrul Azlan Iskandar Mirza, Junaidah Abu Seman, and Saharuddin Ahmad……………. 95
Oil Palm Smallholders Entrepreneurs and Financial Literacy

Mara Ridhuan Che Abdul Rahman, Azhar Ahmad, Norazlan Alias, and Hasimi Yaacob…………….. 97
The Impact of Trust, Responsiveness and Assurance on Customer Satisfaction

Manisah Othman, Nor Azlina Kamarohim, and Nur Arisya Sukri………………………………………………. 100
Turn-of-the-Month-Effect in Indian Stock Market: A Case Study of Sectoral Indices

Ruchita Verma, Dhanraj Sharma, and Heavendeep Singh………………………………………………………… 104
Regulating Solicitor's Clients' Money: A Stitch in Time Saves Nine

Noraziah Abu Bakar, Mazlifah Mansoor, Nurasma Yahya, and Nurazlina Abd Raof…………………. 106
Information Asymmetry and Industry 4.0 among Small and Medium Enterprise (SME) in
Malaysian Halal Industry
Mohd Hasimi Yaacob and Ng Suat Thing………………………………………………………………………………….. 108
Examining the Impact of Social Media Usage on Perceived Organizational Performance: An

Empirical Study in the Malaysian Service Sector
Rosmah Mohamed, Tan Xin Yu, Anuar Shah Bali Mahomed, Anusuiya Subramaniam, Saadiatul
Ibrahim…………………………………………………………………………………………………………………………………..... 114
A Survey on Marketing Decision Support System (MDSS) Applications

Suddin Lada, Azaze-Azizi Adis, Brahim Chekima, Bamini KPD Balakrishnan, and Syed Nasirin….. 117
The Effectiveness of E-Servicescape Towards Customers’ Loyalty: Online Shopping App

Context
Nur Aqilah Samsuddin, Bamini KPD Balakrishnan, and Suddin Lada…………………………………………. 119
Internal Branding Dimensions, Job Satisfaction, and Organizational Commitment: Private

Hospital Nurses Perspectives
Nur Jannah, Bamini KPD Balakrishnan, Oscar Dousin, Suddin Lada, and Leila Afshari………………. 120
3
The Effect of Environmental Stimuli on Consumer's Affective Condition and Impulsive

Consumption via Online Live Streaming
Siti Nor Bayaah Ahmad, Sri Nithilak Kumari, Azizah Omar, and Suddin Lada……………………………. 121
The Effectiveness of Knowledge Management Practices in Developing Innovative Behavior: A

Case Study Public Sector of Palestine
Muhammad Alawneh………………………………………………………………………………………………………………. 123
Part-Time Postgraduate Education among Professionals: Motivations and Challenges

Asrif Yusoff……………………………………………………………………………………………………………………………….. 125
Kedwicekatan Kontekstual Dan Prestasi PKS: Peranan Kapasiti Penyerapan Sebagai

Penyederhanaan
(Contextual Ambidexterity and SMEs Performance: The Role of Absorptive Capacity as
Moderation)
Mohamad Rohieszan Ramdan, Nor Liza Abdullah, Rosmah Mat Isa, and Mohd Hizam Hanafiah 127
Linking Human Resource Practices and Trust in Management to Perceived Organizational

Support: Empirical Evidence from Malaysian Higher Educational Industry
Tan Luen Peng, Choe Kum Lung, and Tan Mom Zee………………………………………………………………….. 128
The Impact of Learning Organization on the Employee Performance among Malaysian Civil
Servants
Zuraida binti Hassan, Darwina binti Arshad, Fadzli Shah Abd. Aziz…………………………………………… 133
Dimensions of Operational Excellence in Building Corporate Image: A Study of Malaysian

Shipping Companies
Ervina Alfan, Anna Azriati Che Azmi, Mohd Zulkhairi Mustapha, and Zarina Zakaria………………… 135
Data Information via Blockchain Transparency in Poultry Supply Chain: Empirical Evidence
using Fuzzy Delphi Method
Asma-Qamaliah Abdul-Hamid, Mohd Helmi Ali, Lokhman Hakim Osman, and Ming-Lang
Tseng……………………………………………………………………………………………………………………………………….. 136
Pyramidal and Indirect Controlling Shareholders and Conflict-Related Party Transactions

Siti Hajar Asmah Ali and Mohd Mohid Rahmat………………………………………………………………………… 139
Exploring Threshold Effect of Board Size on Firm Value: Evidence from Malaysia
Yee-Ee Chia and Ping-Xin Liew………………………………………………………………………………………………….. 141
Determinants of Whistle-Blowing Intention among Staffs in Public Higher Learning Institutions

in Malaysia
Zakiyah Sharif, Ifa Rizad Mustapa, Akilah Abdullah, and Jamaliah Abdul Majid……………………….. 144
Director’s Multiple Identities, Identifications and Oversight Board Tasks: A Scoping Review on
the Antecedents
Sharifah Azlina Syed Anuar, Puan Yatim, and Mohd Mohid Rahmat………………………………………… 146
Examining Institutional Ownership Dynamics in Malaysia from the Financial Reporting Quality
Perspective
Nor Irdawati Mahyuddin and Hairul Suhaimi Nahar ………………………………………………………………… 148
4
A Comparative Study of the Governance Practices Between the High-and-Low Performing

Farmers’ Organisations
Ooi Sue Chern…………………………………………………………………………………………………………………………… 150
Leadership Competencies Important for Post-Covid Era: Insights from Malaysia using Rasch
Analysis
Mansoor Soomro and Mohd Helmi Ali……………………………………………………………………………………… 153
Internal and External Corporate Governance Mechanisms: Are Their Effects Complementary
or Substitutive on Non-Financial Risk Disclosure?
Adibah Jamil, Mohamat Sabri Hassan, Norman Mohd Salleh, and Rubayah Yaakob………………… 155
Hydropower Project Finance in Nepal: Role of Domestic Financial Institutions

Achyut Nepal, Vishnu Khanal, and Ruhanita Maelah………………………………………………………………… 157
The Impact of Corporate Governance on Agency Cost and Firm Performance: Evidence from
Indonesia
Arnold Sanda Layuk and Eko Rizkianto, M.E……………………………………………………………………………… 159
Fiscal Deficit and Economic Growth Nexus in Nigeria

Busayo Victor Osuntuyi and Abimbola Tracy Akinwande………………………………………………………….. 161
Growth and Strategies of Franchising Businesses in Malaysia: A Propositions

Mohd Faizal Abdul Ghani, Mohd Hizam-Hanafiah, Rosmah Mat Isa, and Hamizah Abd. Hamid.. 163
Franchising as a Mode of International Expansion: Some Propositions

Nurul Ashykin Abd Aziz and Mohd Hizam Hanafiah………………………………………………………………….. 164
Strategic Management Critical Success Factors of Small and Medium Sized Enterprises (SMEs):
A Systematic Literature Review
Siti Syuhada Abd Rahman, Zizah Che Senik, Suhaila Nadzri, Salmy Edawati Yaacob, Zamzuri
Zakaria, and Wan Zulkifli Wan Hassan …………………………………………………………………………………….. 165
Market Structure and Business Strategy of Muslim’s Fast Fashion Entrepreneurs

Ahmad Raflis Che Omar and Siti Nurashikin Mohd Noor………………………………………………………….. 167
Public Private Healthcare Partnerships for a Better Stability During the Pandemic: A Case
Study of India
Shamini Kandasamy, Angelina Anne Fernandez, Kho Guan Khai, and Rozitaayu Zulkifli…………… 169
The Impact of Covid-19 Pandemic on Unemployment Rates in Malaysia: Comparative

Approach with Global Financial Crisis 2007/2008.
Nur Uzma Mat Yusoff, Siti Raihana Hamzah, Norizarina Ishak, and Ahmad Fadly Nurullah
Rasedee………………………………………………………………………………………………………………………………….... 170
Determinant Factors of Green Purchase Behaviour among Millennial in Malaysia: Does Peer
Influence Matter?
Noramal Amirah binti Mohd Zaid Koh, Bamini KPD Balakrishnan, Brahim Chekima, and Oscar
Dousin………………………………………………………………………………………………………………………………………. 171
5
The Role of Social Entrepreneurship Approach in Enhancing Homepreneur Business

Opportunities: The Conceptual Model
Nor Hidayu Rahim, Lokhman Hakim Osman, and Che Aniza Che Wel……………………………………….. 173
Safety Culture as Drivers to Social Sustainability: The Insights from Malaysia Healthcare
Industries
Norzianis Rezali and Mohd Helmi Ali………………………………………………………………………………………… 175
Is the PN17 Bursa Malaysia Classification Effective in Mitigating Systematic Risk of Financially
Distressed Member Firms?
Izdihar Baharin @ Md. Daud……………………………………………………………………………………………………. 177
The Influence of Family Firms on Impression Management and the Mediating Role of
Corporate Governance
Dian Indah Hayati, Mohd Fairuz Md Salleh, and Azlina Ahmad………………………………………………… 180
The Issues, Challenges and Recommendations in the Practice of Musharakah Mutanaqisah

Syaima' Adznan………………………………………………………………………………………………………………………… 182
Profit and Institutionalisation in Cash-Rich and Political Building Organisations

Hasri Mustafa…………………………………………………………………………………………………………………………… 184
Does the Use of Hedging Instruments Reduce the Exchange Rate Exposure of Indonesian
Companies?
Lidya Devina and Zuliani Dalimunthe……………………………………………………………………………………… 186
Firm and Board Specific Variables Impact on Financial Performance: A Comparison Between
GLCs and Non-GLCs
Poornachandran Velayudhan, Ervina Alfan, and Azlina Abdul Jalil……………………………………………. 188
Digital Financial Literacy Among SME Entrepreneurs in a Developing Economy

Shayuti binti Mohamed Adnan and Hasniyati binti Hamzah…………………………………………………….. 189
Religiosity and Career Choice: A Cross-Country and Religion Analysis

Abu Hanifah Ayob and Shifa Mohd Nor……………………………………………………………………………………. 192
Impact of Foreign Labour on Firms Productivity: A Case of Malaysia’s Oil Palm Plantation
Sector
Aida Izzati Abdul Razak, Noorasiah Sulaiman, and Elya Nabila Abdul Bahri……………………………… 194
The Mediation Role of Innovation Management on the Relationship Between Entrepreneurial

Leadership, Learning Orientation, TQM Practices, and Organizational Performance of SMEs
Khairul Anuar Mohd Ali and Fahad Awad Aber Sawaean…………………………………………………………. 195
Optimization: A Mediating Impact Towards IMS and Production Performance

Nurshamimah Samsuddin, Maliza Mohd Nor, and Nur Azizah Mohamad Parij………………………… 197
The Impact of Covid-19 on the Stock Market in Malaysia

Nur Izzatie Mohd Sah and Wai-Yan Wong………………………………………………………………………………… 199
6
Halal Transportation: Diffusion of Innovation Theory and Technology Acceptance Model

Approach
Yusrizal Sufardi Mohd Yunan and Mohd Helmi Ali……………………………………………………………………. 201
The Evolution of Research Trends in Enterprise Risk Management (ERM)

Sharifah Faatihah Syed Mohd Fuzi, Mohamat Sabri Hassan, Romlah Jaffar, and Mohd.
Hafizuddin Syah Bangaan Abdullah………………………………………………………………………………………….. 203
Digital Evolution and the Impact of Digital Technology Integration on Logistics Performances:
A Systematic Literature Review
Chandru Angamuthu, Lokhman Hakim Osman, and Che Aniza Che Wel…………………………………… 205
Transformasi Digital Institusi Kewangan Sosial: Kajian Kes Di Lembaga Zakat Negeri Kedah
Noor Syafira Abdul Rahman and Shifa Mohd Nor……………………………………………………………………… 207
Determinants of Risk Management Practice – Case Evidence from Malaysian Zakat Institutions
Nazifah Mustaffha and Sharifah Norzehan Syed Yusuf…………………………………………………………….. 210
Exploring the Potential of Public Private Partnership in Agriculture Sector for Malaysia
Suzana Muhamad Said, Aini Aman, Nazura Abd Manap, and Zaizul Abd Rahman……………………. 212
Hubungan Strategi Pematuhan dengan Pematuhan Cukai Individu di Malaysia: Satu Kajian
Tinjauan Elemen Ganjaran Cukai
Norul Syuhada Abu Hassan, Mohd Rizal Palil, Rosiati Ramli, and Ruhanita Maelah…………………. 214
Exploring Ownership Supply Chain Flows in Different Islamic Finance Modes: Case of a
Leading Full-Fledged Pakistani Islamic Bank
Zubair Ahmed, Mohd Adib Ismail, Lokhman Hakim Osman, and Zizah Che Senik……………………… 217
The Impact of Social Media Adoption on Business Performance of Small and Medium
Enterprises in Saudi Arabia
Ahmed Alhamami, Noor Azuan Hashim, Roshayati Abdul Hamid, and Siti Ngayesah Ab. Hamid. 219
Down the Memory Lane Before Ushering in New Era: Revisiting Corporate Governance and
Transparency Nexus After Two Decades of Change in Malaysia
Hairul Suhaimi Nahar, Maslinawati Mohamad, and Mohd Taufik Mohd Suffian……………………… 220
Challenges of Women in Leadership Role in Malaysian Higher Education: Results of the PLS
Path Modeling
Shnna Chong Yenyi, Vimala Kadiresan, Suguna Sinniah, and Zafir Khan Mohamed Makhbul……. 223
Risk Management Effectiveness, Corporate Social Responsibility Disclosures, and Company

Performance
Husaini, Ridwan Nurazi, and Saiful…………………………………………………………………………………………… 227
The Relationship Between Supply Network Embeddedness Structure and Firm’s Sustainable
Performance
Lokhman Hakim Osman……………………………………………………………………………………………………………. 229
Millennials Generation and Key Factors on the Selection of Korean Restaurants in Malaysia
Nor Azlina Kamarohim, Khaizan Azril, and Manisah Othman……………………………………………………. 231
7
Gold Hedge against Inflation: A Seemingly Unrelated Regression Approach

Nurul Fasyah Mohd Ussdek and Mohd Fahmi Ghazali………………………………………………………………. 233
8
Track: Accounting
Paper ID: 001-099
THE INFLUENCE OF TAX CREDIT ON PARTICIPATION OF EMPLOYERS IN THE

STRUCTURED INTERNSHIP PROGRAM (SIP) AND ITS IMPACTS ON JOB CREATION
Fatin Nabilah binti Norzihad1 and Mohd Rizal Palil1
Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia 1.
1.0 Introduction
Tax credits are common strategies for addressing economic problems in developing nations. The Malaysian
government began introducing the tax credit of ‘Deduction for Expenditure Incurred for the Provision of An
Approved Internship Programme’ in 2012 to indirectly address the rise in the youth unemployment rate in the
country. The general unemployment rate in Malaysia has risen quickly, from 3.3% in 2019 to 4.8% in 2020 (ILO,
2015), following the economic downturn, and things might worsen by the end of 2021 due to the spread of
COVID-19. The national youth unemployment rates were 10.5% and 13.2% in 2019 and 2020, respectively
(Department of Statistics Malaysia (DOSM), 2021)1. Poverty, criminal activities, the prevalence of domestic
violence and deteriorating mental health are among the social damages of unemployment. The effects of
unemployment and poverty crime rate along with violence are always positive in the long run 2. While recent
studies estimating the rises in domestic violence reporting, moreover in post-pandemic, are limited, media reports
and anecdotal evidence are abound to prove that unemployment and financial uncertainties affect the lives of
many3. Nevertheless, governments worldwide have established various economic strategies to reduce the impacts
of unemployment on the public and offering tax credits and active labour market programs are among them. As
part of the active labour market program, hiring credits have been used in many countries to keep unemployment
at a reasonable level and encourage the employment of targeted public groups. Calmfors 4 interprets the active
labour market policy as the measures taken by the government to polish the functioning of the labour market
directed towards the unemployed. The participation of companies in the SIP began with a small involvement from
the SIP-endorsed companies since 2014. The program then started to gain better momentum in the year 2016 to
2018. The participation dropped in 2019, followed by a high number of participations in the year 2020. The
participation, however, decreased in 2021. Due to the lack of study on the effectiveness of such a program 5,6,7, this
study intends to observe the factors that influence the participation of companies in the SIP and how it may
motivate job creation. It is necessary to study the program's efficacy since it indirectly involves public spending
and influences the national capital cost. The government must forgo a portion of the tax revenue to attract
companies to participate in the SIP. Hence, this study also hopes to provide some insights for the Inland Revenue
Board of Malaysia and TalentCorp as an organising body to see whether the SIP has achieved its objectives and
to improvise the program where necessary. Therefore, this paper aims to study the factors that influence
employers' participation in the Structured Internship Program (SIP), which includes the double deduction tax
credit, using diffusion theory. This paper also intends to study how the SIP can motivate job creation.
2.0 Methods
The primary data required for this study’s main objective are collected through a survey conducted among SIP
companies as a treatment group and non-SIP companies as a control group. The online poll consists of 31 questions
designed for the SIP companies and another survey of 21 questions curated for the non-SIP companies. The target
respondents of this survey are the people who can make decisions regarding the participation of companies in the
SIP under TalentCorp or the hiring of employees; or those who have been delegated with such functions and
authorities from the top management. The number of the survey being distributed is 110. This study uses the
elements of innovation-decision theory and theory of perceived attributes under the diffusion theory as
independent variables to create relevant survey questions regarding the objective of this study on how the double
1
Department of Statistics Malaysia (DOSM). 2021. Key Statistics of Labour Force in Malaysia.
2
Andresen, M. A. 2012. Unemployment and crime: A neighbourhood-level panel data approach. Social Science Research, 41(16): 1615-1628.
3
Peterman, A., Potts, A., O'Donnell, M., Thompson, K., Shah, N., Oertelt-Prigione, S., and Van Gelder, N. 2020. Pandemics and violence
against women and children. Working Paper 528.
4
Calmfors, L. 1994. Active labour market policy and unemployment - A framework for the analysis of crucial design features. OECD
Economic Studies, No. 22.
5
Eibrahim, A., Leibbrandt, M., and Ranchhod, V. 2017. The effects of the employment tax incentive on South African employment (WIDER
Working Paper 2017/5 ed.) [Working Paper]. UNU-WIDER.
6
Cahuc, P., Carcillo, S., and Le Barbanchon, T. 2017. The effectiveness of hiring credits. IZA Discussion Paper, No. 11248. IZA Institute of
Labor Economics.
7
Roca, J. 2010. Evaluation of the effectiveness and efficiency of tax benefits. Discussion Paper, No. IDB-DP-136. Inter-American
Development Bank.
9
deduction tax incentive affects the participation of employers in the SIP. Most of the elements from both theories
are used as the factors that affect companies' involvement in the SIP. It is assumed that these factors can influence
the employer’s participation in the SIP and, consequently, the program's ability to create jobs8. The elements used
in the questionnaire are knowledge5,9,10, adoption decision8,9, implementation8, relative benefits5,8,
compatibility5,11, complexity7,10,12, observable outcomes5,8,11, and job creation5,8,11. In measuring the effectiveness
of the SIP to motivate job creation, a 5-point Likert Scale is used. The multiple-choice questions consist of single
responses sets and multiple responses sets, which are further interpreted using the descriptive and reliability
analysis. The survey consists of comparative questions that require the respondents to distinguish the impacts of
the tax incentive on (1) the number of interns per intake and (2) the effect of the double deduction tax credit on
job creation. Job creation is measured by the number of interns being offered permanent positions after completing
the training. This also implies that the training program has been worthwhile to produce skilled labours during the
course.
3.0 Results/Discussion
Two sets of questionnaires were distributed. 110 SIP companies have been reached to participate in the survey,
22 responded, but only 18 valid responses are considered after the data cleaning process. Therefore, the response
rate for the Treatment group is 16.36%. As for the Control group, ten companies known to offer typical internship
placements have been contacted, and the response rate is 50%. Therefore, the total respondents of this survey are
27 companies, represented by the personnel designated in the hiring decisions of the sample firms. None of the
SIP companies is grouped under micro businesses. 61% of the respondents are small and medium enterprises
(SMEs), while 38.9% of the sample comprises large companies. 50% of the SIP companies have been in business
for more than 20 years, indicating that established companies tend to participate more in the SIP. At the same
time, most of the participants in the Control group (60%) have never heard of the program. Most of the respondents
have good knowledge about the program. 38.9% of the Treatment group view the double deduction tax incentive
as not lucrative enough, and 33.3% participated in the program mainly to obtain the double deduction. While only
a small fraction of the respondents believe the program is complicated. As for the Control group, their main
concerns about not participating in the program are the insufficient staff to train the interns. Most of the
respondents for both Treatment (50%) and Control (80%) groups favour semi-skilled employees over the skilled
and unskilled ones. Responses also show that the SIP has motivated job creation, indicated by the high percentage
(72.2% of the Treatment group and 80% of the Control group) of companies that offer permanent jobs to the
interns. The survey is then followed by the question of whether the same number of interns will be hired without
the double deduction tax incentive. 72.2% of the SIP companies claim that they would have hired the same number
of interns even without this program. Regarding the medium that the respondents find most effective in
disseminating information on the SIP, a major of the respondents found out about the SIP through TalentCorp.
Recommendation to other firms, which indicates the desirable observable outcomes 8, has the highest mean of
4.28, which indicates employers believe their participation in the SIP have a noticeable result of producing more
skilled employees and consequently creating values for the company. The measurement with the lowest mean is
complexity, which signifies that most employees believe the program is not complex to be implemented. This
finding is consistent with the previous studies7,12, as they explained that more straightforward tax treatment is
more accepted and feasible than a more complicated treatment. The use of diffusion theory as the main element
in this study has provided valuable insights into understanding the participation of employers in the SIP 9,13.
3.1 Theoretical and Practical Contribution

Finally, it is hoped that this study may address the information asymmetry and add more information to
implementing the hiring tax credit program, SIP, in Malaysia. The IRB, together with TalentCorp Malaysia, may
enhance the performance of the SIP so that it achieves the target of improving the employability skills of the target
group, which will consequently reduce the unemployment level in the country.
8
Jensen, N. M. 2016. Job creation and firm-specific location incentives. Journal of Public Policy, 37(1): 85-112.
9
Leiser, S. 2014. Essays on state business tax incentives and policy diffusion [Unpublished doctoral dissertation]. Digital Library - University
of Washington.
10
Jensen, N. M., and Lindstädt, R. 2011. Leaning right and learning from the left: Diffusion of corporate tax policy across borders. Comparative
Political Studies, 45(3): 283-311.
11
Garsous, G., Novoa, D. C., and Velasco, M. 2015. Tax incentives and job creation in the tourism industry of Brazil. Inter-American
Development Bank: Working Paper Series, IDB-WP-644.
12
Abeler, J., and Jager, S. 2013. Complex tax incentives: An experimental investigation. In Discussion Paper Series (Issue DP No. 7373).
Institute for the Study of Labor (IZA).
13
Baybeck, B., Berry, W. D., and Siegel, D. A. 2011. A strategic theory of policy diffusion via intergovernmental competition. The Journal
of Politics, 73(No. 1): 232–247.
10
Track: Accounting
Paper ID: 001-102
TAX KNOWLEDGE, TAX AWARENESS, AND TAX BEHAVIOUR OF SOCIAL COMMERCE

OWNERS: EVIDENCE FROM INDONESIA
Arya Zulfikar Akbar1 and Mohd Rizal Palil1

1.0 Introduction
The phenomenon of transforming traditional business processes into digital-based businesses has become popular
because it brings an opportunity to utilise the efficiency of online transactions1. Social commerce utilises internet
technology through web 2.0 and social media, in all kinds of trade transactions and interactions, both products
and services2. Web 2.0 technology is a revolution in Internet and web use that enables user-centered design and
collaboration in the world wide web with information exchange, easy operation, and enables users to interact and
collaborate with each other, also known as social media 3. Not too different from e-commerce in its application,
social commerce uses social media platforms in making transactions, such as Facebook, LinkedIn, Twitter,
Instagram, WhatsApp, and so on4.
According to the Asia Social Commerce Report, compiled by PayPal, it was revealed that 57 percent of
traders said social media is easier to set up their business, and 43 percent of them liked the idea of leveraging their
friends and family network. The majority of traders use social media to promote their products and services.
Another report on social commerce by PayPal’s, states that 80% of Indonesian online merchants are selling their
products on social media. A whopping 92% are on Facebook, 76% sell via WhatsApp, 72% sell on Instagram,
and 49% are on Facebook Messenger5. The shift towards online selling systems using social media platforms, in
particular, is considerably unique, and these changes could affect Indonesian government policies, especially in
the field of taxation6. The phenomenon of online shopping will increase the number of transactions, which can be
classified as tax objects regardless of their willingness to comply with the provisions. By upholding the law and
the principle of justice, online merchants should be treated equally with offline traders regarding their tax
obligation7.
The majority of Indonesian taxpayers are unaware of their tax obligations. Small and medium-sized
businesses, as well as individual taxpayers, are examples of groups with limited tax knowledge and awareness.
For adolescent social commerce owners, their knowledge and awareness of taxes are relatively low, resulting in
less attention to the taxation aspects of online transactions. On the other hand, the adult category should have
adequate tax knowledge and awareness, so that it is expected to pay higher taxes8. The issue of social commerce
owners’ knowledge and awareness related to tax regulations and their behaviour in carrying out tax obligations
becomes a concern in this study. The increasing use of transactions on social media, and the issuance of regulations
on the imposition of taxes on social commerce, will increase national tax revenue. However, if this is not
accompanied by a willingness to pay taxes, this potential will not be achieved.
This study aims to investigate the tax knowledge and awareness of social commerce owners on their
obligation to pay income tax from social media activities and to examine their perspectives on their tax obligations
arising from their social media commerce practices. Two research questions are addressed concerning taxation
from social commerce owners’ perspectives. First, what is the extent of tax knowledge and awareness among
social commerce owners in Indonesia? Second, how would social media business owners react when informed
about the possibility of paying tax from their social media business income?
1
Rosalinawati, E., dan Syaiful. 2018. Analisis pajak penghasilan atas transaksi e-Commerce di Kabupaten Gresik. Journal of Islamic
Accounting and Tax, 1:1-18.
2
Han, H., and Trimi, S. 2017. Social commerce design: A framework and application. Journal of Theoretical and Applied Electronic Commerce
Research, 12:50-68.
3
Hossain, M. M., and Aydin, H. 2011. A web 2.0-based collaborative model for multicultural education. Multicultural Education &
Technology Journal, 3:116-128.
4
Liang, T.-P., and Turban, E. 2012. Introduction to the special issue social commerce: A Research Framework for Social Commerce.
International Journal of Electronic Commerce, 16:5-14.
5
Dharmawan, I. 2018. Potensi pajak dari lapak bisnis online di media sosial. Direktorat Jenderal Pajak.
6
Arimbhi, P., Susanto, I., dan Ghany, S. K. 2019. Proses bisnis dan aspek pemungutan pajak atas transaksi e-commerce dalam era revolusi
industri 4.0. Jurnal Reformasi Administrasi: Jurnal Ilmiah untuk Mewujudkan Masyarakat Madani, 6:53-67.
7
Cahyadini, A., dan Margana, I. O. 2018. Kebijakan optimalisasi pajak penghasilan dalam kegiatan e-commerce. Veritas Et Justitia, 4:358.
8
Puspawati, D. 2016. Studi kualitatif orang pribadi pengusaha tertentu untuk melakukan pajak penghasilan (Studi kasus pada pelaku Social
Commerce). Riset Akuntansi dan Keuangan Indonesia, 1:119-125.
11
2.0 Methods
This research involved a qualitative design that focuses on social commerce owners as individual taxpayers, by
exploring their perceived knowledge and awareness regarding income tax obligation and their perspectives toward
tax using WhatsApp calls for online interviews with three main questions and follow up questions related to the
research topic. Snowball sampling was used to select respondents of this study, which involves selecting the
respondent in the continuous network or chain of relationships 9. Eight business owners carrying online business
activities on social media for a minimum period of one year were interviewed to obtain information related to
their knowledge and awareness of income tax obligation and their hypothetical behaviour towards income tax.
The interviews were transcribed and followed by ethics procedures, and the transcribed interviews were sent back
to respondents for confirmation.
3.0 Result/Discussion
3.1Knowledge and Awareness Toward Tax

The data gained from interviews revealed that half of the respondents did not possess sufficient knowledge about
tax laws and procedures. The other half of respondents, on the other hand, seemed to have a well-understanding
of tax rates, tax registration and payment method, and tax reporting procedures (offline and online using an E-
filing system). The lack of tax knowledge among taxpayers is a fundamental hindrance for the government to
enforce tax laws. In other words, sufficient knowledge about tax procedures can potentially increase tax
compliance and reduce tax evasion10.
In terms of the imposition of taxes on social media transactions, six out of eight respondents are unaware
that their income may be subject to income tax. They believe that social media transactions generate very little
income and should be exempt from taxation because it could be burdensome for them. The third and fifth
respondents, both are aware of such obligation. However, the third respondent does not care regarding the tax, as
long as they do not make a voluntary report to the tax authority. Tax awareness appears to be important in
understanding the reality underlying tax imposition and their attitude toward taxation. Taxpayers with good
awareness have a positive perception of the tax system, resulting in a higher level of tax compliance11.
3.2 Behaviour Toward Tax

Two out of eight respondents would prefer not to pay taxes because they believe that online businesses should
not be taxed. According to the sixth respondent, she is too lazy to pay taxes, and the income received is still
relatively small and should be exempted from tax. Furthermore, the third respondent expressed concerns about
the use of taxpayer funds by government entities, which influenced his mindset and behaviour. Consequently,
although his income fell into the taxpayer’s category for individuals, he preferred paying zakat to taxes. He
believed that based on Islamic law, zakat funds were unquestionably used to support the poor. He believed that
revenues were under the tax threshold.
The tax knowledge and awareness among social commerce owners are still limited due to a lack of
information. If social commerce owners are pre-supposed to be aware of their tax obligations, they will adhere to
the government's rules. However, some social commerce owners believe that they should not pay taxes because
they feel lazy to obey and tend to deny the regulation because the earnings are relatively low, under the tax
threshold. This behaviour stems from the respondent's intention to defy the government regulations because of
the imposition of taxes that can harm social commerce owners, economically. Furthermore, some refuse to pay
taxes, citing their distrust of the government and the belief that the tax system only burdens economically weak
and underprivileged, and preferred paying zakat rather than a tax. This is because they believe that the distribution
of zakat collection is clear and specifically intended to help the poor based on Islamic law. This study also found
that some reasons have influenced social commerce owners to become less compliant with tax regulations, such
as the income earned is still relatively small and no need to pay taxes, distrust of tax authorities regarding the use
of tax collected funds, the perception that taxation can be burdensome owners of social commerce, lazy to obey
and tend to deny the regulation.
9
Neuman, W. L. 2003. Social research methods: Qualitative and quantitative approaches. Pearson Education, Boston.
10
Palil, M. R. 2005. Taxpayers knowledge: Descriptive evidence on demographic factors in Malaysia. Jurnal Akuntansi & Keuangan, 7:11-
21.
11
Hardiningsih, P., and Yulianawati, N. 2011. Faktor-faktor yang mempengaruhi kemauan membayar pajak. Dinamika Keuangan dan
Perbankan, 3:126-142.
12
IMAC – 13-14 October 2021 (Online Conference) https://www.ukm.my/imac
Track: Accounting
Paper ID: 013-007
A REVIEW OF METHOD, CHALLENGES AND ACCOUNTING ISSUES IN AGRICULTURAL

COOPERATIVE
Mohammed, I. U.1, Mustafa, H.2, Lau, Y. W1,2 and Sidek, S.1
Department of Economics, School of Business and Economics, Universiti Putra Malaysia, Malaysia1,
Department of Accountancy, School of Business and Economics, Universiti Putra Malaysia, Malaysia2.
1.0 Introduction
A significant percentage share, estimated to be 32% of the global market, belongs to agricultural cooperatives 1.
It was estimated that 40.2% of Ethiopian GDP results from agriculture, 80% is of employment, and 70% is
export earnings2. Economists believe that cooperative is not a minor economic sector as they contribute up to
one-third of the world’s food supply, a reasonable percentage of the productive world asset3.
This paper contributes by identifying the factors that facilitate smooth business operations of
agricultural cooperative societies through improved communication and trust-building among stakeholders.
Overall, the paper benefits readers in several ways: Firstly, the paper provides a method and introduction to
agricultural cooperative cycles based on the comprehensive review of the literature. Secondly, this paper
reviews obstacles surrounding the development of cooperative enterprise toward solving a member’s common
problem. Thirdly, this paper highlights prior literature in connection to agricultural accounting.
This paper is organized as follows: section (2) describes the method of study used in agricultural
cooperative literature, Section (3) discusses cooperative agricultural challenges, section (4) focuses on
agricultural accounting IAS41 and its’ issues, section (5) details the significance and limitation of the review.
Overall, the study used 28 journals in the analysis. Out of the total number, the cooperative has 13,
accounting 7, agriculture 5, and others 3. The literature search ranges from 2010-2018. The reason for the
limited range is to trace new policies and explore current trends in the application of accounting practice in the
development of agricultural cooperatives.
2.0 Materials and Methods

The method of close reading is used for the purpose of this review. A deeper understanding of a particular idea
with close reading is important. It is an effective process to understand the actual meaning of a text through
careful and attentive examination4. It comprises moving ahead of the reading process and incite re-reading, to
gain a better and detailed understanding of the text 5 as reflected in some studies (see for example6,7,8). The
method is used to understand the application of accounting in promoting the performance of agricultural
cooperatives with a specific reference to International Accounting Standard No. 41 (IAS41).
3.0 Literature Review

Although the literature on agricultural accounting covers a wide topic of discussions (see for
example9,10,11,12,13,14), it is essential to take into consideration the peculiar nature of cooperatives when dealing
with financial analysis. In most cases, financial ratios are interpreted with the activity of companies that have
significantly diverse features compared with cooperatives15. Prior reviews discuss the importance of
1
Milonovic & Smutk, 2018.
2
Ahmed & Mesfin, 2017.
3
Vanpeursem et al., 2016.
4
Wu, 2018.
5
Walsh, 2017.
6
Smith, 2013.
7
Walsh, 2017.
8
Wu 2018.
9
Lopez-Espinosa et al., 2012.
10
Alsaidat, 2014.
11
Kurniawan et al., 2014.
12
Abu and Haruna, 2016.
13
Yemer, 2017.
14
Goncalves et al., 2017.
15
Leurmann, et al., 2018.
13
cooperatives to members’ business and their challenges (see for example16,17,18,19,20,21). However, we found a
need for sharpening and revisiting the previous study.
4.0 Finding and Discussion of the Review

Agriculture has a wide coverage. It seems there may be no part of the world where agriculture activities are not
taking place even at a minimal level, but most of the studies on agriculture accounting are in Asian countries as
assumed by22,23; and24 while other studies took place in East Africa, including’s Ethiopia25,26,27,28. This indicates
limited study in West African countries like Nigeria.
Acknowledgement
The first author would like to acknowledge the financial support provided by University Putra Malaysia VOT
no: (9562600) under the supervisor’s research grants.
16
Van Oorschot et al., 2013.
17
Lecoutere, 2017.
18
Tefera et al., 2017.
19
Abate, 2018.
20
Milovanovic, and Smutka 2018.
21
Jensen-Auverman et al., 2018.
22
Kurniawan et al., 2014.
23
Ma and Abdullai, 2017.
24
Milovanovic and Smutka, 2018.
25
Abate, 2018.
26
Ahmed and Mesfin 2017.
27
Benson, 2014.
28
Yemer, 2017.
14
Track: Accounting
Paper ID: 014-013
FAIR VALUE ACCOUNTING AND ABNORMAL AUDIT FEES: EMPIRICAL EVIDENCE FROM
AMMAN STOCK EXCHANGE-LISTED COMPANIES
Esraa Esam Alharasis1
Business School, Victoria University, Melbourne, Australia 1.
1.0 Introduction
Unlike the historical cost (HC) approach, Fair Value Accounting (FVA) was introduced by the International
Accounting Standards Board (IASB) agenda in 2005 to enhance the quality of financial reporting following the
modified IAS 39 — fair value option1. The focus of International Financial Reporting Standards (IFRS) on FVA
is to reflect the current economic conditions and provide up-to-date assumptions about future events2. FVA has
been growing as it promotes such benefits as disclosure of relevant financial information for decision making,
improved the transparency of financial reporting, and overcame the drawback of the HC principle3. However,
FVA introduces substantial difficulties from the audit perspective in obtaining and confirming fair value inputs.
For example, the increasing use of complex estimates of FVA allows management bias and puts further pressure
on the need for high-quality audits as a proxy for the reliability of financial reports4. Auditors, therefore, come
under additional pressure to meet stakeholders' needs for high-quality financial reporting. Inclusion and higher
proportion for fair-valued assets increase the risk of misstatements, particularly for Level 2 and 3 fair value inputs,
increasing auditing efforts and time and eventually driving audit prices up5.
Implementing FVA is even more challenging in the context of developing countries 6. In Jordan's case,
fair value for financial assets is aggressively used to serve managers' interests due to the agency conflict.
Consequently, this abuse increased volatility in share prices traded in the Jordanian capital market. The reasons
behind this fraud are the lack of active Jordanian markets, weak corporate governance systems and the non-
availability of single guidelines on how fair value is to be measured and audited7. The risk became higher,
particularly for Levels (2 & 3) inputs, which increased auditors' burden and eventually drove audit prices up. The
recognition of unrealised gains/losses of the fair-valued assets in Jordan raised share prices to the highest levels
during the economic downturn8. Consequently, the share prices fell dramatically later on. This situation's main
cause was fair value fraud and abuse by managers due to the agency problem7. The need for independent assurance
regarding Fair Value Estimates (FVE) has been increased accordingly to avoid earnings management practices
and ultimately led to higher audit prices. Therefore, Jordanian auditors expect to spend more time detecting
management fraud and misstatement to resolve the information asymmetry problem 7,8. Consequently, increasing
the credibility of a firm's financial reporting quality is considered a positive signal for stakeholders 6,8.
Audit fees ensure the proper application and disclosure of FVA 8. It is worth mentioning that those audit
fees are categorised into two different types: normal and abnormal audit fees9,10. The former refers to the auditor's
effort and time spent in the auditing and reflecting labour costs and expected litigation losses 11. However, the
latter captures the economic associations between auditors and their clients 12. Hence, abnormal audit fees signal
either auditor's efforts or vulnerable auditor independence. In the auditing literature, there are two contradictory
views regarding the incentives towards abnormal audit fees; the first view is that abnormal audit fees harm auditor
1
IAS Plus. 2005. Fair value measurements. Retrieved from https://www.iasplus.com/en/meeting-notes/iasb/2005/agenda_0512/agenda622.
2
Alharasis, E. E., Prokofieva, M., Alqatamin, R. M., and Clark, C. 2020. Fair value accounting and implications for the auditing profession:
Historical overview, Accounting and Finance Research, 9(3):31-52.
3
Barth, M. E., and Landsman, W. R. 2018. Using fair value earnings to assess firm value. Accounting Horizons, 32(4):49-58.
4
Griffith, E. E. 2020. Auditors, specialists, and professional jurisdiction in audits of fair values. Contemporary Accounting Research,
37(1):245-276.
5
Sangchan, P., Habib, A., Jiang, H., and Bhuiyan, M. B. U. 2020. Fair value exposure, changes in fair value and audit fees: Evidence from
the Australian real estate industry. Australian Accounting Review, 30(2):123-143.
6
Abdullatif, M., and Al‐Rahahleh, A. 2020. Applying a new audit regulation: Reporting key audit matters in Jordan. International Journal of
Auditing, 24(2):268-291.
7
Abdullatif, M. 2016. Auditing fair value estimates in developing countries: The case of Jordan. Asian Journal of Business and Accounting,
9(2):101-140.
8
Alharasis, E. E., Prokofieva, M., and Clark, C. 2020. Fair value accounting and audit fees: The moderating effect of the global financial crisis
in Jordan. Paper presented at the Proceeding Sustainable Business Innovation: New Normal Going Forward, The 6th International
Conference of Accounting, Business, and Economics (ICABEC 2020).
9
Ettredge, M., Fuerherm, E. E., and Li, C. 2014. Fee pressure and audit quality. Accounting, Organizations and Society, 39(4):247-263.
10
Huang, Lin, S., and Raghunandan, K. 2016. The volatility of other comprehensive income and audit fees. Accounting Horizons, 30(2):195-
210.
11
Asthana, S. C., and Boone, J. P. 2012. Abnormal audit fee and audit quality. Auditing: A Journal of Practice & Theory, 31(3):1-22.
12
Choi, J.-H., Kim, J.-B., and Zang, Y. 2010. Do abnormally high audit fees impair audit quality? Auditing: A Journal of Practice & Theory,
29(2):115-140.
15
independence13; while the second view confirms that abnormal audit fees signal greater audit effort 13,14. Based on
the theoretical evidence discussed above, which presumes that higher percentages of fair values improve the audit
fees, the following hypotheses have been developed:
● H1: There is a positive relationship between the proportion of fair-valued assets and abnormal audit fees
among Jordanian firms.
● H2: The relationship between fair-valued assets and abnormal audit fees is stronger for firms with greater
ratios of the subjective fair-valued assets (Level 2 and Level 3) among Jordanian firms.
The empirical efforts on the FVA post-implementation are growing but yet to be established area of
research5, with limited studies available with mixed results for developed economics and unexplored niche of
developing countries, particularly for the Middle Eastern (ME) region. Most results in this stream of research
derive mostly from larger and more developed economies, where the audit market is larger compared to small,
developing countries like Jordan. It is noted that institutional affiliations and differences in fundamental
characteristics lead to different conclusions regarding the sufficiency of audit evidence supporting fair value
verifications. Therefore, given the characteristics of Jordan’s market setting, the current study’s findings supply
alternative implications of FVD on auditing pricing. Given the differences in nature and risk between the
developed and developing economies, it is worth broadening the understanding of the FVA application's impact
on the audit profession, abnormal audit fees in particular15,16. Although there are findings of abnormal audit fees
which are mainly centred on specific topics, such as earnings management, cost of capital, and financial
restatements, it is strongly disregarded in the fair value research 10,17. Therefore, this study pioneers the literature
by investigating the association between FVA and abnormal audit fees for the first time 7,10. This paper focuses on
the ME region, Jordan, which is traditionally characterised by high usage of fair values due to industry focus 6.
2.0 Research Data and Methodology

The research data were hand-collected from corporations' annual reports disclosed on the Amman Stock Exchange
(ASE) website. The initial sample comprised 235 firms, excluding firms with missing data (13 firms). Therefore,
the final sample consisted of 222 firms over the period 2005-2018. This analysis builds on the quantitative
tradition and extends the previous audit pricing models arising from the application of FVA. Further, the current
study introduces new variables, including the abnormal audit fees (Abn_FEES)10 for the first time. The current
study extends the previous auditing knowledge into the following two basic equations:
3.0 Results and Discussion
3.1. Descriptive Statistics:

Table 1. and Figure 1. summarises the descriptive statistics of the variables utilised in the study's models.
Table 1: Descriptive Statistics
13
Blankley, A. I., Hurtt, D. N., & MacGregor, J. E. (2012). Abnormal audit fees and restatements. Auditing: A Journal of Practice & Theory,
31(1), 79-96.
14
Eshleman, J. D., & Guo, P. (2014). Do Big 4 auditors provide higher audit quality after controlling for the endogenous choice of auditor?
Auditing: A Journal of Practice & Theory, 33(4), 197-219.
15
Alexeyeva, I., & Mejia‐Likosova, M. (2016). The impact of fair value measurement on audit fees: Evidence from financial institutions in
24 European countries. International Journal of Auditing, 20(3), 255-266.
16
Ettredge, M. L., Xu, Y., & Yi, H. S. (2014). Fair value measurements and audit fees: Evidence from the banking industry. Auditing: A
Journal of Practice & Theory, 33(3), 33-58.
17
Jiang, H., Habib, A., & Zhou, D. (2015). Accounting restatements and audit quality in China. Advances in Accounting, 31(1), 125-135.
16
Figure 1: Fair Value Inputs Percentage of Total Proportion of Fair-Valued Assets
3.2. Multivariate Analysis: Regression's Results and Discussion

Table 2 below presents the OLS regression results of the tested hypotheses. Regression's assumption tests were
employed to ensure the validity of the data to the OLS regression analysis. Thus, Figure 2 confirms the normal
distribution of the error terms. Therefore, the regression models are controlled by year and industry fixed effects
with Robust t – statistics. The P-value of each model is significant with reasonable explanatory power. Diagnostics
do not suggest that a multicollinearity problem exists. The results of Model (1) of Table 2 confirm the significant
positive association between the proportion of fair-valued assets and abnormal audit fees. The result is aligned
with previous research findings and confirms that the application of FVA in Jordan has led to greater risk and
measurement complexities, which are translated into higher auditor's remuneration 10,6,7. Therefore, H1 is accepted.
The hierarchy inputs results summarised in Model (2) of Table 2 confirm the significant correlation between each
Level 1 and Level 3 asset and abnormal audit fees. While Level 2 was not significant with a positive sign. F-test
concludes that the coefficients of fair value inputs are not equal. The result supports the fact that low and high
uncertainty fair-valued assets wield a different impact on audit fees where the coefficients of Level 1 and Level 2
assets are not distinguishable, while Level 3 assets are very different from either Level 1 or Level 2, which is quite
similar to prior research8,15,16. Thus, H2 is accepted. Re-testing Model (1) using the dummy FVA variable (equal
1 if firm's assets are reported in fair values, 0 otherwise) instead of FVA_TA further confirms the significant impact
FVA made on abnormal audit fees.
Overall, in line with the triangulation of agency, signalling and stakeholder theories, the significant
association between abnormal audit fees and FVA metrics can be explained in other ways. First, the findings
support that subjective fair-valued assets are more likely to lead to audit fees payments over the normal level due
to the greater complexity and risk of using the controversial FVA 5 where the agency problem causes a high level
of information asymmetry10. Second, fair value application leads to charging audit fees greater than the
standardised level of fees. This is due to the higher risks of auditors losing their independence and using
discretionary accruals to meet or beat the consensus earnings forecast caused by the agency conflict to fulfil
managers' interests11,13. Opinion shopping in the form of abnormal audit fees is also an incentive for auditors to
give unqualified opinions, which is the case of Jordan 6,14. This can affect the independence and objectivity of the
auditor and compromise the financial statements15.
Table 2: OLS Regression
17
Figure 2: Histogram with Normal Curve for the Abnormal Audit Fees: Residuals
4.0 Concluding Remarks and Implications

Using hand-collected data from 222 Jordanian firms from 2005-2018, the analysis confirms the significant impact
of FVA on abnormal audit fees. This analysis contributes to the currently limited auditing FVA research and
extends the understanding of abnormal audit fees following the implementation of FVA for the first time. The
findings of this study provide policymakers and standard setters with updated empirical evidence originating from
a non-Western setting about the implications of adopting FVA. The positive correlation between FVA and
abnormal audit fees in this investigation may be attributed to two factors either the higher audit risk or poor audit
quality. Therefore, the findings of this study provide more insight into the issues that auditors face when auditing
FVA in Jordan. This will guide regulatory authorities in monitoring the audit profession and regulating the audit
of FVA practices. It recommends that the government provide more specific guidelines and legislation that
improve compliance with FVD requirements. It is worth extending this examination to a wider time frame to
capture the potential effect of economic volatility during the devastating COVID-19 pandemic.
18
Track: Accounting
Paper ID: 018-012
CIRI LEMBAGA PENGARAH DAN KUALITI PELAPORAN KEWANGAN: SATU TINJAUAN

LITERATUR
Maliza Mohd Nor1,2 dan Zaini Embong1

Fakulti Ekonomi dan Pengurusan, Universiti Kebangsaan Malaysia, Malaysia 1, Fakulti Perniagaan, Universiti
Multimedia, Malaysia2.
1.0 Pengenalan
Tujuan kajian ini adalah untuk meninjau penggunaan teori dalam kajian empirik berkaitan ciri lembaga pengarah
dan kualiti pelaporan kewangan. Penekanan diberikan kepada aspek teori kerana teori menjelaskan sesuatu
fenomena yang dikaji. Teori yang digunakan akan menjadi sudut pandang dalam menjelaskan hubungan pemboleh
ubah yang dikaji. Oleh itu, kesimpulan yang dibuat dari sesuatu kajian empirik kemungkinan berbeza bergantung
kepada teori yang digunakan. Tinjauan literatur ini secara khusus akan melihat teori yang digunakan dalam kajian
empirik berkaitan lembaga pengarah dan kualiti pelaporan kewangan.
Kepentingan lembaga pengarah dalam mengawal selia pelaporan kewangan semakin mendapat perhatian
di kalangan agensi kawal selia, pelabur dan pengkaji akademik. Ini berikutan kepentingan pelaporan kewangan
yang dijadikan sebagai medium komunikasi penyampaian maklumat dan rujukan pengguna dalam pembuatan
keputusan. Telah banyak kajian empirik yang dilakukan bagi mengenal pasti pengaruh lembaga pengarah terhadap
kualiti pelaporan maklumat kewangan dan kebanyakannya dalam kerangka teori agensi. Teori agensi menjelaskan
bahawa pengasingan pemilikan antara prinsipal (pemilik) dengan ejen (pengurusan) menyebabkan timbulnya
keperluan kawal selia terhadap proses pelaporan kewangan. Keperluan kawal selia mendorong kepada pelantikan
lembaga pengarah untuk mengawal selia tindakan serta aktiviti pihak pengurusan syarikat yang berpotensi
mementingkan kepentingan sendiri berbanding pemilik. Kawal selia yang baik dapat mengurangkan kos agensi
dan dapat mengekang pihak pengurusan mengurus maklumat kewangan keterlaluan sehingga menyebabkan
kekeliruan dan menjejaskan kualiti pelaporan kewangan.
Memiliki lembaga pengarah yang dapat berfungsi dengan baik dan efisien adalah sangat penting. Justeru,
pelbagai dasar yang membabitkan ciri lembaga pengarah telah diperkenalkan untuk memastikan keberkesanan
fungsi kawal selia lembaga pengarah. Antara dasar yang diperkenalkan ialah perlaksanaan ciri diversiti lembaga
pengarah dalam kod tadbir urus korporat. Ekoran dari dasar yang diperkenalkan ini, banyak kajian empirik telah
dilakukan untuk melihat kesan ciri diversiti lembaga pengarah terhadap kualiti pelaporan kewangan yang mana
majoriti kajian melihat hubungan ini menggunakan teori agensi. Keperluan kepada lembaga pengarah sebagai
mekanisme kawal selia dapat dijelaskan melalui teori agensi. Walau bagaimana pun, keupayaan teori agensi dalam
menjelaskan keperluan kepada komposisi lembaga pengarah yang pelbagai seperti mana yang digariskan kod
tadbir urus dilihat agak terhad. Dengan itu, tinjauan literatur ini dibuat bagi melihat sejauh mana teori agensi
digunakan dalam kajian empirik berkaitan lembaga pengarah dan kualiti pelaporan kewangan. Dalam masa yang
sama, akan juga dapat disingkap teori lain yang pernah digunakan, seterusnya menyarankan sama ada perlu
dipertimbangkan untuk melihat hubungan antara lembaga pengarah dan kualiti pelaporan kewangan dari sudut
pandang yang berbeza.
2.0 Metodologi
Tinjauan literatur ini dibuat ke atas beberapa jurnal dalam bidang perakaunan dan pengurusan yang diterbitkan
dalam tempoh 2010 sehingga 2020. Pencarian artikel dilakukan menggunakan kata kunci ‘kualiti pelaporan
kewangan’ dan ‘diversiti lembaga pengarah’ dan ia berdasarkan artikel yang diterbitkan secara atas talian.
Kemudian, kajian memilih artikel yang menyatakan dengan jelas nama teori yang digunakan dalam kajian mereka.
3.0 Dapatan Tinjauan Literatur

Tinjauan ke atas 30 artikel yang telah dilakukan mendapati teori yang kerap digunakan dalam mengkaji hubungan
antara ciri lembaga pengarah dan kualiti pelaporan kewangan ialah teori agensi. Teori agensi telah mendominasi
literatur dalam bidang tadbir urus dan juga perakaunan. Kebanyakan kajian lepas berkaitan diversiti lembaga
pengarah dan kualiti pelaporan kewangan menyandarkan hipotesis ataupun perbincangan mereka kepada teori
agensi. Akan tetapi teori agensi seakan tidak mampu menjelaskan tingkah laku dan cara kawal selia lembaga
pengarah terhadap kualiti pelaporan kewangan. Teori agensi hanya menjelaskan keperluan lembaga pengarah
untuk mengawal selia proses pelaporan kewangan disebabkan wujud pengasingan kuasa antara prinsipal dan ejen.
Walau bagaimana pun, keperluan kepada diversiti dalam komposisi lembaga pengarah tidak dapat dijelaskan
melalui teori agensi. Selain teori agensi, teori kebergantungan terhadap sumber adalah antara teori yang turut
digunakan dalam menjelaskan hubungan antara ciri lembaga pengarah dan kualiti pelaporan kewangan. Jadual 1
merumuskan teori yang digunakan secara berasingan dan secara bersama dengan teori agensi.
19
Jadual 1: Teori yang digunakan dalam kajian empirik

Teori digunakan Kajian oleh Kekerapan
Teori agensi Sarun et al. 2019; Al Azeez et al. 2019; Alqatan 2019; Saona et al. 2019; 24
Ginesti et al. 2018; Damak 2018; Ibrahim & Jehu 2018; Gull et al. 2018;
Garcia Lara et al. 2017; Du et al. 2017; Kibiya et al. 2016; Onuorah &
Imene 2016; Hoang et al. 2016; Holtz & Sarlo Neto 2014; Oba 2014; Al-
Dhamari & Ku Ismail 2014; Alzoubi 2014; Fodio et al. 2013; Mansor et al.
2013; Uadiale 2012; Abdoli & Royaee 2012; Buniamin et al. 2012; Gulzar
& Wang 2011; Dimitropoulos & Asteriou 2010.
Teori kebergantungan terhadap sumber Sarun et al. 2019; Aifuwa & Embele 2019; Alqatan 2019; Ginesti et al. 8
(Resource Dependence) 2018; Du et al. 2017;García-Sánchez et al. 2017; Hoang et al. 2016;
Jamaludin et al. 2015.
Teori eselon atas (Upper echelons) Sarun et al. 2019. 1
Teori modal manusia (Human capital) Alqatan 2019; Gull et al. 2018. 2
Teori modal sosial (Social capital) Alqatan 2019. 1
Teori pandangan berasaskan sumber daya Buniamin et al. 2012. 1
(Resource based view)
Teori hegemoni pengurusan (Managerial Wan Mohammad et al. 2016. 1
hegemony)
Teori pengisyaratan (Signalling) Kibiya et al. 2016. 1
Teori pihak berkepentingan (Stakeholder) Obigbemi et al. 2016. 1
Teori kawalan identity (Identity control) Damak 2018. 1
Teori jantina (Gender theory) Damak 2018. 1
Teori kedekatan geografi (Geographical Tee & Rassiah 2019. 1
proximity)
Disebabkan lembaga pengarah bekerja sebagai satu pasukan, tinjauan literatur turut dibuat ke atas kajian
empirik dalam bidang pengurusan, secara khususnya berkaitan kerja berpasukan. Ini dilakukan bagi mengenal
pasti teori lain yang sesuai digunakan bagi memberi gambaran tingkah laku dan menjelaskan hubungan antara ciri
diversiti lembaga pengarah dan kualiti pelaporan kewangan. Hasil dari tinjauan yang dibuat mendapati teori
diversiti sumber kognitif dan teori tarikan persamaan juga mampu menjelaskan keberkesanan kerja lembaga
pengarah dalam melaksanakan tugas sebagai pemantau dalam memastikan kualiti pelaporan kewangan terhasil
dan syarikat diuruskan selari dengan kepentingan pemilik dan pelabur. Teori diversiti sumber kognitif merupakan
teori pengurusan yang diperkenalkan untuk menerangkan kesan diversiti kumpulan keatas prestasi kerja
berkumpulan seterusnya kesan terhadap prestasi syarikat 1. Teori ini meramalkan tahap prestasi kerja berkumpulan
dan syarikat adalah berdasarkan komposisi yang efektif iaitu memiliki diversiti ahli kumpulan dari pelbagai latar
belakang demografi (dikenali sebagai heterogen) yang mana dapat menghadirkan keunikan sumber kognitif
seterusnya merangsang penglibatan aktif lembaga pengarah menerusi wujudnya konflik kognitif yang akan
memberi kesan positif terhadap pembuatan keputusan dan penyelesaian masalah. Seterusnya, teori tarikan
persamaan adalah teori bersilang (competing theory) yang berbeza pendapat dengan teori diversiti sumber kognitif
di mana teori ini menerangkan kelebihan memiliki kumpulan homogen (rendah diversiti) berbanding kumpulan
heterogen. Teori ini berpendapat kumpulan homogen yang memiliki persamaan ciri dipercayai dapat
mempengaruhi tingkah laku atau cara kerja secara berkumpulan. Teori ini mengandaikan kumpulan homogen
lebih efektif kerana dapat bekerjasama dengan baik disebabkan terdapat persefahaman dan cara berfikir yang sama
berbanding kumpulan heterogen yang sering mempunyai konflik ketika bekerjasama sehingga memberi kesan
negatif kepada prestasi kerja berkumpulan2.
4.0 Sumbangan
Dapatan dari tinjauan literatur ini menawarkan peluang kepada pengkaji untuk mengembangkan lagi penggunaan
teori sedia ada dan meneroka penggunaan teori lain bagi melihat dari aspek yang berbeza seperti pengaruh diversiti
dalam menentukan keberkesanan kerja berpasukan antara ahli lembaga pengarah. Penggunaan teori yang berbeza
ini dirasakan dapat memberi pemahaman serta gambaran yang lebih baik dan jelas tentang bagaimana diversiti
lembaga pengarah bekerja dalam satu pasukan dapat mempengaruhi penghasilan pelaporan kewangan yang
berkualiti. Secara ringkasnya, ini dilihat sebagai satu sumbangan ke atas teori dan akan memperluaskan karya
literatur menerusi penemuan hasil kajian yang menggunakan konsep dan teori berbeza dan belum pernah diuji
dalam kajian di bidang perakaunan.
Kata kunci: Lembaga pengarah; Teori agensi, Teori diversiti sumber kognitif, Teori tarikan persamaan, Kualiti
pelaporan kewangan.
1
Cox, T. H. and Blake, S. 1991. Managing cultural diversity: Implications for organizational competitiveness. Academy of Management
Executive 5(3): 45–56.
2
Tziner, A. 1985. How team composition affects task performance: Some theoretical insights. Psychological Reports 57:1111–1119.
20
Track: Accounting
Paper ID: 023-018
FACTORS AFFECTING FINANCIAL DISTRESS OF NON-FINANCIAL COMPANIES
Tjhen Lili, Debora1
Trisakti School of Management, Jl. Kyai Tapa No. 20 Grogol, Jakarta, 11440, Indonesia 1.
1.0 Introduction
This research was conducted because many companies were experiencing financial distress. Financial distress
can challenge all types of companies. This financial problem becomes an interesting topic to be researched
because each company avoids financial problems that will affect parties inside and outside the company. This
research is a development of previous research conducted by Islami and Rio1 This study shows that the liquidity
and profitability variables have a positive effect on financial distress, and the solvency variable has a negative
effect on financial distress, and the capital structure has no effect on financial distress. The difference between
the research and the previous research lies in the addition of independent variables and differences in the
sample—previous studies using four independent variables, namely liquidity, solvency, profitability, and capital
structure. While the researcher examined four variables from previous studies and added three other variables,
namely activity of the research of Restianti et al.2, operating cash flow from the research of Balasubramanian et
al.3, and the growth from the research of Kartika et al.4. Previous research from Islami and Rio1 used a sample
of 34 property and real estate companies listed on the IDX during the five years of the study (2012-2016), while
this study used a sample of non-financial companies listed on the IDX during the three years of research (2017-
2019).
2.0 Methods
The population used in this study are all listed non-financial companies in Indonesia Stock Exchange (IDX). The
sample in this study was obtained by purposive sampling method, the criterion of non-financial companies that
have been listed on the Indonesia Stock Exchange (IDX) consistently from 2016 to 2019, published financial
statements as of December 31, published financial statements using the currency, and presenting data relating to
information in accordance with the dependent and independent variables required in this study. The number of
companies that meet the sample selection criteria sample was 321 companies. This research used 321 listed non-
financial companies in Indonesia Stock Exchange.
The research uses three recent years from 2017 until 2019 and is selected by the purposive sampling
method. The analysis was performed using the multiple linear regressions analysis method.
The variables used in this study are two variables, namely the independent variable consisting of Liquidity,
Solvency, Profitability, Capital Structure, Activity, Operating Cash Flow, and Growth, while the dependent
variable is financial distress.
The research results show that solvency and activity had an influence on financial distress. This test is used to
determine the effect of independent variables on the dependent by using an error tolerance value of 5%. The
research hypothesis is accepted if the significance value of the independent variable is less than 0.05. The error
tolerance value. The statistical results are as follows:
Table 1: Result of Hypothesis Testing

Variable B t Sig.
(Constant) 3,626 1,817 0,070
CR 0,025 1,386 0,166
DR -8,980 -168,562 0,000
ROE 0,025 0,226 0,821
CAR -0,002 -0,033 0,974
TATO 3,972 3,253 0,001
1
Islami, I. N. and Rio, W. 2019. Financial ratio analysis to predict financial distress on property and real estate company listed in Indonesia
Stock Exchange. JAAF (Journal of Applied Accounting and Finance), 2(2):125-137.
2
Restianti, T. and Agustina, L., 2018. The effect of financial ratios on financial distress conditions in sub industrial sector company.
Accounting Analysis Journal, 7(1):25-33.
3
Balasubramanian, S.A., Radhakrishna, G.S., Sridevi, P., and Natarajan, T., 2019. Modeling corporate financial distress using financial and
non-financial variables: The case of Indian listed companies. International Journal of Law and Management, 61(3–4):457–84.
4
Kartika, T. P. D. 2018. Impact of financial ratio on financial distress in Indonesia manufacturing companies. International Journal of Research
Science & Management, 5(9):93–100.
21
OCFS 0,000024 0,063 0,950

GROWTH -0,009 -0,173 0,863
Source: SPSS 25.0
Liquidity (CR) has no effect on financial distress. Liquidity has no effect on financial distress because
it does not reflect the company in good or bad condition. When current assets and current liabilities are used
to measure the ratio, current assets contain a receivable account that will be used to pay off short-term debt,
but these receivables are converted into cash and take quite a long time.
Solvency (DR) has a negative effect on financial distress. Solvency can describe the company's ability
to pay its debts. Companies that have a small debt ratio can be said that the company is not at risk of
experiencing financial distress. The smaller the value of the debt ratio means that the company does not have
much debt so that the company can use its assets to cover its operational costs and does not cause an obligation
to pay off the debt that is too large in the coming period.
Profitability (ROE) has no effect on financial distress. The increase and decrease in profitability do
not affect the company's ability to avoid financial distress. ROE can only show the company's ability in terms
of an effective return on capital, but the value of ROE does not contribute to the prediction of financial distress
in the company.
Capital structure (CAR) has no effect on financial distress. The capital structure cannot affect
financial distress because the size or size of the debt owed by the company does not affect investors in assisting
the development of company activities, so it cannot be used as a possibility for financial distress.
Activity (TATO) has a positive influence on financial distress. This means that if the company's assets
cannot be maximized, then the company's profits will not be maximized. As a result, the possibility of the
company experiencing financial distress is even greater.
Operating cash flow (OCFS) has no effect on financial distress. A good operating cash flow does not
guarantee that the company will avoid financial distress if the company has a long-term loan from a bad
investment side, so that operating cash flow cannot cover it.
Growth (GROWTH) has no effect on financial distress. Growth, as measured by sales, shows
fluctuating results each year. The fluctuating value of sales growth is caused by the high and low sales value
that occurred in the previous year. However, there is an increase in sales each year, indicating that the company
has a good profit. If the company experiences relatively increasing sales every year, it can be said that the
company does not have negative profits and will also not experience financial distress. However, this
movement also cannot be supported by existing movements, where sales that continue to increase do not
necessarily avoid financial distress. Therefore, growth has no effect on financial distress.
3.1 Theoretical and/or Practical Contribution

By holding this research, it is hoped that it can bring contribution to related parties, including:
1. For Management
From the results of this research, it is expected that the management get references in predicting the
occurrence of financial distress so that a manager can make a policy and make decisions from the
information that has been generated.
2. For Investors
From the results of this study, it is hoped that it can be used as a consideration in decision making for
investors, related to the information generated about evaluating the company's financial performance as a
step in making decisions in investing in companies.
3. For Creditors
The results of this study are expected to provide benefits to creditors who wish to provide loans to
companies. It is also hoped that it can be used as consideration for decision making by creditors.
4. For Further Researchers
The results of this research are expected to be a reference so that it can be continued in future research.
22
Track: Accounting
Paper ID: 028-030
THE INFLUENCE OF POWER OF TAX ADMINISTRATOR ON TAX COMPLIANCE: THE

MEDIATING ROLE OF COGNITIVE AND AFFECTIVE ATTITUDE
Siti Fatimah Abdul Rashid1, Rosiati Ramli1, Amizawati Mohd Amir1, and Mohd Rizal Palil1
Centre for Governance Resilience and Accountability (GRACE), Faculty of Economics and Management,
Universiti Kebangsaan Malaysia1.
1.0 Introduction
The introduction of self-assessment (SAS) has enabled a broader opportunity for tax non-compliance, mainly
when the probability of a tax audit is assessed as low. A recent voluntary based program was the Special Voluntary
Disclosure Program (SVDP) in 2019. Similar to the SAS, the success of SVDP also depends on taxpayers’ honesty
and voluntary effort. However, the success rate of SVDP is reported as low since only a small number of tax
offenders took the opportunity compared to Inland Revenue Board Malaysia’s (IRBM’s) target 1. Therefore, along
with introducing voluntary-based programs, it is also crucial for IRBM to improve taxpayers’ knowledge and
awareness so that a positive attitude among taxpayers could be fostered, further enhancing the success of similar
future programs.
Taxpayers’ attitude is formed out of the taxpayer experience interacting with tax administrators, and this
attitude can shape their tax compliance motivation and behaviour2. If the interaction is friendly and supportive,
taxpayers are more likely to have a positive attitude. However, if the interaction experience is stressful, it tends to
affect taxpayers’ attitudes negatively. Therefore, the tax administrators need to devise tax compliance strategies
that could result in a positive interaction experience to foster favourable cognitive attitude, emotion, and behaviour
towards taxation. Tax administrators worldwide, including Malaysia, strives to balance the use of enforcement
and the accommodative approach. Therefore, to enhance insight into both approaches, this study will study both
enforcement and accommodative approaches through four forms of social powers: coercive power, legitimate
foundation power, persuasive power (information, expert, and referent power) reward power. The power of tax
administrators can form attitudes and tax compliance. This study also extends the attitude study by studying
cognitive and affective components since past studies within the taxation context often neglected the affective
part. The behavioural component of attitude is studied as tax compliance. Based on the discussion, this study aims
to examine the mediation effect of cognitive and affective attitude that is further details into resistance, capitulation
and commitment in the relationship between four types of tax administrator’s power (coercive persuasive,
legitimate foundation and reward power) and three forms of tax compliance (enforced compliance, voluntary
cooperation and committed cooperation3).
2.0 Methods
This study uses a quantitative approach using mailed questionnaires. This study focuses on professional taxpayers.
The reason for studying this group is that the recent attention given by IRBM on this group since their compliance
is argued to be problematic based on IRBM’s risk analysis and intelligence information from various parties,
including the Central Bank of Malaysia4. Based on the Malaysian Standard Classification of Occupation
(MASCO, 2008) and a list of professional bodies recognised by the Public Service Department of Malaysia,
professional individuals comprise nine professions, namely accountants, architects, doctors, dentists, engineers,
lawyers, pharmacists, surveyors, and town planners. Therefore, the respondent of this study is professional
taxpayers registered with their respective professional bodies. Stratified random sampling is applied since
professional taxpayers are represented by nine subgroups. In selecting samples from each subgroup, this study
applies a random selection process using online Research Randomizer software. A 5-points Likert scale is used
to evaluate the level of agreement to the statements used to measure variables in this study adapted from previous
studies.
Three hundred ninety-one questionnaires were returned out of 2,500 questionnaires mailed, giving a response
rate of 15.64 per cent. However, three questionnaires are excluded since they did not meet this study respondent’s
criteria, leaving 388 responses for further analysis. The descriptive analysis of respondents’ demographics shows
that respondents’ profile matches the study’s requirement since they are mature taxpayers, earning middle to high
income monthly, having considerable working experience, and interacting with tax administrators in the past.
1
Fahmy A Rosli. BH Online. LHDN Kutip RM7.88 bilion hasil PKPS. 2020. Berita Harian.
2
Dukes, G., Braithwaite, J., and Moloney, J. P. 2014. Pharmaceuticals, corporate crime and public health. Edward Elgar Publishing.
3
Gangl, K., Hofmann, E., and Kirchler, E. 2015. Tax authorities' interaction with taxpayers: A conception of compliance in social dilemmas
by power and trust. New Ideas in Psychology, 37:13-23.
4
Hayati Ibrahim. Harian Metro Online. Akan Audit Golongan Profesional. 2017. Harian Metro.
23
Structural equation modelling (SEM) was used to analyse the data using AMOS software. A bootstrap analysis is
used to test the hypothesis of the research that involves mediation analysis.
3.0 Results/ Discussion

This article provides empirical evidence on the mediating effect of defiance and deference attitudes in the
relationship between different tax administrators’ power and tax compliance. The analysis shows three main
findings.
First, both cognitive resistance and affective resistance attitude partially mediate the relationship between
coercive power and enforced compliance. This finding indicates that the use of enforcement activities will result
in taxpayers having doubts about the tax administrator’s intention, making them placing a wide social distance
with the tax administrator5. The use of enforcement activities will also result in negative emotions that include
feeling annoyed, disappointed, hate and anger6. The broad social distance will result in taxpayers having negative
perceptions, making them careful in their behaviour, fighting for their rights, and seeking to control tax
administrators’ power7. This finding shows that enforcement through audit and penalties will impact taxpayers’
cognitive attitudes and emotions, influencing their compliance motivations and behaviour. Besides, both cognitive
commitment and affective commitment mediate the relationship between coercive power and reward power with
committed cooperation. This finding shows that enforcement through audit threats and punishments on honest
compliant taxpayers conveys that tax administrator disrespects and distrusts them 8. This negative signal makes
honest taxpayers feel betrayed, weakening taxpayers’ stronghold that taxes are a moral and national responsibility.
This situation may result in honest taxpayers opposing tax administrators since such treatment damages their
perceptions and trust in tax administrators, reducing their cooperation level 9. Therefore, IRBM should be more
vigilant in using coercive power since it can result in a defiant attitude and a lower deference attitude.
Second, cognitive and affective capitulation attitudes partially mediate the relationship between persuasive
power and reward power with voluntary cooperation. This finding shows that gentle power involving educational,
supportive, and persuasion could result in taxpayers having a positive attitude where they show higher recognition
and acceptance of tax administrators’ roles10. This resulted in them placing a closer social distance with the tax
administrator, indicating they hold a positive perception towards the tax administrator. They believe that tax
administrators always act benevolent and friendly if they act well and comply with tax obligations 11. This soft
power can shape taxpayers’ positive emotions, such as relief, thankful, like, and happiness after experiencing
positive interaction6. Besides, reward power is found to influence both positive attitude and feeling of capitulation
and commitment. The finding is aligned with responsive regulation that reward can form a positive attitude and
emotion towards tax administrator and a tax system that would eventually influence their voluntary compliance 12
12,13
. Thus, IRBM should use persuasive power as the primary approach and expand where possible the use of
reward power so that deference attitude could be nurtured, resulting in minimal cost to produce longer-lasting
compliance. Even current tax reward studied is limited to tax relief, deduction, rebate, exemption, and appreciation
message, it can still bring taxpayers closer to IRBM, making them have a deference attitude to comply voluntarily.
Third, the result of cognitive and affective attitudes in all the hypothesised paths is consistent. This indicates
that studying one component alone, either cognitive or affective, will not impair the overall findings and yield
comparable results.
5
Braithwaite, V., 2003. Dancing with tax authorities: Motivational postures and non-compliant actions. Taxing Democracy, 3:15-39.
6
Olsen, J., Kasper, M., Enachescu, J., Benk, S., Budak, T., and Kirchler, E. 2018. Emotions and tax compliance among small business owners:
An experimental survey. International Review of Law and Economics, 56:42-52.
7
Ayres, I. and Braithwaite, J. 1992. Responsive regulation: Transcending the deregulation debate. Oxford University Press, USA.
8
Torgler, B. 2004. Moral suasion: An alternative tax policy strategy? Evidence from a controlled field experiment in Switzerland. Economics
of Governance, 5(3):235-253.
9
Mendoza, J. P., Wielhouwer, J. L., and Kirchler, E. 2017. The backfiring effect of auditing on tax compliance. Journal of Economic
Psychology, 62:284-294.
10
Dukes, G., Braithwaite, J., and Moloney, J. P. 2014. Pharmaceuticals, corporate crime and public health. Edward Elgar Publishing.
11
Gangl, K., Hofmann, E., and Kirchler, E. 2015. Tax authorities' interaction with taxpayers: A conception of compliance in social dilemmas
by power and trust. New ideas in Psychology, 37:13-23.
12
Bornman, M. and Stack, L. 2015. Rewarding tax compliance: taxpayers' attitudes and beliefs. Journal of Economic and Financial Sciences,
8(3):791-807.
13
Rillstone, J. M. 2015. Rewarding taxpayers: A possible method to improve tax compliance in New Zealand?
24
Track: Accounting
Paper ID: 030-024
THE INFLUENCE OF CORPORATE GOVERNANCE, ESOP AND OTHER FACTORS ON

INCOME MANAGEMENT
Muhammad Bitsca Basyara1 and Annisa Kanti1
Sekolah Tinggi Ilmu Ekonomi Trisakti, Indonesia1.
1.0 Introduction
When processing company financial data, management often deliberately manipulates or manipulates it for
personal gain. The management of deliberate addition or subtraction of data that led to the financial statements
does not reflect the actual status information company. This opportunistic behavior is called earnings
management. Management tries to deceive those who use financial statements.
Management with unilateral interests to maximize company value. Earnings management or earnings
management is caused by agency problems; that is, there is a conflict between the personal interests of the
manager (agent) and the interests of the principal. The goals that both parties have for the company are the
same, namely to increase the value of the company, but their interests are different 1.
From a theoretical or practical point of view, earnings management techniques vary widely. From legal
technology, the implementation of corporate governance encourages competition and a favorable business
atmosphere. The board of directors and audit committee are an important part of a company that can support
and ensure the implementation of normal corporate governance. The existence of independent supervisory
board members is considered to have a significant influence on earnings management, and if the role of the
audit committee is appropriate, namely overseeing management activities in the preparation of financial reports,
the quality of financial reports will be very high2.
This study is a development of Laily (2017) study, which aims to investigate factors such as employee
stock ownership program (ESOP), leverage, independent board of commissioners, audit committee, audit
quality, company size and profitability that can affect earnings management so that the public or investors can
choose companies with good financial reports without any manipulation of financial statements.
2.0 Methods
This study uses a population of non-financial companies listed on the Indonesia Stock Exchange (IDX). The
sample of companies taken is non-financial companies listed consistently on the Indonesia Stock Exchange (IDX)
during the 2017-2019 research period. This research uses the purposive sampling technique. Sampling here under
the criteria established by researchers that produce 594 research data. The sample selection procedure is described
in Table 1.
Table 1: Sample Selection

Criteria Description Total Total
Firms Data
Non-financial companies consistently listed on the Indonesia Stock Exchange (IDX) during the 2016-2019 period 447 1341
Non-financial companies that do not present financial statements in Rupiah currency during the period 2016-2019. (86) (258)
Non-financial companies that did not present financial statements ended on December 31 for the period 2016-2019. (2) (6)
Non-financial companies that did not make consecutive profits during the 2017-2019 period. (161) (483)
The number of companies and ada used in this study 198 594
The measurement of dependent variable in this study will be calculated using absolute discretionary accruals
(DA)because it is the best proxy in calculating earnings management which are calculated using the Modified
Jones model calculation, which is measured on a ratio scale with the following calculations:
(i) TACCi = NIi – OCFi

(ii) TACCit / Ait-1 = αt [1 / Ait-1] + α1i [(ΔREV – ΔREC) / Ait-1] + α2i [PPEit / Ait] + εit
(iii) [DAit] = TACCit / Ait-1 - αt [1 / Ait-1] + α1i [(ΔREV – ΔREC) / Ait-1] + α2i [PPEit / Ait]
where, TACCi Total accruals for firm i, NIi Net income for firm, OCF, Operating cash flow for firm i, [DA it]
1
Yunietha, Y. and Palupi, A. 2017. Pengaruh corporate governance dan faktor lainnya terhadap manajemen laba perusahaan publik non
keuangan. Jurnal Bisnis dan Akuntansi, 19(1a-4):292-303.
2
Nujmatul, L. 2017. The effect of good corporate governance and audit quality on earnings management. Journal of Accounting and Business
Education, 2(1):134-143.
25
Absolute Discretionary Accruals for firm i in period t, TACCit = Total accruals for firm i in period t, Ait-1 Total
asset for firms, ΔREVit Changes of revenue for firm i in period t, ΔREC it Changes of receivable for firm i in
period t, PPEit Fix asset (gross) for form i in period t. The independent variables measurements in this study are
as follows Table 2.
Table 2: Variable Measurement

Variable Measurement
ESOP 1=Implement ESOP, 0=Not implement ESOP
Leverage Total Debt ÷ Total Asset x 100%
Independent Commissioner Board Independent Commissioner ÷ Total Commissioner
Audit Committee Total amount of audit committee
Audit Quality 1=Audited by Big-Four, 0=Audited by non-Big-for
Firm Size Ln x Total Assets
Profitability Net income after tax ÷ Total Assets x 100%
3.0 Results/ Discussion

Variable N Minimum Maximum Mean Std. Deviation
DA 594 0.0004 0.6516 0.058299 0.0684693
ESOP 594 0 1 0.13 0.342
LEV 594 0.0415 1.9475 0.418253 0.2062308
DKI 594 0.2000 0.8000 0.410236 0.0997688
AUD 594 2 6 3.10 0.409
AQ 594 0 1 0.37 0.409
SIZE 594 24.6236 33.4945 28.945035 1.5808843
ROA 594 0.0001 0.5267 0.067429 0.0660242
Table 4: Hypothesis Testing

Variable Coefficients Sig.
ESOP 0.000 0.964
LEV 0.049 0.000
DKI 0.023 0.409
AUD 0.004 0.554
AQ -0.004 0.509
SIZE -0.006 0.004
ROA 0.140 0.002
Based on the tables above employee stock ownership program (ESOP) has no effect on earnings management.
Leverage (LEV) has a positive impact on earnings management; the bigger the company loan, the higher the
probability of earnings management3. The independent commissioner board (DKI) has no effect on earnings
management; this shows that the proportion of independent commissioners cannot influence the occurrence of
earnings management in a company. The audit committee (AUD) has no effect on earnings management. Audit
quality (AQ) has no effect on earnings management. This shows that the Big Four public accounting firm has
good audit quality in auditing companies because of its high integrity and independence4. The size of a firm
(SIZE) has a negative effect on earnings management; the bigger the company, the better corporate governance
and technical systems that can reduce the possibility of earnings management. The bigger the company, the
higher thedegree of public awareness; therefore, the company must be careful in making decisions. Profitability
(ROA) has a positive impact on earnings management; this happens because profitability shows the profitability
of the company. In a company with a higher level of profitability, compared to a company with lower
profitability, the probability of revenue management is greater5.
The conclusion showed that the leverage, firm size and profitability affect the earnings management,
while the employee stock ownership program, independent commissioner board, audit committee and audit
quality do not affect the earnings management.
3
Mulyana, A. and Zuraida, M.S. 2018. The influence of liquidity, profitability and leverage on profit management and its impact on company
value in manufacturing company listed on Indonesia Stock Exchange. International Journal of Managerial Studies and Research, 6(1):8-14.
4
Susanto, Y. K., Pradipta, A., and Ellen C. 2019. Earnings management: ESOP and corporate governance. Academy of Accounting and
Financial Studies Journal, 23(1):1-13.
5
Fitri, A. and Muda, I. Badaruddin. 2018. The Influence of good corporate governance, leverage, and profitability on earning management
with firm size as moderating variable in the banking companies listed in Indonesia Stock Exchange in the period of 2012-2016. International
Journal of Research and Review, 5(9):49-66.
26
Track: Accounting
Paper ID: 032-029
Affecting Factors Quality of Income to The Company Registered Manufacturing in

Indonesia Stock Exchange
Nur Elvy Syahra1 and Arwina Karmudiandri1
Trisakti School of Management1.
1.0 Introduction
Financial reports are a means of communication to several parties outside the company and a form of responsibility
by management for owner resources (Kieso et al., 2002 in Septiyani et al., 2017). An income statement is one of
several parts in financial statements to be used as a basis for decision making by investors. Low earnings quality
will cause users of financial statements to be unreliable. Therefore, the profits contained in the financial statements
must be relevant and reliable so that they can be useful information in making decisions.
The act of manipulating earnings can reduce the credibility of the company in earnings quality if the
information in the financial statements is used for decision making. Users of financial statements will not get a
picture of the actual condition of the company if the information is irrelevant and unreliable, so that the results
obtained will also not be optimal. This study aims to obtain empirical evidence on whether there is an influence
between profitability, leverage, the board size, institutional ownership, earnings growth and firm size on earnings
quality.
2.0 Method
The research object used is a manufacturing company listed on the Indonesia Stock Exchange (IDX) from 2017
to 2019. The sampling method used in this study is the purposive sampling method. The data analysis method
used in this research is the statistically multiple regression method. The calculation used in this study for the
earnings quality variable is the modified Jones model. As done in Warrad's research (2017), the proxies for
calculating earnings quality are as follows:
NDAt = α1 (1 / At-1) + α2 [(∆REVt - ∆RECt) / At-1] + α3 (PPEt / At-1) + ε
where:
∆RECt : the resulting reduction in receivables between year t and t-1

NDAt : nondiscretionary accruals
∆REVt : the result of revenue reduction between year t and t-1
PPEt : gross property plant and equipment in the period year t
At-1 : total assets company in the period year t
α1, α2, α3 : firm specific parameters
Profitability measured using Return on Asset (ROA), according to research by Sukmawati et al. (2014)
in Marsela and Maryono (2017) as for the proxies to calculate ROA, namely: ROA= EAT / total asset
As done in Kaplan's research (2012) in Warrad (2017), Leverage is measured using a proxy to calculate
the Debt Ratio as follows: Debt Ratio = total debt / total shareholder's equity
According to Chaharsoughi and Rahman (2013) in Soly and Wijaya (2017), board size is the number of
board members in a company. BS = Jumlah Anggota Dewan Komisaris + Direktur Perusahaan
According to Tarjo (2008) in Ananda and Ningsih (2016), institutional ownership is formulated as
follows: KI = Jumlah Saham Institusional / Jumlah Saham yang Beredar x 100%
Profit growth according to Warsidi and Pramuka, 2003: 4 in Septiyani, et al (2017) can be formulated
by: ∆Yit = [Yit - Yit-1] / Yit-1
Where :
∆Yit : Profit Growth
Yit : Company profit for a certain period
Yit-1 : Company profit in the previous period
The size of the company, according to the research of Soly and Wijaya (2017) in Chaharsoughi and
Rahman, 2013), can be formulated by: SIZE = Ln Total Asset
27
3.0 Result
The results of descriptive statistical analysis can be seen in the table below:
The t-test results can be seen in the table below:
The t-test results show that the profitability variable has a sig. 0.011. Sig value. which is smaller than
alpha (α = 0.05), means that there is an influence of the profitability variable on earnings quality so that Ha1 can
be accepted. This proves that when the ROA is high, the earnings quality is also high. The actors in the company's
interests continue to manipulate profits in an effort to avoid paying large amounts of taxes so that high-quality
earnings do not guarantee that the company does not manipulate profits. Thus, this study is consistent with
research conducted by Hassan and Farouk (2014), Warrad (2017), and Soly and Wijaya (2017).
The t-test results show that the leverage variable has sig. 0.199. Sig value. which is greater than alpha (α
= 0.05) means that there is no influence of the leverage variable on earnings quality, so that Ha2 cannot be
accepted.
The t-test results show that the board size variable has sig. 0.566. Sig value. which is greater than (α =
0.05); that is, there is no influence of the board size variable on earnings quality, so that Ha3 cannot be accepted.
The t-test results show that the institutional ownership variable has sig. 0.606. Sig value. which is greater
than alpha (α = 0.05) means that there is no influence of institutional ownership on earnings quality, so that Ha4
cannot be accepted.
The t-test results show that the profit growth variable has sig. 0,000. Sig value. which is smaller than
alpha (α = 0.05) means that there is a variable influence of company size on earnings quality, so that Ha5 can be
accepted. This shows that the more a company's profit grows, will cause shareholders respond positively to high
benefits in the future (Hassan and Farouk, 2014). Thus, this study is consistent with previous research conducted
by Hassan and Farouk (2014), Widayanti et al. (2017), Arisonda (2018) and Shi (2019).
The t-test results show that the firm size variable has a sig. 0.366. Sig value. which is greater than alpha
(α = 0.05) means that there is a variable influence of earnings growth on earnings quality, so that Ha6 cannot be
accepted.
28
Track: Accounting
Paper ID: 033-026
FACTORS THAT AFFECT INCOME SMOOTHING
Inayah Hafzah Anggita1 and Julisar1
Department of Accounting, Trisakti School of Management, Jakarta1.
1.0 Introduction
The financial statement is an output produced by management at the end of the company's operational activity
period. Earnings management is an attempt by company managers to intervene or influence financial statement
information with the aim of tricking stakeholders who want to know financial performance, Sulistyanto (2008)
in (Agustia & Suryani 2018)1. Performing income smoothing action does not mean violating accounting
principles. Income smoothing can make untrustworthy to the performance of the company. Thus, it can make
big scandal to company. Based on the background above, the problem can be formulated as follows. First, does
the Independent Board of Commissioners have any influence on Income Smoothing? Second, does Managerial
Ownership have an influence on Income Smoothing? Third, does Firm Size have an influence on Income
Smoothing? Fourth, does Profitability have an influence on Income Smoothing?
2.0 Methods
The objects used in this study are non-financial companies listed on the Indonesia Stock Exchange (IDX) in
the 2017-2019 period. The sample selection was taken from 2017 to 2019, however, to calculate the dependent
variable or income smoothing by using the Eckel Index. Thus, there is a formula using the t-3 in the Eckel
Index.
The criteria for companies was as follows, first, the non-financial company listed on the Indonesia
Stock Exchange in 2014-2019; second, non-financial companies that financial statements use the Indonesian
Rupiah currency for 2014-2019; third, non-financial companies that financial statements ended on 31
December 2014-2019; fourth, non-financial companies that have consistent profit from 2014-2019; fifth, non-
financial companies that have consistent managerial ownership from 2017-2019.
For this study, non-financial companies were the sample. The reasons were the total of non-financial
companies, in our county, more than financial companies or manufacturing companies. Moreover, the
managerial ownership variable in manufacturing companies is less than in non-financial companies. So if this
study used a manufacturing company, researchers would get fewer data.
The sampling method used the purposive sampling method, in which only samples that meet the criteria
was to be used in this study.
The Independent Board of Commissioners (DKI) has a P-value <0.01 against PROF, where the P-value is
smaller than the alpha value 0.05, meaning that DKI has an influence on PROF. While the independent variable
DKI has a value of P = 0.23 on IS, where the P-value is greater than the alpha value of 0.05, meaning that DKI
has no influence on Income Smoothing (IS).
The Independent Board of Commissioners (DKI) is in charge of overseeing management in the
company's activities. A large number of independent boards will usually have better oversight. However, in
this study, the Independent Board of Commissioners had no effect on Income Smoothing. It means that the
Independent Board of Commissioners had no authority properly in this study.
The independent variable Managerial Ownership (KM) has a value of P = 0.39 on PROF, where the P-
value is greater than the alpha value of 0.05, meaning that KM has no effect on PROF. While the independent
variable KM has a value of P <0.01 against IS, where the P-value is smaller than the alpha value of 0.05,
meaning that KM has an influence on Income Smoothing (IS).
Managerial Ownership (KM) had no effect on Income Smoothing. It indicated that the Managerial
Ownership had no effect on Income Smoothing practices. Managerial Ownership is influenced by the
intervention of certain parties; it turns out that this intervention cannot be seen as a factor that affects income
smoothing.
The independent variable Company Size (UP) has a value of P <0.01 against PROF, where the P-value
is smaller than the alpha value of 0.05, meaning that UP has an influence on PROF. While the independent
variable UP has a value of P <0.01 against IS, where the P-value is smaller than the alpha value of 0.05,
1
Agustia, Y. P. and Suryani, E. 2018. Pengaruh ukuran perusahaan, umur perusahaan, leverage, dan profitabilitas terhadap manajemen laba
(Studi pada perusahaan pertambangan yang terdaftar di Bursa Efek Indonesia periode 2014-2016). Jurnal Aset (Akuntansi Riset), 10 (1):63-
74.
29
meaning that KM has an influence on Income Smoothing (IS).

Company Size (UP) has no effect on income smoothing because companies with large or small sizes
can do income smoothing if the company's condition is not good. High or low profit generated by the company
does not encourage the company to be motivated to do income smoothing. That is why profitability has no
effect on income smoothing.
The independent variable Profitability (PROF) has a value of P = 0.09 on IS, where the P-value is
greater than the alpha value of 0.05, meaning that PROF has an influence on Income Smoothing (IS).

3.1.1 Independent Board of Commissioners and Income Smoothing
Putri et al. (2019)2 and Soeharto (2018)3, in previous research, stated that the independent board of
commissioners has a positive influence on the practice of income smoothing. Ekadjaja et al. (2020) 4, in a
previous study, stated that the independent board of commissioners had a negative effect on the practice of
income smoothing. The results of this study are inversely proportional to previous research conducted by
Marpaung & Latrini (2014)5, Kharisma & Agustina (2015)6 and Sugiarti (2017)7, which states that the
independent board of commissioners has no influence on the probability of income smoothing practice. This
shows that the proportion of independent commissioners does not encourage management to practice income
smoothing.
3.1.2 Managerial Ownership and Income Smoothing

Pernasari & Dharmadiaksa (2014)8, Mambraku & Hadiprajitno (2014)9 and Maotama & Astika (2020)10, in
previous studies stated that managerial ownership has a positive effect on the occurrence of income smoothing
practices, the more share ownership is owned by managerial, the more it will encourage companies to do the
practice of income smoothing. Utami et al. (2020)11, in a previous study, stated that managerial ownership has
a negative effect on the occurrence of income smoothing practices. The results of this study are inversely
proportional to previous research conducted by Oktoriza (2018)12, Purwanti & Nugrahanti (2016)13 and Pratiwi
& Handayani (2014)14, which states that share ownership by management does not encourage management to
practice income smoothing.
3.1.3 Company Size and Income Smoothing

Pratiwi & Handayani (2014)14 Oktoriza (2018)12 and Nengsi (2019)21, in a previous study stated that company
size has a positive effect on income smoothing practices, the greater the size of the company, the more it
encourages management to practice income smoothing so that the company will always appear visible. good.
Kharisma & Agustina (2015)6, Iskandar & Suardana (2016)22 and Dewi & Suryanawa (2019)23, in previous
studies stated that company size has a negative influence on income smoothing practices. The results of this
study are inversely proportional to previous research conducted by Mudjiumami & Setiawan (2018),
Nugraheni & Sulistyawati (2018)15 and Ekadjaja et al. (2020)4, show that firm size has no influence on income
smoothing practices.
3.1.4 Profitability and Income Smoothing

Oktoriza (2018)12, Nugraheni & Sulistyawti (2018)15 and Ekadjaja et al. (2020)4, in a previous study stated that
profitability has a positive influence on the occurrence of income smoothing practices, the higher the ROA
value, the management will feel there is no need to carry out income smoothing practices. Pratiwi & Handayani
(2014)14, Ratnaningrum (2016)16 and Arum et al. (2017)17, in previous research stated that profitability has a
negative effect on the occurrence of income smoothing practices. The results of this study are inversely
proportional to previous research conducted by Suryani & Damayanti (2015) 18, Ginantra & Putra (2015)19 and
Napitupulu et al. (2018)20, stated that profitability has no influence on the opportunities for income smoothing
practice.
2
Putri, W. C. 2019. The effect of good corporate governance, firm size and financial leverage on income smoothing and its implication on
stock return. Scientific Journal of Reflection: Economic, Accounting, Management and Business, 2(1):91-100.
3
Soeharto, K. (2018). Peran dewan komisaris, komite audit, struktur kepemilikan perusahaan dan perataan laba perusahaan manufaktur.
Jurnal Riset Akuntansi dan Perpajakan (JRAP), 5(2):213-229.
4
Ekadjaja, A., Chuandra, A., and Ekadjaja, M. 2020. The impact of board independence, profitability, leverage, and firm size on income
smoothing in control of agency conflict. Dinasti International Journal of Education Management and Social Science, 1(3):388-399.
5
Marpaung, C.O. and Latrini, N.M.Y. 2014. Pengaruh dewan komisaris independen, komite audit, kualitas audit dan kepemilikan
manajerial pada perataan laba. E-Jurnal Akuntansi Universitas Udayana, 7(2):279-289.
6
Kharisma, A. and Agustina, L. 2015. Pengaruh mekanisme corporate governance dan ukuran perusahaan terhadap praktik perataan laba.
Accounting Analysis Journal, 4(2):1-10.
7
Sugiarti, R. 2017. Faktor-faktor rasio keuangan dan good corporate governance yang mempengaruhi praktik perataan laba. Jurnal Ilmu
Akuntansi, 10(2):247-260.
30
8
Peranasari, I. A. A. I. and Dharmadiaksa, I. B. 2014. Perilaku income smoothing, dan faktor-faktor yang memengaruhinya. E-Jurnal
Akuntansi Universitas Udayana, 8(1):140-153.
9
Mambraku, M. E. and Hadiprajitno, P. B. 2014. Pengaruh cash holding dan struktur kepemilikan manajerial terhadap income smoothing
(Studi empiris pada perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia tahun 2010-2012). Diponegoro Journal of Accounting,
3(2):1-9.
10
Maotama, N. S. and Astika, I. B. P. 2020. Pengaruh profitabilitas, ukuran perusahaan, dan kepemilikan manajerial terhadap praktik
perataan laba (Income smoothing). E-Jurnal Akuntansi, 30(7):1767-1779.
11
Utami, D. R., Evana, E., and Yuliansyah, Y. 2020. The influence of audit opinion and managerial ownership on income smoothing in
banking companies. International Research Journal of Business Studies, 13(1):15-26.
12
Oktoriza, L. A. 2018. Pengaruh leverage, profitabilitas, ukuran perusahaan, nilai perusahaan, aktivitas komite audit dan kepemilikan
manajerial terhadap praktik perataan laba. Journal of Management and Business, 1(2):188-203.
13
Purwanti, R. and Nugrahanti, Y.W. 2016. Prevention strategy of income smoothing practices with good corporate governance mechanism.
Jurnal Dinamika Akuntansi, 8(1):60-72.
14
Pratiwi, N.W. and Damayanthi, I.A. 2017. Analisis perataan laba dan faktor-faktor yang mempengaruhinya. E-Jurnal Akuntansi
Universitas Udayana, 20(1):496-525.
15
Nugraheni, A. Q. and Sulistyawati, A. I. 2018. Pengaruh ukuran perusahaan, profitabilitas, kepemilikan institusional, dept to equity ratio,
dan net profit margin terhadap perataan laba. Majalah Ilmiah Solusi, 16(1):19-39.
16
Ratnaningrum, R. 2016. The influence of profitability and income tax on income smoothing rankings. Jurnal Bisnis dan Manajemen,
17(2):133-143.
17
Arum, H. N., Nazar, M.R. and Aminah, W. 2017. Profitabilitas, ukuran perusahaan, dan nilai perusahaan terhadap praktik perataan laba.
Jurnal Riset Akuntansi Kontemporer, 9(2):71-78.
18
Suryani, A. D. and Damayanti, I. G. A. E. 2015. Pengaruh ukuran perusahaan, debt to equity ratio, profitabilitas dan kepemilikan
institusional pada perataan laba. E-Jurnal Akuntansi Universitas Udayana, 13(1):208-223.
19
Ginantra, I. and Putra, I. N. W. A. 2015. Pengaruh profitabilitas, leverage, ukuran perusahaan, kepemilikan publik, dividend payout ratio
dan net profit margin pada perataan laba. E-Jurnal Akuntansi Universitas Udayana, 10(2):602-617.
20
Napitupulu, J., Nugroho, P. S. and Kurniasari, D. 2018. Pengaruh cash holding, profitabilitas, reputasi auditor dan komponen good
corporate governance terhadap perataan laba. Prima Ekonomika, 9(2):1-20.
21
Nengsi, N. S. W. 2019. Pengaruh jenis usaha, ukuran perusahaan, umur perusahaan dan financial leverage terhadap perataan laba pada
perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia (BEI) tahun 2012-2016. Jurnal Ekobistek, 8(1):28-37.
22
Iskandar, A. F. and Suardana, K. A. 2016. Pengaruh ukuran perusahaan, return on asset, dan winner/loser stock terhadap praktik perataan
laba. E-Jurnal Akuntansi Universitas Udayana, 14(2):805-834.
23
Dewi, M. A. and Suryanawa, I. K. 2019. Pengaruh leverage, bonus plan, ukuran perusahaan, dan profitabilitas pada praktik perataan laba.
E-Jurnal Akuntansi Universitas Udayana, 26(1):58-84.
31
Track: Accounting
Paper ID: 035-028
THE ROLE OF FAMILY ON THE EFFECT OF OWNERSHIP ON EARNINGS MANAGEMENT
Cindy Paramitha1 and Novia Wijaya1
Accounting Major, Trisakti School of Management1.
1.0 Introduction
Financial statements can be said as a reflection of a company, and it is considered as one important information
source commonly used by the investor in order to assess the performance of companies that go public. The
financial statements’ users, in fact, often put their attention only on the earnings information, regardless of how
the earnings are generated. As a result, this action encourages companies’ management to do some activity called
earnings management.
Earnings management happens in most companies, including in many companies in Indonesia. One of
the earnings management cases that happened in Indonesia came from the affiliated family companies, PT Bumi
Resources Tbk., and its subsidiaries which doing sales manipulation to avoid royalty and tax payments. Reflecting
on the cases above, it is unfortunate that earnings management practices oftentimes still happen, even in family-
owned companies, which by several previous researchers is believed to have a negative relation to the earnings
management practices1. Facts revealed that the reality and the researchers’ perceptions regarding the factors that
affect earnings management are not always in harmony, and therefore it is considered an important topic to be
discussed further.
This research is a replication of the research arranged by Reyna and Manuel (2018) with some additional
development The objective of this research is to acquire empirical evidence of the effect of block-holders
ownership, institutional ownership, public ownership, managerial ownership, family ownership, firm size, firm
age, financial leverage, the effect of family ownership towards the relationship between external shareholders,
such as block-holders ownership, institutional ownership, public ownership and earnings management.
2.0 Methods
The population of this research is all non-financial companies listed on the Indonesia Stock Exchange with a
period of 2016 to 2019. The samples were obtained secondarily and then selected through a purposive sampling
technique by defining the sampling criteria. There were 92 non-financial companies that met the all criteria,
resulting in 368 data sets being available throughout the research. This research also uses the multiple regression
method as part of the data analysis as below.
DAIt = ∝ + β1(EBH) + β2(INST) + β3(PUB) + β4(MAN) + β5(FAM) + β6(SIZE) + β7(AGE) + β8(LEV) +

β9(EBH)(FAM) + β10(INST)(FAM) + β11(PUB)(FAM) + 𝜀
The measurement of earnings management is adapted from the measurement by prior research Reyna
and Manuel (2018) using Discretionary Accruals Modified Jones Model 1995. Steps taken to obtain the value of
discretionary accruals are stated in the following equation.
TAIt= NIt – CFOt

TAIt = DAIt + NDAt
TAIt /At-1 = α1 [1/At-1] + α2 [(∆REVt – ∆ARt)] / At-1 + α3 [PPEt / At-1] + εt
NDAt = β1j [1/At-1] + β2j [∆REVt - ∆ARt /At-1] + β3j [PPEt /At-1]
DAIt = TAIt / At -1 – NDAt
As for the measurement for the independent variables are stated as follows in Table 1.
Table 1: Variable Measurement

Variable Operational Definition Measurement
Block-Holders Percentage of shares held by individual block-holders who were not Total shares held by block-holders / Total shares
Ownership members of dominant family. Researcher only took into account when outstanding x 100%
the block-holders ownership is 5 percent or more of a firm’s share
capital.
1
Reyna, S.M, and Juan Manuel. 2018. The Effect of Ownership Composition on Earnings Management: Evidence for the Mexican Stock
Exchange. Journal of Economics, Finance and Administrative Science 23 (46): 289–305.
32
Institutional Proportion of common stock owned by institutional investors. Total shares held by institution / Total shares
Ownership outstanding x 100%
Public Ownership Percentage of ownership the public have to the outstanding share. Total shares held by public / Total shares
outstanding x 100%
Managerial The shareholders from management side who actively contribute in the Total shares held by BOD and BOC / Total shares
Ownership company’s decision making such as directores and commissioners. outstanding x 100%
Family Ownership Family ownership is the ownership dominated by a family usually 1 = Founding families hold shares in the firm or
depicted as the founder of the firm allowed to expropriate the wealth of present on the board of directors, 0 = Founding
minority shareholders in a company. families do not hold shares in the firm or present
on the board of directors
Firm Size The natural logarithm of total assets at the end of the financial year. Ln of total assets at the end of year
Firm Age The number of years since the company is founded. Log (number of years since company is founded)
Financial The ratio used to measure how the company purchases its assets funded Total Liabilities / Total Assets
Leverage by its debt.
Where:
TAIt : total accruals information for firm i in yearly period t
DAIt : discretionary accrual information
At-1 : total assets of firm i in yearly period t-1
∆REVt : change in revenue for firm i in year t compared to previous year
∆ARt : change in accounts receivable of firm i in year t compared to previous year
PPEt : gross property, plant, and equipment of firm i in year t
α1, α2, α3 : regression parameters
ε : error
EBH : block-holders ownership
INST : institutional ownership
PUB : public ownership
MAN : managerial ownership
FAM : family ownership
SIZE : firm size
AGE : firm age
LEV : financial leverage

Std.
Variable N Minimum Maximum Mean
Deviation
DAI 368 -.336640 .697584 .000000 .089360
EBH 368 0.000000% 35.605805% 2.306905% 5.812809%
INST 368 0.000000% 99.673070% 71.959243% 25.466131%
PUB 368 0.926133% 75.134595% 29.363696% 14.862952%
MAN 368 0.000006% 84.925018% 8.646399% 17.175045%
FAM 368 0 1 .64 .480
SIZE 368 24.995137 33.494533 29.277750 1.637851
AGE 368 .845098 2.008600 1.543172 .193915
LEV 368 .081782 1.922784 .500324 .234071
EBH*FAM 368 0.000000% 35.605805% 1.938095% 5.361157%
INST*FAM 368 0.000000% 99.673070% 43.012390% 38.730153%
PUB*FAM 368 0.000000% 75.134595% 18.273851% 18.649479%
Table 3: Hypothesis Testing

Variable B Sig.
(Constant) .0047 0.628
EBH -.004 0.092
INST -.001 0.174
PUB -.002 0.030
MAN -.001 0.053
FAM -.021 0.716
SIZE .002 0.595
AGE .041 0.096
LEV -.104 0.000
EBH*FAM .002 0.412
INST*FAM 4.346E-5 0.938
PUB*FAM .000 0.549
33
The outcome of this research suggests that public ownership and financial leverage affect earnings management.
The logical reasoning behind the relationship between public ownership and earnings management is the
companies having done their Initial Public Offering activities and had public ownership have an obligation to
provide the companies’ information to the public, more detailed information items that should be opened in the
annual report. By having a certain ownership in a company, public are demanding for corporate transparency as
the company’s accountability as much as possible and therefore could reduce the earnings management practices
since there is the increasing of public investors supervision of the financial reports generated by the management2.
The relationship between financial leverage and earnings management can be explained with the logical reasoning
that the increasing amount of debt owned by the company since the supervision by creditors conducted on the
company is getting tighter so that the possibility of management to do earnings management is reduced 3. Block-
holders ownership, institutional ownership, managerial ownership, family ownership, firm size, firm age, block-
holders ownership with family ownership as moderating variable, institutional ownership with family ownership
as moderating variable, public ownership with family ownership as moderating variable, on the other hand, do
not affect earnings management in non-financial companies listed in the Indonesia Stock Exchange.
2
Raja, A. and Desmiyawati, K. 2007. Aktivitas manajemen laba: Analisis peran komite audit, kepemilikan institusional, persentasi saham
public dan leverage. Simposium Nasional Akuntansi, 17, Mataram, Indonesia.
3
Astari, A. A. M. R. and Suryanawa, I. K. 2017. Faktor-faktor yang mempengaruhi manajemen laba. E-Jurnal Akuntansi Universitas Udayana,
20(1):290-319.
34
Track: Accounting
Paper ID: 044-038
THE IMPACT OF COST OF CAPITAL ON FINANCIAL PERFORMANCE: EVIDENCE FROM

LISTED NON-FINANCIAL FIRMS IN NIGERIA
Mohammed Ibrahim1, Habib Abdulkarim1, Jamila Muktar1, and Zakariya’u Gurama1
Department of Accounting, Faculty of Arts and Social Sciences, Gombe State University, Gombe-Nigeria1.
1.0 Introduction
This study examines whether Cost of Capital (COC) impact on non-financial firms’ financial performance in
Nigeria for the period 2015-2019. Not considering COC could lead to future failure of a company. Companies
can face devastating losses by underestimating their COC. Management used COC to recognise and choose
projects, strategies, deals and portfolios that will effectively add value to the company and its shareholders. Players
and institutions in stock markets, like investment funds, banks and other financial institutions, have the incentives
to suitably incorporate the objective of optimising COC. Evaluating Nigeria’s capital market which is an avenue
for sourcing long-term resources to finance long-term scheme is underdeveloped compared to its foreign
equivalent. Therefore, the main responsibility of efficient gathering of capital or mobilisation of fund from the
surplus units of the economy and successfully channeling it to the deficit sector so as to meet up with its long-
term capital needs has not been carried out prudently. For example, Nigeria’s capital market is very illiquid, few
quoted firms with low volume of transactions and with low market capitalisation which consequently result to
increase in the COC. In spite of the increasing literature, the COC-financial performance nexus remained a
knowledge gap as most existing studies focused on foreign countries with few conducted in Nigeria hence the
need for this study.
2.0 Methods
To carry out this study, hand-collected data from a sample of 31 non-financial firms listed in Nigeria for the period
2015-2019 was used. Also, two system GMM regression procedures were employed for the analysis.
We find a significant and positive impact of COC (WACC) on Return on Assets (ROA). We further document a
significant and positive impact of COC (WACC) on Tobin’s Q (TQ). Overall, our study documents that COC
impacts non-financial firms’ financial performance in Nigeria positively and significantly. The finding shows that
COC impacts firms’ financial performance positively and significantly. This may be because the firms are using
efficient resources in their operational activities and providing the rate of return required to their funds' providers,
which consequently leads to increase in the financial performance.

Our findings, which add to the existing knowledge with regard to the impact of COC on financial performance,
should be interesting to the managers and the providers of finance. The managers should put their resources where
there is higher return rate and they should be acquainted with the COC, thus the need of having an efficient mix
of capital structure so as to reduce the COC which consequently, improves profitability and firm value. For the
providers of fund, the study helps them to make the decision whether or not to invest in these firms. Since they
want their money to be invested where there will be maximum return; otherwise they would not sustain their
investment in the firm. When the firm’s return rate is beneath the COC, most of the investors will transfer their
investment to other firms where they can obtain maximum return.
35
Track: Accounting
Paper ID: 045-041
SME CATEGORIES AND PRACTICES OF MANAGEMENT ACCOUNTING
Noor Raudhiah Abu Bakar1, Nor Suhaily Bakar1, Noor Suhaila Shaharuddin1, and Nur Ayuni Iylia
Yahya1
Faculty of Management and Muamalah, Kolej Universiti Islam Antarabangsa Selangor 1.
1.0 Introduction
Small and Medium Enterprises (SMEs) are among the major and important contributors to the country's economy
today. Although SMEs are the industry with the most organizations, the amount of profit from SMEs is still low.
Management accounting practices in SMEs have been identified as one of the key factors influencing the
performance of SMEs but relevant studies are still limited. This study aims to examine practices of management
accounting and compare the means among SME categories in Klang Valley. SMEs categories include micro, small
and medium, while practices of management accounting include planning, controlling, and decision making.
Based on contingency theory, the size of the company is one of the factors affecting the organizational practices
and the study suggests that the size or specifically SMEs categories are different within the practice of
management accounting. There are three hypotheses which are: (1) there are significant differences in the mean
between planning and SME categories; (2) there are significant differences in the mean between controlling and
SMEs categories; (3) there are significant differences in the mean between decision making and SMEs categories.
2.0 Methods
This quantitative study used face-to-face and online survey methods. Data are collected using a questionnaire
from manager/owner randomly selected from SME listed in SME corporation in Klang Valley. Based on SME
Corps (2016) there are 907,065 SMEs in Malaysia in various sectors. However, this study is concentrated in Klang
Valley only as many SMEs are concentrated there with a population of 312,937,425. The number of samples that
need to be distributed is based on table A Skill Building Approach Seven Edition, Uma Sekaran (2016), where
this study needs to get a sample of 384. From a total of 400 questionnaires sent to the manager/owner, 212
questionnaires were returned, which yielded a response rate of 53 percent. All questionnaires returned are valid
to analyse. The data were analysed using Statistical Package for the Social Science for Windows (SPSS for
Windows). The analysis used is descriptive analysis and ANOVA analysis.
The result discussed the respondent profile and the ANOVA analysis for hypotheses testing.
3.1 Respondent Profile

55.3% of the respondents are from micro categories, 33.5% from small categories and 11.2% from medium
categories. Majority of them is the manager and most of them with a mean age of below forty years. More than
half of the respondents have at least diplomas.
3.2 Hypotheses Testing

The results of testing hypotheses 1 to 3 are presented in Table 1.
Table 1: Differences in the Management Accounting Practices (Planning, Controlling and Decision
making) by SME categories (Micro, Small and Medium)
Micro Small Medium F Value
(Mean) (Mean) (Mean)
Planning 3.4168a 3.7556a 3.9333b 5.196**
Controlling 3.5361a 3.8111a 4.1500b 7.614**
Decision making 3.6319a 3.8389a 4.2000b 5.445**
Means with the same superscripts are not significantly different for decision making and means with the same superscripts are significantly
different at p< 0.1 for planning and controlling; means with different superscripts are significantly different at p< 0.01.
Based on Table 1, the practice of management accounting is differentiate by the categories of SME. A one-way
between-group ANOVA was conducted to test whether the practices of management accounting (planning,
controlling and decision making) differed by SMEs categories. Hypothesis 1 expects there are significant
differences mean of planning with SME categories. The results showed there were statistically significant
differences at the p< 0.01 level in planning for the three SMEs categories [F(2,212) = 5.196, p=0.006] and
hypothesis H1 is supported.
36
Hypothesis 2 expects there are significant differences mean of controlling with SMEs categories. The
results showed there were statistically significant differences at the p< 0.01 level in controlling for the three SMEs
categories [F(2,212) = 7.614, p=0.001] and hypothesis H2 is supported. Hypothesis 3 expects there are significant
differences mean of decision-making with SMEs categories. Same with planning and controlling, the result
showed there are also statistically significant differences at the p< 0.01 level in decision making for the three SME
categories [F(2,212) = 5.545, p=0.005] and hypothesis H3 is supported.
Despite reaching statistical significance, the actual difference in mean scores between the groups was
quite small. The effect size, calculated using the eta squared, was 0.04 for planning and decision making and 0.06
for controls. For planning, Post-hoc comparison using Duncan’s range test indicated that the mean score for Micro
(M=3.42, SD=1.01) was statistically different from Medium(M=3.93, SD=0.86) and those with Small (M=3.76,
SD=0.68) did not differ statistically from the Medium category. For controlling, Post-hoc comparison using
Duncan’s range test indicated that the mean score for Micro (M=3.54, SD=0.87) and Small (M=3.81,
SD=0.59)was statistically different from Medium(M=4.15, SD=0.66). Similar to controlling, for decision making,
Post-hoc comparison using Duncan’s range test indicated that the mean score for Micro (M=3.63, SD=0.93) and
Small (M=3.83, SD=0.63)was statistically different from Medium(M=4.20, SD=0.55).
In summary, the result from the ANOVA test showed there are differences between SMEs categories
for the practices of management accounting among SMEs in Klang Valley. The medium SMEs significantly
practice more management accounting as compared with micro and small categories of SMEs. These results
indicate that the size of SMEs influences the practices of management accounting.

The findings of this study could promote the use and the benefit of using management accounting to enhance
organizational performance. This study gives important implications to both theory and practice. Theoretically,
the findings of this study are consistent with contingency theory which underlies the conceptual model of this
study.
Practically, for government to increase the practice of management accounting performance of SME, the
government should pay more intention to the micro and small companies. The results of the study may be subject
to several possible limitations. Firstly, many companies in Malaysia consider disclosing information as requested
in the survey questionnaire as confidential and thus are unwilling to cooperate. This results in a low response rate
(53%). However, the sample size received is considered enough for a meaningful statistical analysis to be
undertaken. Secondly, although the sample for this study is selected from various industries, there is no attempt
to study the industrial influence on the current findings. If the sample collected is large enough, consideration of
industrial influence would provide valuable insight. Finally, the results of this study should be interpreted with
care as it is conducted in one country only, i.e., Malaysia. Different results may be found in different countries
with different political settings and cultures. Future studies may study the effect of the management accounting
practice of SMEs on SMEs performance.
37
Track: Accounting
Paper ID: 047-040
EFFECTIVENESS OF INTERNAL AUDIT AND OTHER FACTORS IN FRAUD DETECTION
Gita Prajna Paramita1 and Friska Firnanti1
Accounting Department, Trisakti School of Management, Indonesia 1.
1.0 Introduction
Fraud in general poses an enormous threat to wellbeing of organization and people lives, in all parts of the world.
Therefore, organization should be able to detect fraudulent activities before it is too late and causing devastating
damage (ACFE, 2018)1. The financial crisis and instability have resulted in the increase of fraud scandals. In order
to detect fraudulent activities, making use of internal auditing procedures is the outmost importance for
organizations2. According to Drogalas et al. (2017)3 the effectiveness of internal auditing can be improved from
the quality of internal audit, the competence of internal audit team, the independence of internal audit and the
management support.
Many organizations believe the good auditor is an auditor that has more experience in their job to do the
audit. Yet there are some factors that can be used to measure how well the auditor in doing their job. Such as:
their training, their responsibility toward their work, their independence, and their fraud awareness, regardless
they are internal or external auditor. All of the mention factors above are important things to measure the
effectiveness of the auditor in doing their jobs (Halbouni et al. 2016) 4.
PWC (2008)5 founded that when questioned concerning fraudulent acts, the lack of clear guidelines is
often the first excuse perpetrators will use. Therefore, they concluded, in order for employee to comply with
policy, it is necessary to clearly set out a comprehensive document which details procedures to be followed. Thus,
proactive fraud detection in the form of fraud detection procedures is needed.
Nowadays, many organizations are using information technology, such as using a computer or laptop
to make a financial statement and to do the accounting and auditing work. Yet as more business operations used
computerized information, frauds are increasingly being committed using computer-assisted means (Halbouni et
al. 2016). According to PWC (2008), in many organizations, the traditionally physical paper has been replaced by
record from computers or laptop. To anticipate this trend, the using of Fraud Technology which relies upon
computer software becomes inevitable.
Based on the explanation in the research background, the purpose of this research is to find empirical
evidence regarding the effect of Internal Audit Effectiveness, Internal Auditor Responsibility, Internal Auditor
Training, Fraud Awareness, Fraud Detection and Fraud Technology on Fraud detection.
Singleton and Singeleton (2010)6 pointed out that the first axiom to remember in fraud detection is that
frauds are more often associated with the absence of control rather than weak controls. In other word, a weak
control is generally better than none. The second axiom is that frauds are more often detected by reactive measures
than proactive ones. It means there is a lot of room for improvement. Lastly, frauds are often detected by intuition,
suspicion of investigator, managers, auditor, or exception (anomaly) detected in the accounting record.
Under SAS No. 99, financial auditor’s responsibilities regarding fraud are as follows. (a) Understand the
characteristic causes and signs of fraud. (b) Assess the risks of a material financial statement misstatement due to
fraud. (c) Plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement, whether caused by error or fraud. (d) Exercise due care in planning, performing,
evaluating, and documenting the results of audit procedures and instances of fraud. (e) Possess neither the proper
degree of professional skepticism, assuming neither dishonesty nor unquestioned honesty of management. (f)
Assign significant engagement responsibilities to audit personnel with the experience and training indicated as
needed by the risk assessment (i.e., personnel experienced in antifraud). (g) Report all instances of fraud to the
appropriate level of management. (h) Insist that financial statements affected by a material fraud be modified to
reverse the effects of the fraud or provide a qualified opinion. (i) Inform the company’s audit committee of fraud,
except those that are clearly inconsequential (Singleton and Singeleton, 2010).
1
ACFE. 2018. Report to the nations, 2018 Global study on occupational fraud and abuse. 10th Edition. Austin: Association of Certified Fraud
Examiners, Inc.
2
Bekiaris, M., Efthymiou, T., and Koutoupis, A.G. 2013. Economic crisis impact on corporate governance and internal audit: The case of
Greece. Corporate Ownership and Control, 11(1):55-64.
3
Drogalas, G., Pazarskis, M., Anagnostopoulou, E., and Papachristou, A. 2017. The effect of internal audit effectiveness, auditor responsibility
and training in fraud detection. Accounting and Management Information Systems, 16(4):434-454.
4
Halbouni, S.S., Obeid, N., and Garbou, A. 2016. Corporate governance and information technology in fraud prevention and detection:
Evidence from the UAE. Managerial Auditing Journal, 31(6–7):589–628.
5
PwC. 2008. Fraud: A Guide to Its Prevention, Detection and Investigation. PwC Forensic Service.
6
Singleton, T. W. and Singleton, A. J. 2010. Fraud auditing and forensic accounting. 4th Edition. New Jersey: John Wiley & Sons, Inc.
38
According to Petraşcu and Tieanu 2014)7, the ability of auditor to detect fraudulent activities depends on
his practical abilities and professional training in detecting fraud. In order for internal auditing to be efficient, it
requires the continuous training of the internal auditors.
The Association of Certified Fraud Examiners (ACFE) has been established an event called International
Fraud Awareness week in 2000 as a global initiative to raise awareness about Fraud Detection and Prevention and
to help safeguard business and the economy from risk of fraud by anti-fraud education. Since then, hundreds of
organizations worldwide joined this yearly event, which usually held in the second or third week of November.
Fraud detection procedures are directly proportional to fraud awareness. Organization with high degree
of fraud awareness should have more comprehensive fraud detection procedures and vice versa. According to
ACFE, In addition to prevention strategies, organizations should also have detection methods in place and make
them visible to the employees. The visibility of these controls acts as one of the best deterrents to fraudulent
behavior.
Nowadays business data is being managed and stored by IT system in organizations. According to Gee
(2015)8, as part of their duties, many staff members have access to business systems to update, create, delete, and
modify transaction records. Without the proper controls these accesses are vulnerable to errors and potential fraud.
Arens et al. (2012)9 stated that IT could help a company’s internal controls, although its use creates other risks,
such as those related to the protection of hardware and data, or the potential introduction of new types of errors if
there is too much reliance on hardware and software capabilities. These risks include systematic risk, unauthorized
risk and the risk of losing data.
2.0 Research Method

Data for this empirical research are gathered through quantitative research method. Self-administered, closed type
questionnaire with 5-level Likert scale are send to research object at Indonesia companies. Research objects must
have direct involvement and first-hand experience in Internal Audit and Fraud Detection. Their position either in
Accounting/Finance department (Staff, Auditor, Manager) or as key person/ decision maker in organization
(Business Owner, Board of Director, Audit Committee). The questionnaires consist of 8 Tables. Table 1 is
intended to capture respondent demographic, while Table 2 to 8 are intended to capture their perception regarding
following subject.
Table 2: Detection of Fraud with 4 questions.

Table 3: Internal Audit Effectiveness with 7 questions.
Table 4: Internal Auditor Responsibility with 6 questions.
Table 5: Internal Auditor Training with 4 questions.
Table 6: Fraud Awareness with 10 questions.
Table 7: Fraud Detection Procedures with 24 questions.
Table 8: Fraud Technology with 9 questions.
Questionnaires are sent to 143 respondents. Out of 111 respondents who filled the questionnaire, 7
respondents cannot be processed because they did not fulfill the criteria. Therefore, 104 questionnaires can be
processed. The collected data are then processed and analyzed by using multiple regression test to analyze linear
relationship between dependent variable and independent variables.
3.0 Analysis and Discussion

Demographic profile of 104 respondents can be seen in Tables 1 and 2. There are 104 respondents, with 1
Dependent variable: Fraud Detection (FD), and 6 Independent variables: Internal Audit Effectiveness (IAE),
Internal Auditor Responsibility (IAR), Internal Auditor Training (IAT), Fraud Awareness (FA), Fraud Detection
Procedures (FDP), and Fraud Technology (FT). The hypotheses test results are shown in Table 3.
R value is 0.734. This value indicated that there is a strong positive relationship between dependent
variable and independent variables. While Adjusted R2 is 0.510. This value indicated that 51% of variation in
dependent variable (Fraud Detection) can be explained by variation of 6 independent variables (Internal Audit
Effectiveness, Internal Auditor Responsibility, Internal Auditor Training, Fraud Awareness, Fraud Detection
Procedures, and Fraud Technology).
7
Petraşcu, D. and Tieanu, A. 2014. The role of internal audit in fraud prevention and detection. Procedia Economics and Finance, 16:489-
497.
8
Gee, S. 2015. Fraud and fraud detection: A data analytics approach. 2nd Edition. New Jersey: John Wiley & Sons, Inc.
9
Arens, A. A., Elder, R. J., and Beasley, M. S. 2012. Auditing and assurance services - An integrated approach. 14th Edition. Essex: Pearson.
39
Internal Audit Effectiveness has effect on Fraud Detection. This finding is consistent with research
conducted by Drogalas et al. (2017), Monisola et al. (2013)10, and Coram et al. (2008)11. The effectiveness of
Internal Audit has a positive effect on fraud detection, followed by a high level of disciplinary consequences for
fraud perpetrators. Internal audit systems improve their business operations while preventing errors and helping
them detect fraud effectively. Firms with a well-established internal audit function detect more fraudulent acts
than firms without an internal audit department.
Internal Auditor Responsibility has effect on Fraud Detection. This finding is consistent with research
conducted by Drogalas (et al. 2017), Pujahanty et al. (2016) 12, and Balaciu et al. (2012)13. Auditor responsibility
has a positive effect on fraud detection. Internal auditors have full access to business records and errors are
reported directly to management. However, the main objective of the auditor is not only to find fraud and errors
but to evaluate the efficiency of internal audit and make recommendations aimed at preventing and tracking fraud
and errors. Auditors with higher responsibility will detect fraud better.
Internal Auditor Training has no effect on Fraud Detection. This finding is inconsistent with research
conducted by Drogalas et al. (2017) and Bierstaker et al. (2012) 14, but consistent with research conducted by
Indrawati et al. (2019)15 and Sanjaya (2017)16 which stated that internal auditor training have no significant effect
on fraud detection.
Fraud Awareness has effect on Fraud Detection. This finding is consistent with research conducted by
Othman et al. (2015)17, Yuniarti (2017)18, and Jalil (2018)19. Fraud awareness affect positively on fraud detection.
With high fraud awareness, there will be a higher increase in the implementation of fraud detection in their
organization. Increased awareness of fraud from all parties in the organization, together with good internal control
has a significant effect on preventing fraudulent activities.
Fraud Detection Procedures has no effect on Fraud Detection. This finding does not mean that Fraud
Detection Procedures are useless in fraud detection. It implies that in respondent’s perception, from total 24
procedures, some ineffective procedures outweigh some effective procedures. Effectiveness of Fraud Detection
Procedures is a spectrum and is supported by researches conducted by Othman et al. (2015), Halbouni et al. (2016),
and Li et al. (2018)20, which concluded that there are degree of effectiveness in each procedures ranging from
least effective to most effective.
Fraud Technology has no effect on Fraud Detection. This finding is consistent with research conducted
by Zamzami et al. (2016)21, but inconsistent with research conducted by Bierstaker et al. (2012). Zamzami et al.
(2016) stated that virus protection, financial ratio, firewalls, filtering software, and digital analysis are ineffective
in fraud prevention and detection. They concluded that information technology have no effect in fraud detection.
Table 1: Demographic Profile of Respondents (1 of 2)

Respondent Profile Category Frequency Percentage
Gender
Female 26 25 %
Male 78 75 %
Age
22-39 years old 49 47 %
40-60 years old 53 51 %
Over 60 years old 2 2%
Years of Involvement
10
Monisola, O. 2013. Effect of internal audit on prevention of frauds, errors and irregularities in corporate organisation. Research Journal of
Finance and Accounting, 4(19):103-108.
11
Coram, P., Ferguson, C., and Moroney, R. 2008. Internal audit, alternative internal audit structures and the level of misappropriation of
assets fraud. Accounting & Finance, 48(4):543-559.
12
Pujahanty, N. D. S., Purnamasari, P., and Maemunah, M. 2016. The effect of auditor responsibility and red flags in fraud detection (Survey
on public accountant firm in Bandung ). Kajian Akuntansi, 17(2):55–68.
13
Balaciu, D. E., Bogdan, V., Mester, I. T., and Gherai, D. 2012. Empirical evidences of Romanian auditors’ behavior regarding creative
accounting practices. Accounting and Management Information Systems, 11(2):213–238.
14
Bierstaker, J.L., Hunton, J.E. and Thibodeau, J.C. 2012. Does fraud training help auditors identify fraud risk factors? In Advances in
Accounting Behavioral Research,15:85-100. Bingley: Emerald Group Publishing Ltd.
15
Indrawati, L., Cahyono D., and Maharani, A. 2019. The influence of professional skepticism, auditor independence and fraud audit training
on the auditor’s ability to detect fraud. International Journal of Social Science and Business, 3(4):393-402.
16
Sanjaya, A. 2017. The effect of professional skeptism, independence, competence, auditor training, and audit risk on the auditor's
responsibility in detecting fraud. Jurnal Akuntansi Bisnis, 53(9):1689–1699.
17
Othman, R., Aris, N.A., Mardziyah, A., Zainan, N., and Amin, N.M. 2015. Fraud detection and prevention methods in the Malaysian public
sector: Accountants’ and internal auditors’ perceptions. Procedia Economics and Finance, 28:59-67.
18
Yuniarti, R.D. and Ariandi, I. 2017. The effect of internal control and anti-fraud awareness on fraud prevention (A survey on inter-
governmental organizations). Journal of Economics, Business, and Accountancy Ventura, 20(1):113-124.
19
Jalil, F.Y. 2018. Internal control, anti-fraud awareness, and prevention of fraud. Etikonomi, 17(2):297-306.
20
Li, K., Bonsu, O.A.M., Asare, K.E., Dominique, B.J.J., and Johnson, B. 2018. Accountants perception on effectiveness of corporate fraud
detection and prevention methods in Ghana. International Journal of Accounting and Financial Reporting, 8(3):78-90.
21
Zamzami, F., Nusa, N.D., and Timur, R.P. 2016. The effectiveness of fraud prevention and detection methods at universities in Indonesia.
International Journal of Economics and Financial Issues, 6(3):66-69.
40
Up to 5 years 55 53 %
5-20 years 38 37 %
Above 20 year 11 11 %
Job title During Involvements
Auditor/Fraud Examiner 50 45 %
Accounting Staff 24 21 %
Accounting Manager 19 17 %
Other 19 17 %
Type of Industry During
Involvement Banking/Financial 24 18 %
Property 11 8%
Transportation and Logistic 6 5%
Public Services 15 11 %
Retail 8 6%
Natural resources 10 7%
Engineering, Procurement and
7 5%
Construction
Manufacturing/Factory 29 21 %
Non-Profit Organization 11 8%
Other 15 11 %
Current Job Title
Auditor/Fraud Examiner 43 33 %
Accounting Staff 11 8.5 %
Accounting Manager 11 8.5 %
Business Owner 17 13 %
Consultant/Advisor 23 18 %
Lecturer 12 9%
Retired 4 3%
Other 9 7%
Table 2: Demographic Profile of Respondents (2 of 2)

Respondent Profile Category Frequency Percentage
Years of Professional experiences
Up to 5 years 30 29 %
5-20 years 46 44 %
Above 20 years 28 27 %
Current Type of industry
Banking/Financial 20 15 %
Property 9 7%
Transportation and Logistic 3 2%
Public Services 16 12 %
Retail 7 5%
Natural resources 10 7.5 %
Engineering, Procurement and
6 5%
Construction
Manufacturing/Factory 22 17 %
Non-Profit Organization 10 7.5 %
Accounting/Consulting firm 19 14 %
Retired 1 1%
Other 9 7%
Highest Education
Diploma 7 7%
Bachelor 62 60 %
Master 27 26 %
PHD 6 6%
Other 2 2%
Member of Association
Accountant 25 20 %
Auditor 37 29 %
Fraud Examiner 8 6%
None 44 35 %
Other 13 10 %
Professional License Holder
CA 17 14 %
CIA 8 6.5 %
CPA 8 6.5 %
CFE 7 6%
None 57 46 %
Other 26 21 %
41
Table 3: t-Test
T Sig
(Constant) 2.308 0.023
IAE 3.327 0.001
IAR 2.039 0.044
IAT -0.518 0.606
FA 2.143 0.035
FDP 0.490 0.625
FT -0.432 0.667
4.0 Closing
The purpose of this research is to investigate the effect of six independent variables that is Internal Audit
Effectiveness, Internal Auditor Responsibility, Internal Auditor Training, Fraud Awareness, Fraud Detection
Procedures, and Fraud Technology on Fraud Detection as dependent variable. The research finds that Internal
Audit Effectiveness, Internal Auditor Responsibility and Fraud Awareness has effect on Fraud Detection partially.
On the other hand, Internal Auditor Training, Fraud Detection Procedures and Fraud Technology has no effect on
fraud detection partially.
Several limitations in this research are data were collected using self-administered questionnaire and
sample sizes are relatively small compare to total population of research object. A combination of survey
questionnaire and interview can be considered to capture more reliable and valid information. Increasing sample
sizes of research object in order to have more generalized result. Adding other independent variables such as
Auditor’s Experience, Independence, and Professional Skepticism may show how auditor expertise affect Fraud
Detection.
42
Track: Accounting
Paper ID: 071-062
CAN CORPORATE GOVERNANCE MINIMIZE TAX AVOIDANCE?
Dhian Ari Febriyanti1 and Nico Alexander1
Trisakti School of Management1.
1.0 Introduction
The Source of income from a country comes from several sources such as commodity trading, tax revenue and
others. One of the largest revenues from a country comes from taxes paid to the state, including Indonesia, where
82.5% of state revenue comes from tax revenue in 2019. This revenue decreased from 2018, where tax revenue
was around 85.4%. This is of particular concern to the government, especially the directoral general of Indonesian
taxes, because if tax revenue falls every year it will affect the country's development. The decrease in tax revenue
is influenced by several factors, however, there is an activity carried out by the company to reduce the taxes paid,
namely tax avoidance. Tax avoidance is the way that is done by the mandatory taxes by exploiting loopholes in
tax regulations in order to tax burdens paid decreases. Tax avoidance is legal when doing so is appropriate with
its tax laws applies. In such conditions, companies can maximize the profits are used for the benefit of the company
nor the interests of the shareholders. Establishment of tax regulations intended for obedient and obedient taxpayers
against these rules by paying according to real conditions without subtracting it. However, the aim is not noticed
by the taxpayer, that is they want is how to get a big profit without having to pay huge taxes in no way violating
applicable regulations.
To avoid problems resulting from tax avoidance that will lead to tax evasion, company supervision is
needed so that tax avoidance is not excessive. This oversight can take the form of a corporate governance
mechanism. This mechanism will supervise management in tax avoidance so that it will not become a tax evasion.
From the background explanation above, this research is made to obtain empirical evidence regarding the effect
of corporate governance on tax avoidance. There have been many studies conducted on the effect of corporate
governance on tax avoidance, but they gave inconsistent results, Therefore, researchers are interested in examining
the effect of corporate governance on tax avoidance.
2.0 Method
The research object used in this study is the company manufacturers listed on the Stock Exchange Indonesia (BEI)
respectively from 2017–2019 period using purpose sampling method. To test the hypothesis, this research used
multiple regression. Research sample selection procedure sample can be seen in table 1 below this:
Table 1: Research sample selection procedure

Criteria Sample Total Data
Manufacturing companies listed on the IDX 2017-2019 155 465
Manufacturing companies that do not consecutively publish audited financial statements as of December 31 9 27
Manufacturing companies that do not use Indonesian Rupiah 27 81
Manufacturing companies that experience a loss 34 108
Manufacturing companies that do not do tax avoidance 4 12
Total data used in this research 243
The dependent variable was tax avoidance measure by effective tax rate and independent variables were
corporate governance measured by institutional ownership, independent commissioner and audit committee. This
research also using control variables profitability, firm size and inventory intensity.
3.0 Result and Discussion

The descriptive statistic result and hypothesis result can be seen in table below:
Table 2: Descriptive Statistic

Variables Minimum Maximum Mean Std. Deviation
ETR 0.0124 0.9712 0.2756 0.1256
IO 0 0.9995 0.7731 0.2539
IND 0.2000 0.8000 0.4181 0.1071
AC 3 4 3.0700 0.2560
ROA 0.0003 0.921 0.0856 0.1043
SIZE 25.7957 33.4945 28.6177 1.5205
INV 0 0.5680 0.1981 0.1123
43
Table 3: Hypothesis Result

Variables B Sig.
C 0.416 0.016
IO 0.059 0.086*
IND 0.036 0.645
AC 0.015 0.652
ROA -0.298 0.000*
SIZE -0.008 0.183
INV -0.021 0.772
IO = Institutional Ownership, IND = Independent Commissioner, AC = Audit Committee, ROA = Profitability, INV = Inventory
Intensity
*Significant at 1%, 5%, 10%
From descriptive statistic it show that in Indonesia tax rate effective is 27%, while tax rate according to
tax rules was 25%, its means that company pay more tax to government and it’s a good news for government
because the companies pay more tax to government. Board in Indonesia 40% are independent, which more than
the regulation about 30% from its member.
From the hypothesis result, it shows that institutional ownership has a positive effect on tax avoidance.
This result show that institutional ownership can reduce management to do tax avoidance. This is because the
higher the level of ownership institutional in the company, it will be higher the amount of the mandatory tax
burden paid by the company. This is because the stronger the control by the external parties to prevent the potential
for tax avoidance. While the profitability has an negative effect on tax avoidance. Companies that have a high
profitability show that the company is doing tax avoidance because in order to maximize the profit it earns and
minimize the tax burden it owes.
This research give contributed to:
1. Company
This research can be input and encouragement that how important the corporate governance related to tax
avoidance activities in carrying out the company's operational activities, so as to prevent the company from
falling into a circle of ambiguity.
2. Investors
Provide input to investors in assessing and evaluating as well as being considered in a company when making
investment in the company.
44
Track: Accounting
Paper ID: 078-073
REVISITING CORPORATE OWNERSHIP AND EARNINGS QUALITY LINKAGE: A QUANTILE

REGRESSION APPROACH
Saleh Abd Alhadi1, Rosmila Senik2, Jalila Johari2, Hairul Suhaimi Nahar3, and Ridzwana Mohd Said2
Department of Accounting, Faculty of Economics, Omar Al-Mukhtar University, Libya1, School of Business
and Economics, Universiti Putra Malaysia, Malaysia2, Department of Accounting, College of Economics and
Political Science, Sultan Qaboos University, Sultanate of Oman 3.
1.0 Introduction
Earnings quality (EQ) has become a prominent research focus due to earnings management practices that led to
the collapse of several renowned corporations worldwide. As EQ is associated directly with both internal and
external governance mechanisms1, ownership structure being part of the former effectively has a vital role in
monitoring management behaviors and reducing agency costs. Prior studies examining the relationship between
ownership structure and EQ generally focused on accrual-based earnings management (AEM) alone (e.g.,2,3) but
managers practically prefer real earnings management (REM) compared to AEM activities 4. Firms may use REM
methods in order to meet certain financial reporting benchmarks to avoid reporting annual losses 5. This term can
be defined as “Management actions that deviate from normal business practices, undertaken with the primary
objective of meeting certain earnings thresholds” (6, p.336). The limited availability of prior research examining
the nexus between REM and different ownership attributes primarily creates an apparent lacuna in the empirical
literature, thereby signifying the imperative of this study. Accordingly, different corporate ownership attributes
of family and institution and its connection to REM are examined in this study, capitalizing on its interesting
experimental setting for the investigation of REM practices among corporations in Malaysia.
2.0 Method
The corporate ownership and REM linkage is examined based on a final sample of 2090 firm-year observations
among Malaysian listed companies during 2007–2016 after excluding financial firms and firms with incomplete
financial data. Given the available competing theoretical explanations in the literature predicting both family and
institution influence over firm’s REM practices, the following hypotheses are proposed:
H1: Family ownership and REM practices are systematically related

H2: Institutional ownership and REM practices are systematically related
This study calculated the average levels of REM measures based on prior literature7, covering production
costs (PROD: the summation of the cost of sales and the change in inventories for the pre and current periods),
cash flows from operating activities (CFO: obtained from the statement of cash flows), and discretionary expenses
(DISX: the total of selling, general, and administrative expenses for the current period).
The REM metrics are calculated by first, estimating the following models:
PRODit /TSit-1 = β0+ β1 (1/TSit-1) + β2 (Sit /TSit-1) + β3 (∆Sit /TSit-1) + β4 (∆Sit-1 /TSit-1) + μit (1)
CFOit /TSit-1 = β0 + β1 (1/TSit-1) + β2 (Sit /TSit-1) + β3 (∆Sit /TSit-1) + μit (2)
DISXit /TSit-1 = β0+ β1 (1/TSit-1) + β2 (Sit-1 /TSit-1) + μit (3)
Second, the coefficients estimated from equations 1, 2 and 3 are used to calculate the normal levels of
(PRODit, CFOit, and DISXit) for the sample. Third, the “abnormal” measurement for all three elements of
production costs (APROD), cash flows from operations (ACFO), and discretionary expenditures (ADISX) are
calculated to obtain total real manipulations, representing the difference between the actual and estimated values.
1
Houqe, M. N., van Zijl, T., Dunstan, K., and Karim, A. W. 2012. The effect of IFRS adoption and investor protection on earnings quality
around the world. The International journal of accounting, 47(3):333-355.
2
Ferramosca, S. and Allegrini, M. 2018. The complex role of family involvement in earnings management. Journal of Family Business
Strategy, 9(2):128-141.
3
Bao, S. R. and Lewellyn, K. B. 2017. Ownership structure and earnings management in emerging markets—An institutionalized agency
perspective. International Business Review, 26(5):828-838.
4
Graham, J. R., Harvey, C. R., and Rajgopal, S. 2005. The economic implications of corporate financial reporting. Journal of Accounting and
Economics. 40:3–73.
5
Roychowdhury, S. 2006. Earnings management through real activities manipulation. Journal of Accounting and Economics. 42(3):335–370.
6
Ibid
7
Ibid
45
Following previous literature8, an aggregate proxy of REM was created by summing the REM indicators to obtain
the total effects. A higher REM level refers to a higher level of such a breach REM = (–ACFO) + APROD + (–
ADISX) (4).
2.1 Model Specification

The quantile regression approach is used to test the ownership structure and REM relationship. The following
regression model was employed:
REMqit = βq0 + βq1REMit-1 + βq2FAMOWit + βq3 ISNTMOWit + βq4LnSIZEit + βq5GRWTHit + βq6LEVqit

+ β7ROAit + βq8BIG4it + εqit (5)
where subscripts i and t denote firm and year at specific quantile (q) and ε qit represents the composite error term.
Prior studies suggest that the status of auditor (Big4 or otherwise), firm size (LnSIZE), growth (GRWTH),
financial leverage (LEV), and profitability (ROA) influence earnings management levels 9. They are considered
as control variables. Initially, the regression model using OLS was used to find the average relationship between
explanatory variables and REM. Then dynamic quantile regression is used under various quantiles to identify the
heterogeneous relationship between variables and compare with the OLS estimates.
3.0 Results and Discussions

Table 1 shows empirical estimations based on 0.10, 0.25, 0.50, 0.75, and 0.90 quantiles, along with the OLS
estimation. Two quantiles below the median and two quantiles above the median were chosen in order to have a
distributed sample which captures several sizes10.
Table 1: OLS and Quantiles Regression of REM Determinants

OLS Quantiles
10 25 50 75 90
LagREM 0.39 (0.02) *** 0.48 (0.01)*** 0.59 (0.03)*** 0.69(0.01)*** 0.69(0.02)*** 0.74(0.00)***
FAMOW 0.56(0.03) * 0.06 (0.04) -0.03 (0.03) 0.06(0.01)***+ -0.03(0.01)**+ -0.02(0.00)***+
INSTOW 0.03 (0.01) ** 0.03 (0.01)*** 0.01 (0.01) 0.02(0.00)*** 0.02(0.00)*** 0.06(0.00)***
LnSIZE 0.01 (0.01) 0.02 (0.01)*** 0.04 (0.01)*** 0.01(0.00)*** -0.00(0.00) -0.02(0.00)***
GRWTH 0.03 (0.01)*** -0.05 (0.01)*** -0.01 (0.01) 0.04(0.00)*** 0.06(0.00)*** 0.11(0.00)***
LEVE 0.00 (0.00)*** 0.00 (0.00)*** 0.00 (0.00)*** 0.00(0.00)*** 0.00(0.00)*** 0.00(0.00)***
ROA -0.44 (0.01)*** -0.25 (0.01)*** -0.25(0.01)*** -0.26(0.00)*** -0.24(0.00)*** -0.27(0.00)***
BIG4 0.00 (0.01) 0.02 (0.01)* -0.01 (0.00) 0.00(0.00) 0.00(0.00)*** -0.03(0.00)***
R-squared 0.75
Note: Figures reported in the Table are variables' coefficients, where those in brackets are standard errors; *, **, and *** refer to
significance at 10%, 5% and 1%, respectively.
The quantile regression results reveal the following. First, the impact of ownership structure on REM
does not coincide with that of OLS, justifying the use of quantile regression. Second, family ownership (FAMOW)
is considered an influential factor in reducing REM through time. Such effects were not homogenous across
different quantiles whereby higher REM quantiles (i.e., 75% and 90%) would result in family ownership being an
effective governance instrument at reducing REM compared to lower ones. However, institutional ownership
(ISNTMOW) is found to be positively related to REM practices among different points of REMs' conditional
distribution. Several reasons are proposed. First, institutional owners in Malaysia are noticeably having short-run
investment view which affects the monitoring ability and discourage them to improve firm’s governance practices
particularly ensuring quality earnings report. Second, although having voting share, they do not practice and
control the business which is against the concentrated ownership definition of MFRS–10. The results generally
highlight the significance of other governance mechanisms such as accounting standards in controlling REM
practices as prior studies had also shown dynamic roles of institutional investors (e.g., myopic or long-term view11)
at monitoring managerial behavior towards ensuring earnings quality.

This research adds to the growing body of literature examining the linkages between corporate ownership structure
of family and institutions with that of REM practices in the Malaysian context. Departing from the common
8
Razzaque, R. M. R., Ali, M. J., and Mather, P. R. 2016. Real earnings management in family firms: Evidence from an emerging economy.
Pacific Basin Finance Journal, 40:237–250.
9
Doukakis, L. C. 2014. The effect of mandatory IFRS adoption on real and accrual-based earnings management activities. Journal of
Accounting and Public Policy, 33(6):551–572.
10
Razzaque, R. M. R., Ali, M. J., and Mather, P. R. 2016. Real earnings management in family firms: Evidence from an emerging economy.
Pacific Basin Finance Journal, 40:237–250.
11
Lemma, T. T., Negash, M., Mlilo, M., and Lulseged, A. 2018. Institutional ownership, product market competition, and earnings
management: Some evidence from international data. Journal of Business Research, 90:151-163.
46
method of empirical examination using AEM and utilizing the OLS approach, this study provided a different view
of ownership implications over firm’s EQ by using the REM and quantile regression approach, something which
prior literature seems to neglect. The results support the existing theoretical proposition explaining the role of
family and institution at influencing firm’s EQ whilst practically informing various stakeholders of the strategic
(albeit dynamic) roles of different corporate ownership attributes at monitoring managerial behavior towards
ensuring earnings quality in Malaysia.
47
Track: Accounting
Paper ID: 079-070
A REVIEW OF GLC PERFORMANCE: MULTI-THEORY PERSPECTIVES
Ervina Alfan1, Azlina Abdul Jalil1, and Elaine Yen Nee Oon1
Department of Accounting, Faculty of Business & Economics, University of Malaya, Malaysia1.
1.0 Introduction
The performance of State-Owned Enterprises (SOEs) has been subjected to a wide range of interests and debates
around the globe. SOEs are of particular interest because they are established with the purpose of meeting socio-
economic objectives of the government such as ensuring equal distribution and access of supplies to the public
and, free from any manipulative influences of monopolistic or oligopolistic powers. SOEs are also operated in
accordance with the private business entity model, making the enterprises “unique” due to the different objectives
and motivation of its establishment, coupled with the operating mechanisms being put in place so that the
enterprises are expected to generate some “income” to the owners who are mainly the government investment
entities. In Malaysia, SOEs are more commonly known as the “government-linked companies” or the GLCs.
Ever since the New Economic Policy (NEP) was introduced by the government in the 1970s in an attempt to
eradicate the socio-economic disparities that prevailed between the major ethnicities in Malaysia, SOEs played a
significant role in shaping the economic development and landscape in the country. Following the recession in
the mid-1980s, a large number of the SOEs were later privatized and turned into GLCs, a strategy to relieve the
government from the financial burden. However, this strategy was not effective as a number of the GLCs were
non-performing, laden with debt and were inefficient. In an attempt to revamp the administration and the
management of the GLCs, the government introduced the GLC transformation initiative in 2005 with the main
intention of enhancing the competitiveness of the GLCs as well as improving their respective financial
performance. Against this backdrop, this study aims to ascertain whether GLCs with large amount of debt are
more inclined to suffer from poor financial performance as propositioned by the Public Choice Theory, and
whether the corporate governance mechanisms as well as the board diversity championed by the Agency Theory
and Human Capital Theory are able to moderate and water down the impact of debt on the GLCs financial
performance.
2.0 Methods
We use a panel dataset consisting of the largest 20 GLCs listed in Bursa Malaysia, observed over a period of 15
years (2005 to 2019). We also test whether debt is a significant predictor of the GLCs financial performance and
whether the corporate governance mechanisms and board diversity can effectively moderate the impact of high
debts on the GLCs financial performance.
Our results show that leverage does not matter in GLCs’ financial performance (H1 is not supported). However,
in the presence of CEO duality, the negative impact of leverage on performance becomes stronger (H2a is
supported), while board independence and racial diversity weaken the negative impact of leverage on performance
(H2c and H2e is supported). Although the findings of our study can partially be explained by human capital theory,
our results indicate that not all corporate governance mechanisms espoused by Agency Theory can mitigate
governance issues in GLCs.
Keywords: financial performance, governance, state-owned enterprises
State-owned Enterprises (SOEs) are entities or businesses that are owned by the state, which generally serve as a
backbone in a nation’s economy (Hafsi, Kiggundu, & Jorgensen, 1987). The significance of SOEs are prevalent
in many countries around the globe, as it is estimated that the SOEs account for approximately 10% of the nation’s
gross domestic products. The impetus of SOEs’ importance to their respective countries is generally centred
around the setting of objectives for the entities that are inclined towards meeting the needs of the societal
communities’ overall and economic well-being. Thus, the SOEs are generally faced with challenges that are
apparently unique in comparison to the for-profit organizations.
The characteristics of the SOEs that are based on these prevalent objectives that are rather divergent from
business organizations render the entities to be sub-optimal in its operations and this correspondingly burden the
government who are compelled to oversee the financial aspects of the entities, especially in the instances when
the SOEs are faced with financial ailments. The circumstance becomes even more perturbing in the event of
economic slowdown, where much of the government’s resources are tied up in providing financial assistance to
48
the SOEs. Hence, to curb further outflow of resources, alongside the intention of improving the performance of
the SOEs which are laden with criticisms of suboptimal performance, many countries had taken the steps to
privatize the SOEs in an attempt to transform the SOEs into “business entities”. However, due to the importance
of the SOEs to the respective countries’ strategic economic development, many of the nationalized entities, which
were previously established as SOEs, retained the government’s ownership and “control” even though the SOEs
were privatized. The government’s ownership and “control” of the privatized SOEs is apparent through the
investment of the government’s investment arms in the companies, in addition or sometimes alongside with the
rights granted exclusively to the government to appoint or remove the board of directors in the companies.
Meanwhile, the “transformed” SOEs into entities that are privately owned whilst at the same time subjected under
the “control” of the government reflect a different view of the “management” and “control” perspectives. Hence,
these entities are also known as “hybrid” organizations (Bruton, Peng, Ahlstrom, Stan, & Xu, 2015). Whilst
privatized SOEs is an approach that are widely practiced around the globe, the connotation of privatized SOEs is
more commonly referred to as the Government-Linked Companies or the GLCs in Malaysia and Singapore. In
this regard, it is apparent that the definition of “GLCs” corresponds to the view of a “hybrid” organization model.
The emergence of the GLCs as a “transformed” SOEs give rise to entities that are driven based on a
business model, which are bound to provide return to their investors and fulfil the needs of other stakeholders yet
at the same time, being “government-linked” they are very much tied up in terms of fulfilling the socio-economic
objectives and the economic policies or directions as set by the government. In this regard, there are numerous
discussions in the academic arena that focus on the performance of these companies, especially as the business
model of the GLCs are very much modelled on profit-making objectives intended for the for-profit organizations
whilst at the same time bound by the specific objectives outlined by the government in meeting the respective
socio-economic agenda, for example, ensuring the provision of employment to the communities at large, and the
requirements to support certain economic sectors in the country. Bound by the requirement to fulfil the country’s
economic objectives, many privatized SOEs worldwide are suffering with ailing financial performance whilst at
the same time laden with debt, which further restrict its abilities to perform and excel as a business entity. High
leverage of the SOEs would consequently lead the privatized SOEs to suffer an even more pronounced poor
financial performance. Hence, despite the initial action undertaken by the government to improve the performance
of SOEs through privatization initiatives, the privatized SOEs are still performing at a suboptimal level in
comparison to the entities established as “purely” private business entities. Nevertheless, as with the other
“purely” private business entities that are subjected to the monitoring and scrutiny of corporate governance
regulations, it is argued that the corporate governance mechanisms which are also expected to be exercised and
implemented in the privatized SOEs would have significant impact in moderating the relationship between the
level of leverage and the entities’ financial performance. The panacea to address the inefficiencies of the SOEs
is aimed towards restructuring the structure and administrative functions of the SOEs, although a review of
literature shows that despite the restructuring of SOEs and the implementation of corporate mechanisms, the
studies thus far reveal inconclusive evidence and mixed results. Armed with this underlying premise, this research
is directed with two research objectives. First, to ascertain whether leverage has an impact on the financial
performance of the GLCs and second, whether corporate governance mechanisms moderates the relationship
between the leverage and financial performance.
Acknowledgement
The authors are grateful to UMRG for the grant; GPF008I-2019 awarded for this project.
49
Track: Accounting
Paper ID: 087-083
MANAGEMENT ACCOUNTING PRACTICES AND THE FINANCIAL PERFORMANCE OF

MALAYSIAN HOTELS
Salumah Nain1, Rasid Mail2, and Nelson Lajuni2
SIDMA College, Sabah, Malaysia1, Faculty of Business, Economics & Accountancy, Universiti Malaysia
Sabah, Malaysia2.
1.0 Introduction
This research is about the MAP among the players in the Malaysian hotel industry where the role of management
accounting practices and hotel performance are examined. Hospitality, in general, is termed as the guest-host
relationship. It is the job or practice of being accommodative. As competition between the hotel industries
intensifies due to the influx of new hotels in Malaysia, the players are under pressure to optimize their resources,
lower the room rate, and satisfy and retain customers while maximizing profit (Mathews, 2008). Simultaneously,
managers are forced to innovate in many operational aspects, particularly in financial and cost management where
they need to make decisions on product and price, cost determination and control, measuring customer
satisfaction, and maximizing financial growth.
Unexpectedly, the COVID-19 pandemic has created a new business landscape for the industry, with
viability now becoming the top priority for hoteliers. Due to the pandemic outbreak, Visit Malaysia 2020 has been
cancelled, and all tourists and foreign visitors are prohibited from entering Malaysia. As a result, the sector is
forecasting a revenue loss of RM6.36 billion, with an average of 25% occupancy rate by the end of the year 2020
(The Edge Malaysia 22th June 2020). To survive in the new business environment, hotel operators need to
redesign their long term impact activities (Ivanov, 2020).
In such a competitive atmosphere, managing businesses necessitates a strong managerial style. It
examines the business process from both a philosophical and technical standpoint. The advancement of
technology and information accelerates the process even more. Those in the hospitality industry are affected as
well. Many traditional approaches and concepts in the hotel industry, for example, have been supplanted by
technologically-based platforms.
Owners are obliged to embrace advanced technology in their operations, from everyday routine
operations like cleaning and programme planning to far more complicated operations like marketing, booking and
payment, costing, and risk management. This is to handle a variety of competitive factors, including cost
leadership, changing client demographics, and more stringent rules and regulations, to name a few.
In such an atmosphere, management accounting (MA) is one of the operational components that receives
increased attention. MA has always been associated with the physical environment of corporate activities, which
includes physical and tangible cost items like inventories, consumables, and so on. The managerial potential of
MA has become more tempting in-service industries like as hotel management, where intangible operational
components such as overhead and labour are more common. Management accounting is concerned with giving
information to managers at various levels of an organisation in order to help them make better decisions and
improve operational efficiency and effectiveness1.
More doubts about the hotel industry's use of management accounting standards have recently been
raised (MAPs). Practitioners and scholars are interested in the characteristics of MAPs used by hoteliers, as well
as their origins and adoption rates. As one of the areas where these sorts of studies have been rarely reported is in
the hospitality industry (Kim et al., 2017; McManus, 2013; Mia & Patiar, 2001; Pellinen, 2003). Ironically,
research on management accounting in the hospitality industry is still relatively scarce compared to research in
the manufacturing sector. In a more specific manner, Pellinen (2003), and Sevim and Korkmaz (2015) advocated
that information on management accounting practices in tourism enterprises, especially in hotels, is limited.
Therefore, the current issue is also seen in Malaysia, as a limited number of studies have been reported
on the Malaysian hospitality industry concerning management accounting, particularly in management accounting
practices.

A growing body of literature considers the advancement of MA as a response to the failure of traditional
management accounting practices. But they claimed that the failure was not due to the forceful environmental
factors or weakness in the technique, rather it is due to the failure of the practitioner to utilize the management
accounting tools appropriately (Nandan, 2010).
1
Drury, C. 2015. Management and cost accounting. 9th Edition. Cengage Learning EMEA.
50
Generally, companies tend to apply management accounting techniques to improve their performance
(Chenhall et al., 1998; Rigby, 2001; Hussain and Hoque, 2002; Abdel‐Maksoud, 2004). The more recent
management accounting tools such as Activity Based Costing, Target Costing, Value Chain Analysis and
Benchmarking have affected the whole process of management accounting (planning, controlling, decision
making, and performance evaluation) and have shifted its focus from a simple and too naïve role of cost
determination and financial control to a sophisticated role of creating value through improved deployment of
resources (Haldma and Laats, 2000; Kaplan, Atkinson, Waterhouse and Wells, 1997; and Otley, 1995).
Nevertheless, in the Malaysian context, Bontis, Keow, and Richardson (2000), Naser, Karbahari and
Mokthar (2004), Samat, Ramayah, and Mat Saad (2006) and Kok Wei and Nair (2006) revealed that the fast
growth of the Malaysian economy along with globalization has encouraged Malaysian companies to adopt MAPs,
for instance, Benchmarking as a means to respond to the global competition.
Besides, several researchers from previous studies agreed that the contingency theory supported the
determinants that make a company to adopt management accounting practices. For instance, Pham, Dao and Bui
(2020); Sáez Torrecilla, Fernández-Fernández, Texeira Quiros and Vaquera Mosquero (1996); Downie (1997);
Shields (1998); Williams and Seaman (2001); and Drury and Tayles (2006) suggested that management
accounting practices varies between sectors and argued that cost structure, product life cycle, company size,
advancement in production technology, and competition intensity are the reasons for diversity.
Furthermore, there are many issues that deserve research attention in the hospitality industry related to
cost and management accounting practices (Pellinen, 2003; Dittman, Hesford & Potter, 2008; Nain, Mail, Lajuni
& Sondoh Jr, 2020) However, the costs of activities have yet to be analyzed in the hospitality industry even though
this method has been applied in other industries. In fact, since 1999, Potter and Schmidgall (1999) believed in
their study that only minor innovation has occurred in the cost and management accounting practices of the
hospitality industry, despite many problems that arise deserve research attention. The enormous changes in service
operations and information technology over the last twenty years have dramatically affected the environment of
hospitality business management accounting practices.
It has been argued that the management accounting practices directly enhance performance measurement
practices (Abdel-Maksoud, 2004; Cinquini & Tenucci, 2006; Chenhall & Smith, 1998; Hussain et al, 2002;
Mohammed Ayedh, 2015; Koller, 1994; Letts et al., 1999; Rigby. 2001). Alsoboa et al. (2015) reported that hotel
property financial performance was positively associated with strategic costing and strategic pricing. Recently,
Alvarez et. al., (2021) highlight a positive and statistically significant relationship between most management
accounting tools and the hotel business’s performance. Therefore, due to the growing development in the
economy, this is worth investigating further for the benefit of the hotel industry to compete effectively in this
changing environment. Thus, management accounting practices have evolved to respond to the complexity of the
organization’s environment.
3.0 Hypotheses Development
3.1 Intensity Market Competition

The reality of the company facing fierce market competition leads hoteliers to management accounting practices
(Kim et. al., 2017; Mia & Patiar, 2001; Tayles & Walley, 1997). These findings imply that when the enterprise
faces intense competition, the stronger the urgency to use management accounting practices.
H1: The more the intensity market competition, the more the use of management accounting practices
3.2 Technology
A study by Buhalis and Law (2008) mentioned that information and communication technologies have
substantially affected the hospitality and tourism industry since their emergence in the early 90s. This indicates
that hotels acknowledged the importance of technology for an organization's efficiency (Ahmad & Scott, 2018)
and viable technologies to reduce cost in particular labour costs (Ahmad & Scott, 2018; Shani & Tesone, 2010;).
H2: The more advanced in technology, the more the use of management accounting practices
3.3 Hotel Size

Size is a factor that affects the use of management accounting practices in a business. Liu, Forgione and Younis
(2012) mentioned that larger the organization tends to have a higher fixed cost, lower variable cost, total revenue,
and total assets return. Hence, this demonstrates that hotel size is a variable that affects the use of management
accounting practices in a business.
H3: The larger the hotel size, the more the use of management accounting practices.
3.4 Hotel Financial Performance

Liu et al., (2012) reported that the cost structure is significantly associated with firm’s performance. Alvarez et
al., (2021) reveals a positive and significant relationship between management accounting practices and hotel’s
51
ROI. Pavlatos (2015) concluded a significant impact between advanced management accounting and hotel
financial performance.
H4: Management accounting practices influence the hotel financial performance.
4.0 Methods
To ensure that the sample characteristics matched the study's nature, a non-probability purposive sampling
technique was used to ensure that the data collected came from verified sources. In the reality, it is unlikely to
increase the likelihood of selecting cases that stand for the complete population. Most of the social scientists’
research depends greatly on non-probability samples as researchers often do not sustain a clean perspective of the
population to which they are seeking to infer or generalize (Rowley, 2014: Sarstedt et al., 2017).
The questionnaire was used to elicit pertinent information from respondents in this study. Respondents
were asked to indicate their level of disagreement with a series of statements using the scaling technique. To
differentiate between levels of agreement and disagreement, a 5-point Likert scale was used. The study's target
population is all hotels listed with Malaysia's Ministry of Tourism, Arts, and Culture (hereafter MOTAC),
regardless of star rating. Due to the critical nature of ensuring that the samples adequately represent the intended
target population to which the hypothesis testing results are generalised, the MOTAC directory was used as a
sampling frame2.
G*Power 3.0 analysis was used to determine the sample size3. G-Power Analysis software was used to
calculate the effect size of f square 0.15, the error pro-0.05, and the power Gf 0.95 for three tested predictors. A
minimum sample size of 119 respondents was required for this study. A mail and field survey were used to collect
data. 384 questionnaires were distributed, but only 217 hotels responded within six months, representing a 56.5
percent response rate. However, 17 of the 217 returned questionnaires were rejected as incomplete, leaving 200
questionnaires suitable for analysis (52 percent response rate). Multiple items were used to examine the variables 4,
and the data were then analysed using SmartPLS 3.05 to determine the validity of the hypotheses.
4.1 Framework
The theoretical framework shown below was developed based on the discussed literature reviews and adopted
from the previous study conducted by Ahmad, (2012), El-Shishini (2017), and Abu-Gyamfi (2020). The research
framework is shown in Figure 1, followed by four hypotheses of the study.
Figure 1: Research Framework

H 1: IMC positively influences MAPs.
H 2: TECH positively influences MAPs.
H 3: HS positively influences MAPs.
H 4: MAPs positively influence HFP.
IMC
TECH MAPs HFP
HS
2
Merchant, K. A. and Van der Stede, W. A. 2007. Management control systems: performance measurement, evaluation and incentives. Pearson
Education.
3
Faul, F., Erdfelder, E., Lang, A. G. and Buchner, A. 2007. G* Power 3: A flexible statistical power analysis program for the social, behavioral,
and biomedical sciences. Behavior research methods, 39(2):175-191.
4
Hayduk, L. A. and Littvay, L. 2012. Should researchers use single indicators, best indicators, or multiple indicators in structural equation
models? BMC Medical Research Methodology, 12(1):1-17.
5
Ringle, C. M., Wende, S., and Becker, J.-M. 2015. SmartPLS 3. Boenningstedt: SmartPLS GmbH, http://www.smartpls.com.
52
To test the study's hypotheses, a 5000-bootstrap resampling of data was conducted6. Table 1 illustrates the path
coefficient assessment, which is denoted by Beta values for each path relationship. Direct effects indicate that
intensity market competition (IMC) and technology (TECH) had a positive effect on MAP adoption. On the
contrary, it was demonstrated that hotel size had no effect on the adoption of MAPs.
Table 1: Path Coefficients Assessment
Additionally, Table 2 indicates the model's quality. It was demonstrated that MAPs have a significant
effect size f2 on the hotel's financial performance (H4). Interestingly, it was discovered that H1 and H2 have a
moderate effect of size f2 on management accounting practices7. On the other hand, the effect size of hotel size
on MAPs shown in H3 was considered to be small compared to other constructs. The coefficient of determination,
R2, indicates a significant effect of intensity market competition (IMC) and technology (TECH) on management
accounting practices8. Besides, the multicollinearity of indicators is evaluated. All indicators for variables satisfy
the VIF values and are consistently less than the 5.09 and 3.39 threshold values10. As a result, collinearity does not
reach critical levels in any of the variables and thus does not pose a problem when estimating the PLS path model.
All exogenous (independent) variables had predictive relevance values greater than 0, indicating that the
independent variables could accurately predict the hotel's financial performance, as demonstrated by Q 2 using the
blindfolding procedure7.
Table 2: Model Quality Assessment
5.0 Conclusion
This study highlighted the roles of management accounting practices (MAPs) and proven to have a significant
effect on the hotel’s financial performance. The analysis involved survey data of 200 hotels in Malaysia which
revealed that the adoption of management accounting practices is highly satisfactory towards hotel financial
performance.
The current study adds to existing knowledge, particularly regarding cost and management accounting
practises in Malaysia's hotel industry. Future research should focus on more specific antecedent contingency
factors for MAPs, particularly the hotel industry's booking and payment systems, as well as how MAPs affect the
hotel's non-financial performance, such as operational. In light of the findings and discussions, it is also necessary
to expand the investigation by performing multi-group analysis to ascertain the differences in effects between
groups, such as hotel type or hotel size.
Economic factors and disruptors such as Airbnb will continue to have an impact on the hotel industry. In
2015 and 2016, Morgan Stanley reported a significant increase in the number of travellers who used Airbnb. The
figure is expected to increase in the future as competitors become more creative and innovative in their efforts to
attract new and existing travellers.
Hotel owners may have no influence over political developments or current market conditions. However,
hotels can mitigate their risk by diversifying geographically. Profits could compensate for losses in one region by
6
Hair, J. F., Hult, G. T. M., Ringle, C. M., Sarstedt, M., and Thiele, K. O. 2017. Mirror, mirror on the wall: A comparative evaluation of
composite-based structural equation modeling methods. Journal of the Academy of Marketing Science, 45:616-632.
7
Cohen, J. 1988. Statistical power analysis for the behavioral sciences, 2nd ed. Hillsdale, NJ: Erlbaum.
8
Chin, W. W. 1998. Issues and opinion on structural equation modeling. MIS Quarterly, March, vii-xvi.
9
Hair, J. F., Hult, G. T. M., Ringle, C. M., and Sarstedt, M. 2014. A Primer on partial least squares structural equation modeling (PLS-SEM).
Thousand Oaks, California: Sage Publications.
10
Diamantopoulos, A. and Siguaw, J. A. 2006. Formative versus reflective indicators in organizational measure development: A comparison
and empirical illustration. British Journal of Management, 17(4):263-282.
53
compensating for losses in other regions. Maintaining a sufficient liquid capital reserve, for example, may provide
some protection against future business risks triggered by unfavourable economic or political conditions.
54
Track: Accounting
Paper ID: 094-093
MEASURING QUALITATIVE CHARACTERISTICS OF INTERNET FINANCIAL REPORTING:

EVIDENCE FROM MALAYSIA
Mathew Kevin Bosi1, Mohd Noor Azli bin Ali Khan2, Nelson Lajuni3, and Melissa Della Joy4
Faculty of Business, Economics & Accountancy, Universiti Malaysia Sabah, Malaysia1,3, Azman Hashim
International Business School, Universiti Teknologi Malaysia, Malaysia 2, Malaysian Institute of Accountants,
Malaysia4.
1.0 Introduction
The 21st century has witnessed significant changes in the setting of the global business landscape engendered by
technological advancements such as data analytics, the Internet of things (IoT), artificial intelligence (A.I.) and
blockchain technology1. The phenomenon also impacted the content and how internet financial reporting (IFR)
should be communicated to key stakeholders, notably the shareholders, for better execution of economic decision-
making2,3. Nevertheless, the absence of robust regulations and specific accounting requirements that are governing
the practice of IFR could dampen the IFR quality (IFRQ), thereby inhibiting investors from obtaining the
usefulness of information that is vital for their economic judgment 4,5. In a similar vein, streams of literature
implicating numerous factors affecting IFRQ. For example, Botti et al.4 and Keliwon et al.6 collectively argue that
the unregulated regime which specifically prescribes IFR disclosure has given wide arbitrary to management to
manipulate the disclosure IFR in such a way that they only report favourable news while omitting the negative
ones to lure more investors. Meanwhile, Efimova and Rozhnova 7 study indicate that the lack of specific
accounting standards on corporate online reporting has caused varying levels of non-financial information across
reporting entities. This points to another study conducted by Kamalluarifin 8, revealing that Malaysian listed
companies are lagging in updating investor relations information on corporate websites, partly due to the lack of
rigorous regulations dealing with IFR disclosure.
Nevertheless, the lack of a reliable measuring instrument that can assess the usefulness of information,
which is correlated to the qualitative characteristics of financial reporting, further compounded the difficulty to
measure the substance of information used for investment purposes. A stream of prior studies exhibits that index-
based measurement mechanisms using indirect proxies such as financial ratios, financial statement restatements,
earnings management etc., have been widely employed to assess IFRQ. Accordingly, the measurements are
restricted to the qualitative characteristics to be directly measured, and they place more emphasis on the existence
of items disclosed in the annual reports rather than the usefulness of information, which is paramount in
investment decision-making9,10,7. Furthermore, according to Hanafi et al. 11, index-based measuring instruments
also focus more on financial information than non-financial information, which does not accord with International
Financial Reporting Standards (IFRS) requirements. The study also implies that most of the measuring
instruments used fail to factor in the importance of technological features, which are also essential in improving
the quality of information published on corporate websites. The above discussions indicate the importance of
1
Tiberius, V. and Hirth, S. 2019. Impacts of digitization on auditing: A Delphi study for Germany. Journal of International Accounting,
Auditing and Taxation, 37:100288
2
Serban, I. V., Sankar, C., Germain, M., Zhang, S., Lin, Z., Subramanian, S., Kim, T., Pieper, M., Chandar, S., Ke, N. R. and Rajeshwar, S.
2017. A deep reinforcement learning chatbot. arXiv preprint arXiv:1709.02349.
3
Schaller, A. A., Vatananan-Thesenvitz, R., Pulsiri, N., and Schaller, A. M. 2019, August. The Rise of digital business models: An analysis
of the knowledge base. In 2019 Portland International Conference on Management of Engineering and Technology (PICMET) (1-13). IEEE.
4
Botti, L., Boubaker, S., Hamrouni, A., and Solonandrasana, B. 2014. Corporate governance efficiency and internet financial reporting quality.
Review of Accounting and Finance, 13(1):43-64.
5
Sia, C. J., Brahmana, R., and Memarista, G. 2018. Corporate internet reporting and firm performance: Evidence from Malaysia. Contemporary
Economics, 12(2):153-165.
6
Keliwon, K. B., Shukor, Z.A., and Hassan, M. S. 2018. Internet financial reporting (IFR) disclosure position and firm value. Asian Journal
of Accounting and Governance, 9:111-122.
7
Efimova, O. and Rozhnova, O. 2018, October. The corporate reporting development in the digital economy. In The 2018 International
Conference on Digital Science (71-80). Springer, Cham.
8
Kamalluarifin, W. F. S. W. 2016. The influence of corporate governance and firm characteristics on the timeliness of corporate internet
reporting by top 95 companies in Malaysia. Procedia Economics and Finance, 35:156-165.
9
Kelton, A. S. and Yang, Y. W. 2008. The impact of corporate governance on internet financial reporting. Journal of Accounting and Public
Policy, 27(1):62-87.
10
Mbobo, M. E. and Ekpo, N. B. 2016. Operationalising the qualitative characteristics of financial reporting. International Journal of Finance
and Accounting, 5(4):184-192.
11
Hanafi, S. R. B. M., Kasim, M. A. B., Ibrahim, M. K. B., and Hancock, D. R. 2009. Business reporting on the internet: Development of a
disclosure quality index. International Journal of Business & Economics, 8(1):55-79.
55
assessing IFRQ to ensure that the investor needs for obtaining the usefulness of information are accommodated,
subsequently preserving market efficiency12,10,13,14. As such, the objective of this study is to come up with a set of
assessed items via an adopt and adapt approach, which is mainly based on the prior literature of Braam and Beest
12
, Nel15 and Al-Dmour et al.13, thus allowing the qualitative characteristics to be operationalised in IFR. The
outcomes of this study contribute to the body of literature on IFR measurement and provide insights to reporting
entities, practitioners, policymakers, and key stakeholders about the development of frameworks and strategies
that take IFRQ to a greater height.
2.0 Methods
This study involves the adoption of the 34-constructed index items designed for operationalising the fundamentals
and enhancing qualitative characteristics of IFR, using a 5-point Likert scoring scale anchored from "very poor"
(1) to "excellence" (5), consistent with the studies by Braam and Van Beest 12 and Nel15 and the financial
framework issued by International Financial Reporting Standards (IFRS) 16. In this research context, the
dimensions were updated by the latest version of "The Revised Conceptual Framework for Financial Reporting",
issued by IFRS in 2018 and converged by Malaysian Accounting Standards Board (MASB) in the same year. A
pre-test process was also performed on measuring the instrument's validity and reliability before collecting the
actual data. This process entails expert review (e.g., researchers from higher institutions, both local and abroad,
selected based on their field of expertise relating to IFR and financial reporting) to obtain their feedback and
recommendations, which is vital in improving the measuring mechanism. This research also involves the adoption
of a set of criteria that will be used as a benchmark for measuring the IFRQ, deriving mainly from the studies of
Braam and Van Beest12, Nel15 and MASB14. An independent chartered accountant then vets the procedural scores
to justify the validity and reliability of the results. Non-probability purposive sampling was used to select 160
listed companies from the main market of Bursa Malaysia across 11 relevant industries encompassing the sectors
of construction, consumer products and services, energy, health care, industrial products and services, plantation,
property, technology, telecommunication and media, transportation and logistics and utilities. The banking and
financial sectors were excluded from the sample because a different regulatory framework governs them. The
extraction of data includes annual reports, and corporate governance is extracted from the websites of Bursa
Malaysia and Malaysian listed companies for the period of 2018. The year 2018 was chosen as corporations
deemed to have already released the most recent financial reports on their company websites in compliance with
the financial framework provided by MASB14. After the extraction of data had been completed, the data was
tabulated using an Excel. The annual reports and investor relations information of the individual sample
companies were compared against the benchmark which requires researchers to assign the scores to determine the
IFRQ. Nonetheless, Braam and Van Beest (2013) highlighted that the qualitative characteristics are difficult to
interpret and measure individually since the assessed items under individual attributes are distinct to each other
and are conceptually based in nature. As a result, they would be assessed on a per-item basis. The final step
requires researchers to calculate the mean and standard deviation of the scoring results, which is tabulated in Table
1.1.
Table 1.1 shows the descriptive analysis which was generated from the scoring method.
Table 1.1: Descriptive Analysis of Internet Financial Reporting Quality

Qualitative Characteristics Means score Standard Deviation
Relevance
R1 5.000 0.000
R2 3.869 0.719
R3 4.988 0.112
R4 3.894 0.650
R5 3.625 0.591
R6 3.781 0.750
R7 3.569 0.533
Faithful Representation
F1 5.000 0.000
F2 3.969 0.175
12
Braam, G. and Van Beest, F., 2013. Conceptually-based financial reporting quality assessment an empirical analysis on quality differences
between UK annual reports and US 10-K reports. Journal of Modern Accounting and Auditing, 9(10), pp.1281-1301.
13
Al-Dmour, R.H., Masa'deh, R.E. and Obeidat, B.Y., 2017. Factors influencing the adoption and implementation of HRIS applications: are
they similar? International Journal of Business Innovation and Research, 14(2), pp.139-167.
14
Malaysian Accounting Standards Board (2018). The Conceptual Framework for Financial Reporting. Retrieved from
http://www.masb.org.my/pdf.php?pdf=BV2018_revised_CONCEPTUAL%20FRAMEWORK.pdfandfile_path=pdf_file
15
Nel, G.F., 2016. Internet investor relations, information asymmetry and the cost of capital: Evidence from JSE listed companies (Doctoral
dissertation, Stellenbosch: Stellenbosch University).
16
IASB (2010). IFRS Practice Statement Management Commentary, International Accounting Standards Board: London, UK.
56
F3 3.556 0.558
Verifiability
V1 5.000 0.000
Understandability
U1 3.619 0.592
U2 3.644 0.565
U3 3.606 0.527
U4 3.525 0.593
U5 3.775 0.824
U6 3.513 0.572
U7 2.738 0.805
Comparability
C1 3.456 0.559
C2 3.575 0.544
C3 3.675 0.567
C4 5.000 0.000
C5 3.619 0.500
C6 2.938 0.814
Timeliness
T1 1.169 0.529
T2 3.531 1.513
T3 2.531 1.719
T4 2.244 1.524
T5 2.763 1.673
T6 2.750 1.641
T7 2.738 1.179
T8 2.169 1.497
T9 3.856 0.924
T10 2.825 0.805
Based on Table 2.3, specific attributes relating to the use of fair value (Relevance 1) and the annual report
clearly explaining the choice of accounting principles (Faithful representation 1), received the highest mean score
for fundamental qualitative characteristics based on the computed analysis of the above, both with a mean score
of 5.0. The attributes of financial reports that are presented annually (Relevance 3), the annual report providing
balanced information explaining yearly performance (Faithful representation 2), and no delays in the presentation
of financial reports, namely the auditor report (Relevance 4), were also highly rated with a mean score of 4.99,
3.99, and 3.89 respectively.
Meanwhile, in the category of enhancing qualitative characteristics, (Verifiability 1) registered the
highest mean score of 5.0, indicating that all organisations present valid evidence of information to support the
accounting judgement option. Similarly, (Comparability 4), which represents the outcomes of the current
accounting period compared to past accounting, also received the highest rating with a mean score of 5.0. The
presentation of graphs and tables (Understandability 5), the company's previous accounting period's figures
adjusted for change in policy or revision in accounting estimates (Comparability 3), and the notes to the balance
sheet and income statements are sufficiently clear (Understandability 2) were also highly rated, showing a mean
score of 3.78, 3.68, and 3.64, respectively. Nonetheless, among the overall criteria, timeliness has the lowest mean
score. This was attributed to the corporation providing the option to subscribe to future email notifications for
press releases, newsletters (Timeliness 8), and disclosure of the most recent stock price data (Timeliness 4), which
gives a mean score of 1.16, 2.16, and 2.24, respectively.
In summary, the data appears to suggest that most corporations have yet to fully comply with MASB's
"The Revised Conceptual Framework for Financial Reporting", except for the elements of Relevance 1, Faithful
representation 1, and Verifiability 1. The study also reveals that corporations are primarily underperformed in
terms of timeliness. These areas need to be improved, mainly when updating investor relations information on
corporate websites. The findings also appear to be consistent with deliberations made by previous scholars 17,9,18,
citing that IFR information is still voluntary, and no clear accounting regulations are addressing which types of
dimensions can be operationalised by IFR. The lack of IFR legislation also allows managers to engage in
opportunistic behaviour by utilising the flexibility to report as a means for them to strategies their IFR disclosure
in a way that benefits both the firm's reputation and their interests 19,20. In this respect, national regulatory bodies
such as the Security Commission, Bursa Malaysia, and Malaysia Institute of Accountants (MIA) are urged to
17
Khan, T. 2007. Internet financial reporting: Disclosure about companies on websites. Journal of Law and Governance, 2(2):37-46.
18
Khan, M. N. A. A. 2016. The practice of internet financial reporting in Malaysia: Users’ perceptions. In Regional Conference on Science,
Technology and Social Sciences (RCSTSS 2014) (687-699). Springer, Singapore.
19
Clark Williams, C. 2008. Toward a taxonomy of corporate reporting strategies. The Journal of Business Communication (1973), 45(3):232-
264.
20
Keliwon, K. B., Shukor, Z. A., and Hassan, M. S. 2018. Measuring internet financial reporting (IFR) disclosure strategy. Asian Journal of
Accounting and Governance, 8:7-24.
57
make a more collective effort to encourage Malaysian listed companies to increase their adoption of the revised
conceptual framework released by MASB14 to improve IFR18. To provide a more standard disclosure of IFR,
national regulators must work with global regulatory authorities, professional organisations, and major
multinational corporations17,7.

The outcomes of this study contribute to the body of literature on IFR measurement and provide insights to
reporting entities, practitioners, policymakers, and key stakeholders about the development of frameworks and
strategies that take IFRQ to a greater height. It also provides a measuring instrument that can measure the level
of compliance on qualitative characteristics of IFR, which is paramount in determining the usefulness of
information for investment decision-making purposes.
58
Track: Accounting
Paper ID: 111-111
THEORIES OF EARNINGS MANAGEMENT: A THEORETICAL REVIEW
Zuraina Sal Salbila Mohamed1,2, Mohamad Fairuz Md. Salleh3, Azlina Ahmad1, and Ruzita Abdul
Rahim1
Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia1, Faculty of Business,
Multimedia University, Melaka, Malaysia2, Graduate School of Business, Universiti Kebangsaan Malaysia,
Malaysia3.
1.0 Introduction
Earnings management is defined as the management reports of a firm’s economic performance that will either
mislead the stakeholders or influence contractual outcome. 1 Moreover, earnings management is a financial
reporting phenomenon that describes a management’s motive to either strategically increase or decrease reported
earnings.2
1.1 Problem Statement

Firm size is a factor that influences earnings management.3 However, firm size alone is not sufficient to explain
earnings management. Therefore, the status of relationship with political elements is suggested as one of the
factors that influences earnings management.45 For example, firms that appoint politicians as members of the
board.6 In addition, earnings management as a positivism research was grounded by theory(s), such as Agency
Theory and Resource Dependence Theory.7 However, lack of research on earnings management from the
perspective of Political Power Theory, which was widely discussed on tax management.
1.2 Objective of the study

1. To review prior literature on the theories of earnings management from different theoretical perspectives.
2. To propose Political Power Theory as the underlying theory of earnings management.
2.0 Methodology
The literature was searched through online databases, such as Scopus, Emerald, Google Scholar and Mendeley
web-based on keywords of “earnings management*” OR” earnings quality*” OR” discretionary
accrual*” AND “political cost” AND “political power”.
3.0 Theories of Earnings Management
3.1 Agency Theory

Agency Theory (AT) is one of the dominant theories for earnings management. Agency theory assumes that each
party, who is an agent or a principal is a utility maximizer. An agent will not always make decisions in the best
interest of the principal but may instead make decisions for their personal interest that could lead to agency
problems.8 Findings from the previous study that utilised agency theory concluded that there is a conflict of
interest between managers (agents) and shareholders (principals). 9
1
Healy, P. M. and Wahlen, J. M. 1999. A review of the earnings management literature and its implications for standard setting. Accounting
horizons, 13(4):365-383.
2
Beneish, M. D. 2001. Earnings management: A perspective. Managerial Finance, 27(12):3–17.
3
Mohamad, S., Abdurrahman, A. P., Keong, O. C., and Garrett, K. W. C. 2020. Corporate governance and earnings management: Evidence
from listed Malaysian firms. International Journal of Psychosocial Rehabilitation, 24(4):1744–1755.
4
Gross, C., Königsgruber, R., Pantzalis, C. and Perotti, P. 2016. The financial reporting consequences of proximity to political power. Journal
of Accounting and Public Policy, 35(6):609-634.
5
Attia, M. B. R., Lassoued, N. and Attia, A. 2016. Political costs and earnings management: Evidence from Tunisia. Journal of Accounting
in Emerging Economies, 6(4):388–407.
6
Sadiq, M., Mohamad, S. and Kwong, W. C. G. 2019. Do CEO incentives mediate the relationship between political influences and financial
reporting quality. International Journal of Asian Social Science, 9(3):276-284.
7
Deegan, C., 2014. Financial Accounting Theory, 4th edn, McGraw-Hill Education (Australia) Pty Ltd.
8
Jensen, M. C. and Meckling, W. H. 1976. Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of financial
economics, 3(4):305-360.
9
Al-Sayani, Y. M., Mohamad Nor, M. N., and Amran, N. A. (2020). The influence of audit committee characteristics on impression
management in chairman statement: Evidence from Malaysia. Cogent Business and Management, 7(1):1-19.
59
3.2 Positive Accounting Theory

Positive Accounting Theory (PAT) derives from the central assumption that each individual has self-interest and
is likely to behave opportunistically to maximise their own wealth. 10 PAT develops the three hypotheses related
consist with bonus plan hypothesis and debt-equity hypothesis with an income-increasing strategy, and the
political costs hypothesis with an income-decreasing strategy. Previous finding stated that the decision to adopt
IFRS is due to PAT perspective and an opportunistic behaviour that lead to earnings management.11
3.3 Resource-Based View Theory

Resource-Based View Theory (RBV) emphasises the concepts of firm resources, competitive advantage and
sustained competitive advantage. Internal resources are essential for a firm to organise processes and also achieve
a competitive advantage.12 Previous study had described that at the stage of introductory, generally, the firm uses
their resources for a competitive advantage.13
3.4 Resource Dependence Theory

Resource Dependence Theory (RDT), introduced by Pfeffer & Salancik, (1978), has implications for optimal
internal and external organizational strategy.14 There are three main concepts in the theory that consists of social
context, strategy for self-autonomy as well as self-interest and power.15 For example, a network relationship,
especially with political elements, affects a firm’s performance positively but has the opposite effect on earnings
quality.16
3.5 Political Power Theory: A Proposed Theory

Political Power Theory (PPT) states that larger firms are able to influence the political process in their favour to
a greater extent compared to smaller firms.17 In particular, large firms can use their resources and power to
negotiate their tax burden or influence legislation in their favour (for instance, through lobbying activities; reduce
taxable).18 In addition, larger firms with economic power have the incentives to collaborate with politics and have
greater resources to influence politics and processes that provide benefits to them or both parties.
4.0 Discussion
Reasoning to the proposed theory is explained in this section. Firstly, Tax management opens up opportunities for
earnings management and there is a strong correlation between tax management and earnings management.19
Secondly, there is a cross relationship between PPT and Political Costs Theory (PCOST) which opens room for
further research in the context of earnings management. Large firms, in perspective of PPT, have a negative
relationship with tax management while PCOST has a positive relationship with tax management. 20 Thirdly, the
consistency of RDT and PPT. The earlier theory explained the dependence of resources, while the later theory
explained “an open-door relationship” between a large firm and a political party (politician or ruling party).
5.0 Conclusion
Firms need to generate power and legitimacy through the political influence of those who control resources
(politics). This paper recommends an empirical study on the size of firms and politically-connected firms on
earnings management in perspective of Political Power Theory. The future study is expected to have a significant
finding on the capital market with highly politically-connected and low regulatory enforcement. The future study
10
Watts, R. L., Zimmerman, J. L., and Ross Watts, S. L. 1978. Towards a positive theory of the determination of accounting standards towards
a positive theory of the determination of accounting. The Accounting Review, 53(1):112–134.
11
Garrett, K. W. C., Mohamad, S., Shafie, R. Bin, and Sadiq, M. 2020. International financial reporting standards and earnings management:
Comparative study of pre-post full convergence of IFRS in Malaysia. Journal Of Critical Reviews, 7(2):85–89.
12
Barney, J. 1991. Firm resources and sustained competitive advantage. Journal of management, 17(1):99-120.
13
Hussain, A., Akbar, M., Kaleem Khan, M., Akbar, A., Panait, M. and Catalin Voica, M. 2020. When does earnings management matter?
Evidence across the corporate life cycle for non-financial Chinese listed companies. Journal of Risk and Financial Management, 13(12):1-
19.
14
Hillman, A. J., Withers, M. C., and Collins, B. J. 2009. Resource dependence theory: A review. Journal of Management, 35(6):1404–1427.
15
Davis, G. F., and Cobb, J. A. 2010. Resource dependence theory: Past and future. Research in the Sociology of Organizations, 28:21–42.
16
Abdul Wahab, E. A., Jamaludin, M. F., Agustia, D., and Harymawan, I. 2020. Director networks, political connections, and earnings quality
in Malaysia. Management and Organization Review, 16(3):687–724
17
Salamon, L. M. and Siegfried, J. J. 1977. Economic power and political influence: The impact of industry structure on public policy.
American Political Science Review, 71(3):1026-1043.
18
Mocanu, M., Constantin, S. B., and Răileanu, V. 2020. Determinants of tax avoidance–evidence on profit tax-paying companies in Romania.
Economic Research-Ekonomska Istrazivanja, 1–20.
19
Fikriyah, I. and Herlianshah, Y. 2019. Analysis of the effect of tax planning and leverage on earnings management with company size as a
moderating variable. EPRA International Journal of Research and Development, 4(6):28–40.
20
Belz, T., von Hagen, D. and Steffens, C. 2019. Taxes and firm size: Political cost or political power? Journal of Accounting Literature,
42(1):1-28.
60
is also expected to contribute to academic, regulatory body and management practices by strengthening corporate
governance and risk management to control an override of political power and economic power in the firms.
61
Track: Accounting
Paper ID: 116-119
INTERNAL AUDIT INVESTMENT AND CASH CONVERSION CYCLE OF MALAYSIAN PUBLIC-

LISTED FIRMS
Hari Haran A/L Karnanidi1 and Amirul Hafiz Mohd Nasir2

Jabatan Kastam Diraja Malaysia1, Faculty of Economics and Management, Universiti Kebangsaan Malaysia,
Malaysia2.
1.0 Introduction
Cash conversion cycle (CCC) is an important ratio that management use to measure how fast they can convert
their resources to cash. Specifically, CCC provides information in terms of firms’ ability to convert their
inventories and receivable to cash, as well as for the firms to extend their payment to payables. The CCC ratio
was first introduced by Richards and Laughlin (1980)1 as an indicator for firm’s liquidity. Since then, CCC has
been a vital ratio used in financial management textbooks and has attracted the interest of many researchers (for
examples, Ahmad et al. 20172; Gill and Biger, 20133; Lyroudi and Lazaridis, 20004). Despite emphasis in textbook
and research, Malaysian firms are still struggling in managing their working capital, particularly in term of CCC 5.
Anecdotal evidence shows that there are RM71 billions value of cash in the form of working capital. Additionally,
the most challenging component of CCC to Malaysian firms is the inventory conversion period. Based on these
issues, we are motivated to examine on how CCC could be better managed for Malaysian listed companies. In
this paper, we aim to examine the impact of internal audit investment on firms’ CCC. In terms of existing empirical
studies, most researchers have studied on how a firm’s CCC plays an important role to drive company’s
profitability and the responsibilities of the board of directors (BOD) and top management in managing their
working capital. For examples, according to Ahmad et al. (2017), working capital management is the basic
responsibility of the board of directors (BOD) and top management. While Gill and Biger (2013) suggest that
when the BOD and top management set a policy to maintain high cash balances, the wealth of the shareholders
are argued has not been maximized. In other words, the responsibility to determine whether there is any weakness,
or any improvement required in the working capital management lies with the BOD and top management of the
companies. On the other hand, this study focuses on the role of internal audit function on firm’s CCC. Internal
audit function has become a mandatory requirement for public listed companies in Malaysia from 2008. Bursa
Malaysia Listing Requirements require all public listed companies in Malaysia to have an internal audit function.
Internal auditor plays an important role to provide assurance and consulting activities for management in ensuring
effective internal control system, risk management process and corporate governance practices. In addition, Al-
Manqari (2020)6 suggested that it is the internal auditor who should also perform the supporting and advocating
role for those in-charge with company governance including the development of resources that can aid in the
company management. Based on this suggestion, we further argue that higher investment in internal audit
function, which enable internal auditor to equip with better tools and resources needed, will increase the efficiency
and effectiveness of operation that leads to the reduction in CCC ratio.
2.0 Methods
The data of this study comprises of 357 firms that are randomly selected from Bursa Malaysia listed companies
in the period of 2017 to 2018. In order to test the relationship, we follow Nobanee et al. (2011) 7 to measure CCC
ratio as our main dependent ratio. CCC ratio comprises of the total of inventory conversion period, receivable
collection period, and payable deferral period. Inventory conversion period is calculated as (inventory/cost of
goods sold) x 365 and used to measure the length of time needed for converting raw materials into finished goods
and selling these goods. For receivable collection period, we use the average number of days from the sale of
goods to collection of receivables (accounts receivable/sales) x 365]. The payable deferral period is the average
1
Richards, V. D., and Laughlin, E. J. 1980. A cash conversion cycle approach to liquidity analysis. Financial Management, 32-38.
2
Ahmad, M. F., Ishtiaq, M., Hamid, K., Usman Khurram, M., and Nawaz, A. (2017). Data envelopment analysis and Tobit analysis for firm
efficiency in perspective of working capital management in manufacturing sector of Pakistan. International journal of Economics and
financial issues, 7(2):706-713.
3
Gill, A., and Biger, N. 2013. The impact of corporate governance on working capital management efficiency of American manufacturing
firms. Managerial Finance, 39(2):116-132.
4
Lyroudi, K. and Lazaridis, Y., 2000. The cash conversion cycle and liquidity analysis of the food industry in Greece. Available at SSRN
236175.
5
PWC. 2017. Cash for growth. 2017 Malaysia working capital study. Kuala Lumpur.
6
Al-Manqari, M. (2020). The importance of internal audit in preserving the company’s tangible assets between Dominion Diamond
Corporation and Bank of Montreal. International Journal of Advances in Management and Economics, 9(02):16-27.
7
Nobanee, H., Abdullatif, M., and AlHajjar, M. (2011). Cash conversion cycle and firm's performance of Japanese firms. Asian Review of
Accounting, 19(2):147-156.
62
length of time needed to purchase goods and pay for them. It is computed as (accounts payable/cost of goods sold)
x 365. All the financial data including total assets are obtained from Datastream database, while for internal audit
investment, as our main independent variable, data are sourced from annual reports. Several governance data such
as the size of audit committee, number of independent directors in audit committee, and type of external auditor
are also collected from annual reports as part of our control variables. In this study, we hypothesize that investment
in internal audit shortens the length of the CCC. This means that we expect that the coefficient of the natural log
of internal audit investment on cash conversion cycle should be significant and negative.
Based on the descriptive analysis, the average CCC of companies is 367 days. While the average amount of
investment in internal audit and total assets of the firms are RM297,409 and RM1,544 million respectively. About
31.9 percent of our samples outsource their internal audit function. The mean size of audit committee in our
samples is 3 with the maximum number of 7 members and the mean number of independent directors in the audit
committee is 3 with the maximum number of directors are 6. For our samples, the percentage of firms audited by
Big 4 are approximately 34 percent. On the other hand, based on the correlation matrix indicates that there is no
unreasonably high correlation present among the independent variables. The results of the correlation analysis
employing Variance Inflation Factor (VIF) also shows that the VIF value of each variable is less than 2 and
tolerance value less than 1 which confirms there is no multicollinearity problem. In order to examine whether
internal audit investment affect firm’s working capital management, we analyse our data by regressing the natural
log of internal audit investment on CCC. Consistent with the prediction, the result of our main analysis shows that
there is significant relationship between investment in internal audit and firm’s CCC. In particular, the regression
results show that the independent variable, LnIAC, is negatively and significantly associated with CCC (β=-201.4,
p<0.05). In contrast, firm Size as proxy by total assets is found positive and significant with CCC (β=110.3,
p<0.05). R-squared of the regression model is 0.03. The results support our argument that investment in internal
audit reducing CCC ratio by increasing efficiency and effectiveness of operation. We also test the relationship
based on each component of CCC for robustness tests. We found consistent results where LnIAC is negatively
and significantly associated with inventory conversion period, receivable collection period and payable deferral
period respectively. These findings provide further support for the influence of internal audit investment on CCC.
In addition, as part of the additional analysis, we also regress CCC and internal audit investment on firm’s revenue.
The result show that CCC is negatively and significantly associated with revenue. While internal audit investment
is positively and significantly associated with revenue. The results suggest that both CCC and internal audit
investment are important elements for firms to generate revenues.

Theoretically, we extend previous studies by the investigating of the impact of internal audit investment on firm’s
working capital management, particularly on CCC ratio. As far as we are aware, the study on the CCC particularly
in relation to internal auditing is still lacking and requires further attention. By addressing this issue, we provide
an insight on agency theory by incorporating the role of internal audit on working capital management. On the
other hand, it is also hoped that this study may address the problem of working capital management and add more
information to better manage working capital, particularly in terms of CCC ratio among Malaysian listed firms.
The study contributes to create awareness among top management. In addition to the importance of sound policies,
sufficient investment on internal auditor will also benefit top management in enhancing the efficiency of working
capital management.
63
Track: Accounting
Paper ID: 117-126
CORPORATE GOVERNANCE AND FINANCIAL DISTRESS IN MALAYSIAN SHIPPING

INDUSTRY- THE MODERATING ROLE OF LEVERAGE
Zhou Wenyu1 and Ervina Alfan2
Graduate School of Business, University of Malaya, Malaysia 1, Department of Accounting, Faculty of

Business & Accountancy, University of Malaya, Malaysia 2.
1.0 Introduction
The detrimental effect of the 1997 Asian financial crisis and the 2008 global economic slump had left many
Malaysian companies suffering from financial ailments as they had been significantly impacted. Amongst the
vital sectors in Malaysia that were adversely impacted is the shipping industry, which had been made financially
unfortunate with the relentlessly low freight rates and rising costs partly due to the high costs of financing, and
is forced to shrink the operations continuously due to the global recession. Meanwhile, although the Malaysian
Code on Corporate Governance (MCCG) was introduced in 2000 and reformed in 2017, the widespread of
ineffectual corporate governance mechanisms in Malaysian shipping companies is also a major factor causing
them to be financially distressed. The Agency Theory perspective propagates that the managers are intensely
motivated to maximize their short-term self-interest rather than promoting the development of the company in
the longer-term horizon as the managers take advantage of asymmetric information. This opportunistic
behaviour of the management also leads to the ineffectiveness of corporate governance mechanisms, which are
primarily focused on the role of Chief Executive Officer (CEO) and the chairman (i.e. CEO duality), the
structure of the board of directors (BODs) and audit committee on the board. Based on this theoretical
perspective, this study sets to examine the effects of corporate governance mechanisms on the financial
performance of shipping companies in Malaysia, measured by the Altman’s Z-Score and the Return on Equity
(ROE). Although a large number of the relevant literatures discuss the possibility of bankruptcy in selected
contexts, it is intriguing to note that however, there is a dearth in the literature that examines bankruptcy
prediction models of companies in the shipping industry, especially in Malaysia. This apparent gap in the
literature, alongside the anticipated role of the corporate governance in influencing the financial performance of
Malaysian shipping companies serve as the motivation that drives the focus of the study.
2.0 Methods
This study is initiated by taking a sample of 763 long-year observations of 47 shipping and/or shipping-related
companies listed on the Malaysia Stock Exchange (Bursa Malaysia) from 2000 to 2019. The financial
performance of the shipping companies is measured by using the Altman’s Z-Score and Return on Equity
(ROE). In addition, this study also further investigates the moderating effect of leverage over the relationship
between corporate governance mechanisms and financial performance of Malaysian shipping companies.
Leverage is examined as a moderating variable in the study as a number of literature that examines financial
performance indicated that the extent of leverage affects the levels of companies’ financial performance and
the severity of financial distress, even when corporate governance mechanisms had been put in place to ensure
that the respective companies’ financial performance is not as adversely impacted.
Contrary to the believe that increasing the proportion of independent directors lead to a better financial
performance, this study finds that the higher percentage of independent members in the BODs results in higher
possibility for the companies to experience financial distress status. In contrast, the results show that the audit
committee independence has a significant positive influence on the financial performance of both Malaysian
shipping and shipping-related companies. The findings also indicate that CEO duality, referred to as the
circumstance whereby the CEO also serves as the chairman on the board, appears to significantly decrease the
level of financial distress. The results also demonstrate the moderating effect of leverage which shows a positive
influence over the relationship between CEO duality and financial distress. However, this research finds that
leverage has no other significant moderating effect over other corporate governance factors and financial
distress. Using the “bankruptcy prediction model” Altman’s Z-Score developed by Altman, the results of the
study demonstrate that there is ample evidence to suggest that the Malaysian shipping companies are
experiencing financial distress. Based on these results, this study therefore supports the presumption that the
“Agency Theory” corresponds with the impact of the audit committee. Nevertheless, the results of the study
show that this theory fails to illustrate that the separation of CEO and the chairman and the higher independent
members of BODs are more effective in reducing the financial distress possibility. This study provides an
64
avenue for the investors and stakeholders of the shipping companies to generally understand the overall context
of the industry performance. Accordingly, it is also crucial for the investors and stakeholders to take note of the
respective shipping companies’ financial performance. Against the backdrop of corporate governance
landscape in Malaysia in the light of the shipping sector, this study enlightens the policymakers on the corporate
governance effectiveness and to particularly consider aspects in the regulations that helps to ensure and enhance
audit committee independence in Malaysia.
Keywords: Shipping, Malaysia, Financial Distress, Corporate Governance, Leverage
Acknowledgement
The authors are grateful with the grant awarded by UMRG, RP033B-16SBS for this project.
65
Track: Best Practices

Paper ID: 006-004
BEST PRACTICE FOR BUSINESS OPPORTUNITIES THROUGH CONVERTING FOOD WASTE

INTO COMPOST AMONG PUBLIC
Zaleha Mohamad1,2, Fadzilah Adibah Abdul Majid2, and Rokiah Hassan3
Faculty of Business, Economic and Social Development, Universiti Malaysia Terengganu, Malaysia1,
Institute of Marine Biotechnology, Universiti Malaysia Terengganu, Malaysia2, Smart Heritage Sdn Bhd,
Terengganu, Malaysia3.
1.0 Introduction
In most countries, almost all food waste generated ended up at the landfills. The centralized facilities of
composting have been handling large volumes of food waste over the years. However, these facilities required
considerable capital investments and often challenged in terms of financial and operational. Due to different
practices of garbage management in every country, this study attempts to investigate the possibility of
decentralized composting approach within Malaysia. The study advocate composting from food waste and
anticipated the public acceptance of it by information source, knowledge, convenience, cost, and attitude.
2.0 Methods
Using the existing literatures, identified indicators were used to formulate the research framework and the
construct of questionnaire design. To acquire the data in this study, quantitative method was applied through
distribution of questionnaire. The study was conducted in Kuala Terengganu, which encompassed residents of
Ladang Apartment and primary school students in Kuala Terengganu. One hundred and fifty hard copies
questionnaire has distributed but only one hundred and twenty questionnaires have returned. During data
collection, several enumerators have been appointed to conducting the survey. Enumerators of this study were
among University Malaysia Terengganu’s (UMT) students. There were also known as a green ambassador among
respondents. The data collected later incorporated into the numerical form to assess the relationship between
dependent variable and independent variables. Convenience sampling was used to collect the data involving 120
respondents. Convenience sampling refers to the collection of information from members of the population who
are conveniently available to provide it. It is often used during the exploratory phase of a research project and is
perhaps the best way of getting some basic information quickly and efficiently.
The survey encompassed seven sections. The first section covers general information of respondents. General
information was age, number of household, occupation, highest education, income and several general questions
about compass food waste. The second section consists of 40 questions of related to sources of information. All
items were measured using a Linkert-scale that ranges from not effective (1) to strongly effective (5). The third
section included items about knowledge. This section divided into four parts such as understanding of compost,
knowledge about compost and food waste, and society’s acceptance about compost and awareness about compost.
The questionnaire was composed in English and translated into Bahasa Melayu, the official language in Malaysia.
Data was analyzed using SPSS Software. The results of the analysis shows that public acceptance on compost is
highly associated with knowledge, information sources and attitude. The outcome of the analysis indicates that
the most influence relationship was knowledge. The variable produced the highest beta values compared to other
variables. The result was similar from the previous research study from 1 who also found that knowledge has a
great influence relationship to the public acceptance towards compost activities. 1
3.1 Theoretical/Practical Contribution

In conclusion, public acceptance on compost is highly associated with knowledge, information sources and
attitude. The knowledge such as compost making methodology, production value, and benefits plays an important
role in this2,3. Information sources such as internet, newspaper, and media had been traditional effective as well
1
Chakrabarti, S., Majumder, A., and Chakrabarti, S. 2009. Public-community participation in household waste management in India: An
operational approach. Habitat International. 33(1):125–130
2
Babaei, A. A., Alavi, N., Goudarzi, G., Teymouri, P., Ahmadi, K., and Rafiee, M. 2015. Household recycling knowledge, attitudes and
practices towards solid waste management. Resources, Conservation and Recycling, 102:94-100.
3
Onwosi, C. O., Igbokwe, V. C., Odimba, J. N., Eke, I. E., Nwankwoala, M. O., Iroh, I. N., and Ezeogu, L. I. 2017. Composting technology
in waste stabilization: On the methods, challenges and future prospects. Journal of Environmental Management, 190:140-157.
66
in convincing the public4,5. Finally, the core of the person to act lies within one’s own attitude to protect the
environment6,7.
Acknowledgement
This project was funded through a Translational Research Grant Vote No 53330: Green Herbal Ambassador
Technoagropreneur Program (GHEART) and KTAG Vote No:58902 & 58906.
4
Mazlan, M., Shahibi, M. S., Dollah, W. A. K. W., Ibrahim, Z., and Ali, J. 2017. Perception of the effectiveness of information content in
newspaper advertising in promoting government’s new policy: Goods and services tax (GST). International Journal of Academic Research in
Business and Social Sciences, 7(11):878-897.
5
Cui, R., Gallino, S., Moreno, A., and Zhang, D. J. 2018. The operational value of social media information. Production and Operations
Management, 27(10):1749-1769
6
Waliczek, T., McFarland, A., and Holmes, M. 2016. The relationship between a campus composting program and environmental attitudes,
environmental locus of control, compost knowledge, and compost attitudes of college students. HortTechnology, 26(5):592-598.
7
Byrka, K., Kaiser, F. G. and Olko, J. 2017. Understanding the acceptance of nature-preservation-related restrictions as the result of the
compensatory effects of environmental attitude and behavioral costs. Environment and Behavior, 49(5):487-508.
67

Paper ID: 046-039
THE EFFECTIVENESS OF SOCIAL MEDIA INFLUENCER ON PURCHASING BEHAVIOR
Brahim Chekima1, Suddin Lada1, Azaze-Azizi Adis1, and Kelvin Yong1

Faculty of Business, Economics, and Accountancy, Universiti Malaysia Sabah, Malaysia 1.
1.0 Introduction
The vast realm of social media with nearly four billion users worldwide seeped into virtually all aspects of modern
life including shopping which is carried out online on a plethora of social media platforms such as Instagram, Tik
Tok, YouTube, and Facebook. This medium acts as a double edge sword where it helps new products to enter the
market and increase its share, while on the other hand intensity the competition in the market with the tremendous
growth of products available to consumers. Conventionally, with the heightened competition, commonly
businesses opt for celebrity advertising which is seen effective and popular means of communication to strengthen
the effectiveness of an ad towards the ad itself, the offerings, and eventually purchasing behavior1,2. However, in
the current world of social media and online marketing, the “conventional celebrities” strategy is by all accounts
blurring on the grounds that organizations progressively favoring it for social media influencers2 with the adoption
of online marketing3. Through different social media platforms, social media influencers are aptly employed to
reach, share product-related information, engage as well as communicate the latest promotions regularly with the
online community4. Despite the increasing use of influencers on social media for endorsing purposes, there is
limited knowledge on their marketing value in terms of understanding its trustworthiness, credibility, and
effectiveness towards the advertisement, the product, and actual purchasing behavior of cosmetic products in
Malaysia by employing the source credibility theory. It is pertinent to review the applicability of credibility
sources from the viewpoint of social media influencer where social media online marketing is dictating the market
and have altered the consumer behavior. Influencer credibility was operationalized as comprising of three
constructs namely trustworthiness, expertise, and attractiveness. In Malaysia, the cosmetic market is labeled as a
highly profitable business with a total value of $764.9 million in 2020 and is forecasted to rise by 8.1% annually
and reach $1,288.7 million by 20275. Presently, this industry is intensely reliant on social media and thus makes
it attainable to validate this model. The finding of this research can serve as a reference to help marketers and
explicitly cosmetic product marketers to oversee and decide on social media influencers for effective ads and other
promotional efforts incorporating the source credibility dimensions to communicate with customers and emerge
from the surrounding media and brand/product clutter.
2.0 Methods
A convenience online sampling was used to elicit responses from consumers who have been exposed to social
media influencers’ promotional efforts/communication and have made a purchase. G*Power software was used
to decide on the minimum sample size required. With six latent variables, an effect size of 0.15, and power at
0.80, a minimum of 98 is required. A total of 135 responses were obtained from throughout Malaysia voluntarily
and a food voucher was given as an incentive. Variance-based Structural Equation Modelling technique using
software PLS 3.2 was employed to assess both measurement and structural models instead of CB-SEM due to the
predictive-oriented objective of this research. The questionnaire consists of two parts, the respondent’s
demographics and the measurement items adopted from Bruner & Hensel 6, Yi7 and McCracken8. The
measurement items were anchored on a Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree).
1
Chekima, F.Z. and Chekima, B., 2019. Celebrity credibility influence on cosmetic product purchase intention: The moderating role of
ethnocentrism. In Exploring the Dynamics of Consumerism in Developing Nations (153-175). IGI Global.
2
Schouten, A.P., Janssen. L., and Verspaget, M. 2020. Celebrity vs. influencer endorsements in advertising: The role of identification,
credibility, and product-endorser fit, International Journal of Advertising, 39(2):258-281.
3
Choi, Y., Chu, K., and Choi, E. J. 2019. Social network services addiction in the workplace. The Journal of Asian Finance, Economics and
Business, 6(1):249-259.
4
Markethub. 2016. Influencer marketing vs. word-of-mouth marketing. Retrieved February 22, 2021 from
https://www.markethub.io/influencer-marketing-vs-word-of-mouth-marketing/
5
MarketResearch.com. 2020. Retrieved from https://www.marketresearch.com/Allied-Market-Research-v4029/Malaysia-Skin-Care-
Products-Type-13536591/
6
Bruner, G. C. and Hensel, P. J. 1993. Multi-item scale usage in marketing journals: 1980 to 1989. Journal of the Academy of Marketing
Science, 21(4):339-344.
7
Yi, Y. 1990. Cognitive and affective priming effects of the context for print advertisements. Journal of Advertising, 19(2):40-48.
8
McCracken, G. 1989. Who is the celebrity endorser? Cultural foundations of the endorsement process. Journal of Consumer Research,
16(3):310-322.
68
In the measurement model, all the indicators namely loadings, composite reliability, and AVE values were higher
than the recommended cut-off of 0.5, 0.7, and 0.5 respectively9. Hence, the convergent validity of the model’s
deemed satisfactory. Discriminant validity was assessed through the Fornell and Larcker (1981) approach and
HTMT. Both analyses indicated that the constructs established discriminant validity. As for the structural model,
all the hypotheses were found significant in which social media influencer’s expertise, attractiveness, and
trustworthiness are positively significant towards advertisement attitude, brand as well as actual purchase
behavior. Altogether, these factors account for 48.3%, 49.1%, and 55.4% of the variance in explaining cosmetic
product advertisement attitude, attitude toward the brand, and actual purchase behavior respectively. A
blindfolding technique was executed to examine the model’s predictive relevance (Q2). The Q2 for ad attitude,
brand attitude, and purchase behavior were .299, .315, and .366 respectively indicating a substantial prediction
relevance based on the recommendation by Hair 9.

This study substantiated the source credibility theory in the context of social media influencers and their ability
to exert a favorable effect on customers toward the advertisement, brand, and purchase behavior. This research
revealed that consumers were bound to confide in the social media influencer just as feel charmed with their
product-fit and attractiveness with whom they saw as a similarity to themselves. The finding could aid cosmetic
product marketers and individual sellers to consider choosing a social media influencer who holds those credibility
traits to acquire an upper hand in the midst of a highly competitive market as found in the neighboring country of
Indonesia10. Doing so can assist with maximizing the influence of advertising endeavors to create positive social
behavior and subsequently boost their sales.
Keywords: Social media influencer, purchasing behavior, cosmetics, attractiveness, trustworthiness, expertise
9
Hair, J. F., Hult, G. T. M., Ringle, C. M., and Sarstedt, M. 2017. A primer on partial least squares structural equation modeling (PLS-SEM)
(2nd ed.). Thousand Oakes, CA: Sage.
10
Rosara, N.A. and Luthfia, A. (2020). Factors influencing consumer’s purchase intention on beauty products in Youtube. Journal of
Distribution Science, 18(6):37-46.
69

Paper ID: 067-059
MENEROKA PROSES PALING KRITIKAL DALAM PELAKSANAAN PELAN PEWARISAN

(Exploring the Most Critical Processes in Succession Planning)
Fatimah Othman1, Rosmah Mat Isa1, Rohayu Abdul Ghani1, and Norhafizah Abu Hasan1
Fakulti Ekonomi dan Pengurusan, Universiti Kebangsaan Malaysia1.
1.0 Pengenalan
Pelan pewarisan merupakan usaha yang dirancang secara sistematik oleh organisasi untuk memastikan
kesinambungan kepimpinan dalam kedudukan penting, mengekalkan dan mengembangkan modal intelektual dan
pengetahuan untuk masa depan, dan mendorong kemajuan individu. Walaupun menyedari tentang kepentingan
pelan pewarisan, namun masih terdapat banyak organisasi belum mempunyai pelan pewarisan yang bersistematik.
Situasi ini berpotensi menjadi risiko bagi sesebuah organisasi kerana kegagalan untuk mengenal pasti dan
menguruskan peralihan pemimpin boleh menjadi ancaman langsung terhadap prestasi organisasi. Selain itu,
berdasarkan kajian lepas, terdapat pelbagai variasi dalam proses pelan pewarisan yang ditawarkan. Namun, model
yang dihasilkan tidak menerangkan secara terperinci dan mendalam berkaitan proses yang paling kritikal dalam
pelaksanaan pelan pewarisan di sesebuah organisasi. Ini adalah penting bagi memastikan pihak pengurusan
organisasi memberi tumpuan yang sepatutnya dan melaksanakan intervensi yang sesuai. Justeru, kajian ini
dijalankan bagi menjawab persoalan bagaimana proses pelan pewarisan dilaksanakan dan mengenal pasti apakah
proses yang paling kritikal dalam melaksanakan pelan pewarisan di sesebuah organisasi.
2.0 Kaedah Kajian

Kajian ini telah dijalankan menggunakan kaedah kualitatif melalui pendekatan kajian kes (berbilang kes). Kaedah
temu bual separa berstruktur digunakan bagi mendapatkan pemahaman yang mendalam mengenai fenomena yang
sedang berlaku. Kajian ini menggunakan kaedah persampelan bertujuan dan peserta kajian terdiri daripada tujuh
orang pegawai (Pengurus Kanan dan Pengurus) iaitu sebagai Ketua Bahagian/Unit yang terlibat secara langsung
dengan pengurusan pelan pewarisan atau pengurusan bakat di tiga GLC yang terpilih di Malaysia. Peserta kajian
dipilih berdasarkan penglibatan mereka sebagai Urus setia yang berperanan sebagai perancang, pemudahcara atau
penasihat, pemantau atau pengawal, dan pemilik atau pengurus data dalam proses pelaksanaan pelan pewarisan.
Temu bual bersama peserta kajian telah dijalankan secara atas talian melalui platfom/pelantar Microsoft Teams
sebagai alternatif kepada temu bual bersemuka. Ini kerana semasa pengumpulan data kajian, lokasi GLC kajian
berada dalam tempoh pelaksanaan Perintah Kawalan Pergerakan (PKP) yang dikenakan oleh pihak kerajaan bagi
mengekang penularan pandemik Covid-19. Analisis data dibuat menggunakan kaedah analisis tema dengan
bantuan perisian Atlas.ti bagi mempercepatkan proses pengekodan. Dalam kajian ini juga, analisis kes silang
dilakukan dengan mengenal pasti secara sistematik tema yang serupa dan berbeza antara kes. Pada masa yang
sama, analisa perbandingan berterusan turut dibuat antara pelan pewarisan setiap agensi kajian dengan pelan
pewarisan yang dicadangkan oleh Rothwell (2005).
3.0 Dapatan Kajian/Perbincangan

Hasil kajian mendapati bahawa proses pelan pewarisan yang diamalkan di GLC dalam kajian ini mempunyai lima
proses yang sama iaitu pengenalpastian jawatan kritikal, pengenalpastian calon, penilaian dan pemilihan calon,
latihan dan pembangunan calon, serta penilaian pelan pewarisan. Dalam konteks kajian ini, walaupun GLC kajian
mengambil pendekatan merekrut calon luar bagi mengisi jawatan kritikal yang tidak dapat diisi oleh calon dalam
terutama di peringkat jawatan atasan, namun strategi yang digunakan bersifat sementara dengan penekanan
kepada aspek pemindahan pengetahuan kepada calon pengganti dalaman yang telah dikenal pasti. Selain itu,
kajian turut mendapati proses yang terlibat dalam pelan pewarisan juga boleh dibahagikan kepada tiga fasa iaitu
sebelum atau pra pelaksanaan, semasa pelaksanaan dan selepas atau pasca pelaksanaan. Kajian ini juga telah
mengenal pasti dua proses yang kritikal yang perlu diberi perhatian dalam membangunkan pelan pewarisan iaitu
penentuan calon pengganti dan pelan pembangunan individu iaitu pada fasa sebelum atau pra pelaksanaan.
Dapatan kajian ini membuktikan fasa pra pelaksanaan adalah fasa yang paling penting kerana ia melibatkan proses
risikan dan pengumpulan maklumat di peringkat awal pembangunan pelan pewarisan yang dapat membantu pihak
pengurusan membuat keputusan.
3.1 Sumbangan Teori/Praktikal

Dalam konteks sumbangan kajian ini kepada bidang ilmu, dapat disimpulkan bahawa berdasarkan teori
berasaskan sumber (RBT) firma dalam pengurusan sumber manusia strategik, kajian ini dapat mengenal pasti
proses pelan pewarisan yang utama, proses berfasa dan mengenal pasti proses pelan pewarisan yang kritikal.
70
Selain itu, penemuan dalam kajian ini juga telah memberikan sumbangan baharu kepada kajian bahawa teori RBT
tidak dapat diaplikasikan sepenuhnya dalam kajian pelan pewarisan khususnya yang melibatkan pengisian
jawatan kritikal di peringkat atasan yang memerlukan perubahan radikal bagi sesebuah organisasi mencapai
matlamatnya. Namun pada sisi yang lain, dengan gabungan teori RBT dan teori pengurusan sumber manusia
dalam pelaksanaan pelan pewarisan berupaya meningkatkan prestasi firma. Manakala dari aspek implikasi
pengurusan, pihak sumber manusia perlulah memberi penekanan kepada penggunaan data analitik dalam
pembuatan keputusan dengan pengenalpastian proses pelan pewarisan yang utama, proses berfasa dan
pengenalpastian proses pelan pewarisan yang kritikal bagi memudahkan organisasi memberi tumpuan yang lebih
ke atas proses yang dapat memberi impak yang lebih signifikan ke atas kejayaan pelan pewarisan dan mengambil
langkah intervensi yang sewajarnya berdasarkan proses penilaian semula dan penyesuaian yang dilaksanakan dari
semasa ke semasa.
71

Paper ID: 101-103
THE CO-MOVEMENT OF CHINA AND US STOCK INDICES: A PORTFOLIO DIVERSIFICATION

ANALYSIS
Ahmad Monir Abdullah1, Hishamuddin Abdul Wahab2, Abul Mansur M. Masih3, Mariani Abdul Majid1,
and Wai-Yan Wong1
Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia1, Faculty of Science and
Technology, Universiti Sains Islam Malaysia, Malaysia2, Business School, Universiti Kuala Lumpur, Malaysia3.
1.0 Introduction
The study on the co-movement of stock markets is crucial for portfolio risk management. Investors would like to
avoid a high correlation of assets in any portfolios that will lower gains. The literature has acknowledged that the
co-movement of stock returns fluctuates with different periods. Therefore, investors must identify risks associated
with a different time horizon to manage their risk. In the meantime, the different objectives and motives between
heterogeneous (short term and long term) investors should be considered. Short-term investors are more inclined
to short-term gains from price movement in their investment portfolio. Meanwhile, long-term investors are
interested in long-term price fluctuation. The risk associated with investors depends on investors’ type, whether
they focus on long or short-term. Therefore, due to the degree of the co-movement of stock returns varies across
time horizons, the risk associated with investors will also be different. Modern techniques such as wavelet analysis
can help us identify the “time-varying” and “scale-dependent” volatilities and correlations of stock indices and
commodities prices return.
Volatilities of stock indices and commodities prices return refers to the drastic changes either increase or
decrease in value of the variables under review within a specific period. Investors need to evaluate the volatilities
of variables before making their decision to buy or sell. The period of volatility tends to be long and can last for
months. High or low volatility stages can continue for months, depending on internal and external shocks. For
example, the high volatility of stock returns incline to last for years during economic recessions. According to the
literature, stock market volatility is positively connected to economic data such as debt level, inflation and
industrial production (Schwert, 1989). We can summarise that it is vital for investors to understand the volatilities
of variables under review to make an informed decision regarding their portfolio management. Besides volatility,
correlation is also an essential factor for decision making in portfolio diversification management. Successful
investment strategies rely heavily on understanding the correlation among assets under the portfolio, as explained
by Markowitz (1959). Since his study has been published, stock return correlation plays a significant role in risk
estimation for portfolios diversification.
Portfolio investment that solely focuses on international stock markets for diversification benefits will
be exposed to fluctuation in the currency exchange rate. This fluctuation will increase the portfolio risk and force
investors to hedge their currency exposure leading to increased investment costs. Therefore, Bitcoin is the
appropriate investment alternative for investors because Bitcoin transaction has no fee, commission and exchange
rate fluctuation. Several studies employ conventional models (e.g., correlation analysis, linear regressions, and
GARCH-based methods) to emphasise the low correlation between Bitcoin and stock market indexes and possible
diversification advantages. (Baur, Hong, & Lee, 2017, Guesmi, Saadi, Abid, & Ftiti, 2018). The result has shown
that Bitcoin is a good stock diversifier (Bouri, Jalkh, et al., 2017). However, several other researchers have
questioned Bitcoin's diversification advantages (e.g., Chowdhury, 2016) and expressed concerns about Bitcoin's
chances as an alternative currency. In reality, there is still debate about whether Bitcoin has intrinsic value and if
its exponential price rise results from an irrational bubble (Li & Wang, 2017). It appears that the connection
between Bitcoin and stock markets remains weak, most likely because the two markets have distinct pools of
participants (Filtz, Polleres, Karl, & Haslhofer, 2017). Financial institutions are hesitant to make direct
investments in Bitcoin due to various legal, taxation, and accounting concerns (Tan & Low, 2017). Another reason
explaining the shaky connection between Bitcoin and stock markets is that the price drivers in each market are
distinct, as Kristoufek (2015) and Bouoiyour et al. (2016) show. Due to the ambiguous findings on the connection
between Bitcoin and stock markets, we would want to delve further into the subject to contribute to the literature.
International investment also exposes investors to many risks. For example, the correlation coefficients raise
significantly during the crisis period, leading to diminishing diversification benefits. Besides that, investors have
to consider other risks such as political risk, unfamiliarity with local laws and regulations, different accounting
standards and taxes rules etc. (Solnik and McLeavey, 2003). Therefore, other investment alternatives such as
commodities becoming popular with investors that looking for new diversification instruments. This study also
selects a few commodities such as gold, crude oil and Bitcoin as variables to be investigated to find their
volatilities and correlation with US and China stock indices.
72
The primary purpose of the study is to analyse the lead-lag relationship between China and the US stock
indices with other variables such as Bitcoin, gold, crude oil and exchange rate of CNY/USD (as a control variable)
in order to assess the potential gains that investors could achieve from diversifying their holdings in the world
stock markets and commodities markets. We want to find out how the six variables under analysis are related and
determine the granger-causality direction.
2.0 Methods
Our data include Bitcoin, crude oil, gold prices, Yuan's exchange rate to US dollar (CNY/USD), China and US
conventional stock indices from 1 September 2011 to 28 June 2019. We employ time series techniques, Maximum
Overlap Discrete Wavelet Transformation (MODWT), Multivariate GARCH – Dynamic Conditional Correlation
(MGARCH-DCC) and Continuous Wavelet Transformation (CWT).
In this article, we assess the possibility of diversification advantages among the variables we have selected. Many
contemporary statistical methods were used to address the study goals, including VECM, MGARCH-DCC,
MODWT and CWT. According to the findings, the VECM results indicate that Bitcoin, crude oil, and the
CNY/USD exchange rate are exogenous, while China and US stock indexes, and gold, are endogenous. This
means that the China and US stock indexes and gold will respond to Bitcoin, crude oil prices, and the CNY/USD
exchange rate.
Based on MODWT's findings, we can conclude that Bitcoin leads crude oil at nearly all levels, implying
that crude oil prices will react to Bitcoin price movement. Because the two variables have a low correlation with
each other compared to the other variables, it offers a diversification opportunity. MODWT results also show that
at higher levels (levels 6 and 7), Bitcoin leads CNY/USD, but at the highest level (level 8), CNY/USD leads
Bitcoin, indicating room for diversification between these two variables, particularly in the long run. The result
from MODWT also indicate that at higher levels (levels 6 and 7), Bitcoin leads CNY/USD, but at the highest level
(level 8), CNY/USD leads Bitcoin which suggest that there are diversification possibilities between these two
variables, especially in the long term. We also discover that CNY/USD leads crude oil at higher levels, indicating
that these two variables provide long-term diversification advantages. In comparison to the other variables in our
sample, the two variables show a weak correlation. As a result, low correlation increases the potential for portfolio
diversification advantages.
According to the MGARCH – DCC results, the CNY/USD exchange rate return has the lowest volatility,
suggesting China is a stable economy with a stable currency in the Asia-Pacific region. Furthermore, the
CNY/USD pair has the least correlation with the Bitcoin price return. As a result, investors interested in Bitcoin
should invest in CNY/USD to profit from a diversified portfolio. Because the US stock index return has the least
correlation with gold, we can infer that gold is still the best option for portfolio diversification for the US stock
index return. Meanwhile, the China stock index has the lowest correlation with Bitcoin and the second-lowest
correlation with crude oil. Consequently, if they have exposure to China's stock index, investors may utilise
Bitcoin and crude oil as an investment diversification strategy.
Finally, the results from CWT conclude that diversification gains can be realised between gold and US
stock indexes over a short and long period, as the correlation between these variables is very low. This finding is
in line with the outcome that utilised MGARCH-DCC, where it is shown that the correlation between the US
stock index and gold is the lowest. Gold is a stable investment instrument that makes it a perfect diversification
portfolio for the US stock index. For an investor in China stock index, they may choose Bitcoin and crude oil to
diversify their investment, but the holding period should not exceed 256 days if they want to gain diversification
benefit.
The policy consequence of this research is that investors should consider the results of this study when
deciding whether to invest in commodities or stock indexes in the United States and China. Risk-averse investors
who wish to minimise systematic risk in their portfolio may diversify by investing in gold and the US stock index,
both of which have extremely low volatility and correlation. A risk-seeking investor should invest in the China
stock index and Bitcoin, which are highly volatile and have the lowest correlation. Investors who wish to protect
themselves against stock market volatility must invest a percentage of their entire investment in gold and Bitcoin.
This is done to safeguard the investor from the stock market's uncertainties since the stock market is highly
volatile, particularly for the China stock market. This study’s results should help develop portfolio strategies for
investors and others who are engaged in both the commodities and stock markets. From this analysis, we can
appreciate the modern techniques’ contributions to consider the potential for diversification of investments for
investors with varied investment goals over different time lengths.
73
Track: Financial Technology

Paper ID: 062-056
THE IMPACT OF INTERNET FINANCE ON BANK PERFORMANCE BASED ON

BEHAVIORAL FINANCE PERSPECTIVE
Pu Weiwei1, Ruhanita Maelah2, and Mohd Dan bin Jantan1
Faculty of Business, Infrastructure University Kuala Lumpur, Malaysia 1, Faculty of Economics and
Management, Universiti Kebangsaan Malaysia, Malaysia2.
1.0 Introduction
Internet finance (ITFIN) is an organic combination of internet technology and financial functions (Ping &
Chuanwei, 2012)1. According to Guidelines for Promoting the Healthy Development of Internet Finance (2015) 2,
ITFIN refers to a new financial business model in which traditional financial institutions and internet companies
use internet technology and information, and communication technologies to realize financial intermediation,
payment, investment, and information intermediary services. The rapid development of ITFIN has caused a great
impact on China’s commercial banks and changes in China’s financial landscape. Market performance is the final
economic result or state achieved by a certain industry in terms of price, cost, output, and profit under a certain
market structure. The performance of a commercial bank is essentially the efficiency of the operation under the
conditions of a certain banking market structure and market behavior. Although the development of ITFIN is
recent, its impact on the performance of commercial banks has gradually emerged over time (Dongshui, 2010)3.
From a theoretical analysis (Shuting, 2017)4 the development of ITFIN will inevitably have a certain impact on
the performance of commercial banks and changes in China’s financial landscape.
On the other hand, behavioral finance is the study of the influence of psychology on the behavior of
financial practitioners and the subsequent effect on markets. Behavioral finance is of interest because it helps
explain why and how markets might be inefficient (Sewell, 2001)5. Behavioral finance mainly studies how people
understand and use the information and makes formal investment decisions from an empirical perspective, and
the impact of human behavioral cognitive bias on decision-making in the process (Mintrom, 2015)6. Currently,
there is a lack of evidence on the relationship between ITFIN and bank performance based on behavioral finance.
Therefore, it is important to study bank performance from the perspective of ITFIN development and behavioral
finance. This study examined the influence of herd effect on ITFIN and bank performance.
2.0 Methods
This study utilized Financial Innovation theory to explain the relationship between ITFIN and performance of
banks in China. Financial innovation (Khraisha & Arthur 20187) is the use of new ideas, new technologies, new
management methods, or organizational forms for financial institutions to better achieve the liquidity, security,
and profitability of financial assets. In the face of the ever-changing Chinese economy, traditional commercial
banks urgently need a big financial innovation. The emergence of ITFIN has accelerated the pace of financial
innovation.
Data of 29 selected banks, from 2010 to 2019 were used as samples to be analyzed using the DEA
method. The data is based on 5 large commercial banks, 12 joint-equity banks, and 12 representatives of city
commercial banks (refer Table 1). After analyzing the data from the bank, this study utilized STATA to analyze
and understand the impact of ITFIN on bank performance. Survey questionnaires were monitored in Dali area to
capture the herd effect of related to ITFIN.
1
Ping, X. and Chuanwei, Z. 2012. Research on business models of internet finance. Journal of New Financial Research, 121:11–22.
2
China Government. 2015. Ten departments such as the People’s Bank issued the “Guiding Opinions on Promoting the Healthy Development
of Internet Finance”.
3
Dongshui, S. 2010. Industrial economics (3nd ed). Higher Education Press.
4
Shuting, L. 2017. Empirical analysis of the impact of internet finance on commercial banks’ Profitability. Journal of Statistics and
Management. 1703:100-101.
5
Sewell, M. 2001. Behavioral finance. University of Cambridge.
6
Mintrom, M. A. 2015. Herbert A. Simon, Administrative behavior: A study of decision-making processes in administrative organization. In
M. Lodge, E. C. Page, & S. J. Balla (Eds.), The Oxford Handbook of Classics in Public Policy and Administration, 12-21. Oxford UK:
Oxford University Press.
7
Khraisha, T. and Arthur, K. 2018. Can we have a general theory of financial innovation processes? A conceptual review. Financial Innovation,
4(1):1-27.
74
Table 1: Lists of sample banks

1 Industrial and Commercial Bank of China Limited (ICBC) 16 China Bohai Bank Co., Ltd (CBB)
2 China Construction Bank Corporation (CCB) 17 Hengfeng Bank Co., Ltd (HB)
3 Agricultural Bank of China Limited (ABC) 18 Beijing Bank
4 Bank of China Limited (BOC) 19 Shanghai Bank
5 Bank of Communications Co., Ltd (BCM) 20 Nanjing Bank
6 China Merchants Bank Co.,Ltd (CMB) 21 Tianjin Bank
7 Industrial Bank Co., Ltd (IB) 22 Guangzhou Bank
8 Shanghai Pudong Development Bank Co., Ltd. (SPDB) 23 Chengdu Bank
9 China Citic Bank Corporation Limited (CCBC) 24 Chongqing Bank
10 China Minsheng Banking Corp., Lt(CMBC) 25 Dalian Bank
11 China Everbright Bank Co., Ltd (CEB) 26 Ningxia Bank
12 Hua Xia Bank Co., Limited (HXB) 27 Changsha Bank
13 China Guangfa Bank (CGB) 28 Qingdao Bank
14 China Zheshang Bank Co., Ltd (CZB) 29 Luoyang Bank
15 Ping An Bank Co., Ltd. (PAB)
This study has nine preliminary input and output indicators, including total assets, fixed assets, other assets, net
income, return on assets, return on equity, loans, total customer deposits, and operating expenses. Based on the
data analysis of 29 banks between 2010 and 2019, it is concluded that consistent with Ariff and Can (2008), the
impact of ITFIN varied according to bank type and size. Shaddady et. al. (2019) also showed that the performance
of commercial banks, small banks, and banks operating in developing nations is different. ITFIN impact on the
large commercial banks were relatively stable since they have advantage due to their state-owned assets
background, huge assets, financial strength, comprehensive business, system norms, and long history of
development. Findings from this study are consistent with Czerwonka (2019), which showed that the large banks
are very efficient on average. ITFIN impact on joint stock banks fluctuated significantly potentially because they
are owned by investors who purchase bank stock or equity. Each investor has substantial voting rights and
influences the financial institution's strategic policies. Meanwhile, ITFIN impact on city banks varied according
to geographical locations, with higher fluctuation seen in more developed regions. Since the fundamental purpose
of establishing City Bank is to serve the development of local finance and SMEs, their performance was closely
related to the development of local cities.
The survey results indicated herd effect has an impact on the relationship between ITFIN and bank
performance. This study found that the influence of herd expanded or showing a rapid upward trend in the
development stage, gradually flattened, and finally reached a stable state of gradual decline. It can be implied that
as people take the initiative to understand, the herd effect will be reduced, but will always exist. Based on the
long tail theory (Fidiana, et al.,20198), ITFIN reconstructs the financial value and uses the internet platform to
innovatively design personalized products to cater to or stimulate the various needs of potential customers. In the
era of ITFIN, the emergence of big data and cloud computing technology has improved the efficiency of large-
scale data processing, making low-cost transactions with small and micro customers a reality. Due to the
decentralized nature of small and micro customers, it is possible to convert large and small customers into target
customer groups with low overall risk and ultimately bring huge profits to the company. For commercial banks,
Pareto's principle is the theoretical basis of its operation, that is, under the assumption of scarce resources, 80
percent of commercial banks' profits are derived from 20 percent of best sellers. Therefore, in the economic society
where the market competition is becoming more and more fierce, the success and development of ITFIN model
have brought great impact to the operation of commercial banks, thus affecting bank performance.
3.1 Theoretical and/or Practical Contributions

This study contributes to the line of research in behavioral finance through providing insights on ITFIN, herd
effect and bank performance in China, a new emerging economy. It provides empirical evidence based on DEA
analysis that impact of ITFIN varied among large, joint-stocks and city banks; and survey analysis indicated the
influence of herd. Findings from this study can benefit bank management, policy makers and researchers. Further
studies may expand the scope to include more samples and employ qualitative methods to further explain the
relationship between ITFIN and herd effect on performance of banks in China.
8
Fidiana, F., Kautsar, I., and Maika, M. 2019. Blockchain technology: Revenue streams of long tail business model. European Alliance for
Innovation.
75

Paper ID: 073-080
FACTORS AFFECTING THE INTENTION OF A CASHLESS PAYMENT USAGE

AMONG UNIVERSITY STUDENTS
Sayed Muhammad Amir Firdaus Sayed Abdullah1, Teh Zaharah Yaacob1, and Siti Suraya Abd Razak1
Azman Hashim International Business School, Universiti Teknologi Malaysia, Malaysia1.
1.0 Introduction
The growth of financial technology has seen a significant rise in cashless transactions in recent years. Consumers
are moving from cash-based to cashless because of the expansion of financial technology products like e-wallet.
Young adult consumers in 21st century is considered as technology-savvy as they were born in the era of
smartphone technology (Karim, Haque, Ulfy, Hossain, & Anis, 2020). Currently, the digital revolution reaching
Malaysia has a major effect on the entire population, including students of higher education. This is because all
the daily consumption are easier to manage from ordering food or drinks online using a smartphone for online
shopping. Everything is now at the fingertips, and one also does not have to step into any bank to make certain
payments as everything can be done on a smartphone by using an application or using a bank card. In Malaysia,
the cashless technology known as digital wallet or e-wallet or electronic wallet is new and increasingly popular
with customers, particularly among students. They are heavy users of smartphones and always like to adopt new
systems and technologies. By the end of 2018, the Minister of Higher Education opened a new chapter and
developed the idea of 'smart economy' for the introduction of smart campuses or digital campuses across public
universities as the ministry moves towards the Fourth Industrial Revolution (Industry 4.0) requiring the use of the
latest technology (Bernama, 2018). At this time, the implementation of the cashless campus concept carried out
in several public universities (UA) not only facilitate students because they do not have to rush to withdraw money
from ATM machines, but also in line with the latest technological developments that are seen as a trend among
the millennial generation (Laila, 2018). It is also a transition for campus residents toward more advancement in
financial management.
Universiti Teknologi Malaysia is one of the earliest universities to introduce the concept of cashless
campus. On November 2, 2017, Boost, an electronic wallet application (e-wallet) developed by Axiata Digital
entered into a strategic agreement with Universiti Teknologi Malaysia (UTM) to create the first campus without
cash in this country (Mahpar, 2018). According to Deputy Vice Chancellor (Development), Professor Dr Azlan
Abd Rahman said the initiative offered students a more enjoyable digital lifestyle by allowing easier purchases,
money transfers, top-ups and digital souvenirs apart from being in line with UTM's mission to be known as a
leading academic and technology centre world by changing the approach towards digital services (Mahpar,
2018).Since the covid-19 pandemic crisis hit almost every country in the world, it has had a tremendous impact
on society on the change of new norms to address this crisis. The new norms that have been recommended by the
World Health Organization (WHO) have changed the daily activities of the community. One of the changes
practiced by society can be seen in the concept of payment system in which the changes of new norms have led
society to use the cashless payment system. Based on the Mastercard Impact Study results, it shows that the use
of cash by Malaysians has decreased by 64 percent since the onset of the Covid-19 pandemic crisis (Bernama,
2020). Besides, the result from that study also shows that the cashless payment system that uses the e-wallet or
digital wallet increase 40 percent, its follow using debit card on 26 percent and credit card on 20 percent (Bernama,
2020).
The effort of government that make the E-PENJANA incentive for youth in 2021 Budget can be a factor
that encourage youth especially students in the use of cashless payment method. This because, from the speech
for 2021 Budget from Ministry of Finance, Tengku Datuk Seri Zafrul Abdul Aziz said that government spend
RM75 million for youths’ program where will give e-wallet voucher RM50 for 1.5 million youths which are youth
who are 18 until 20 years old and for students from Higher Education Institute (IPT) (Aziz, 2020). This effort will
encourage the youth, especially students to use cashless payments by using e-wallet applications such as Touch
and Go (TnG). In addition, the E-Belia Program is also one of the initiatives announced under the 2021 Budget
and aims to alleviate the financial burden as well as encourage cashless spending among youths and students of
higher learning institutions (Ministry of Finance, n.d.). This program can attract students to use cashless payment
services since each recipient is eligible to claim e-wallet credit of RM150. Henceforth, the objective of the study
is to examine the level of awareness on cashless payment system among university students. Additionally, the
study will measure the factors that influence the intention of using a cashless payment system among university
students. Simultaneously, the study determines the relationship between relationship the level of awareness and
the intention to use cashless payment among university students.
76
1.1 Problem Statement

Since the covid-19 pandemic crisis hit almost every country in the world, it had given a tremendous impact on
society on the potential change of new norms to address this crisis. The new norms that have been recommended
by the World Health Organization (WHO) have changed the daily activities of the community. One of the changes
practiced by society can be seen in the concept of payment system in which the changes of new norms have led
society to use the cashless payment system. It has also happened in Malaysia whereby the usage of cashless
payments is increasing, and the use of cash was decreased. Based on the Mastercard Impact Study results, it shows
that the use of cash by Malaysians has decreased by 64 percent since the onset of the Covid-19 pandemic crisis
(Bernama, 2020). Besides, the result from that study also shows that the cashless payment system through the e-
wallet or digital wallet increased by 40 percent, this statistic follows by the increased usage of debit card by 26
percent and credit card by 20 percent (Bernama, 2020). The awareness of the society in following the Standard
Operating Procedure (SOP) that have been enforced by the Government along pandemic Covid-19 also has led
the people to the awareness of the usage of the cashless payment system. Based on the article by My Metro (2020),
indicated that the contactless payment continues to be the main choice of Visa Malaysia cardholders. Besides, the
usage of cashless payment can be seen in the purchase of the important products such as food and beverages,
groceries, restaurant, department store and pharmacy in this country (My Metro, 2020). People are more aware to
use this kind of payment method to avoid close contact among others and to prevent from the spread of the Covid-
19 disease. Towards cultivating the use of digital technology among university residents, initially, UTM has
collaborated with Boost to become a pioneer of 'Cashless Campus' (Mustafa, 2017). In line with the
implementation of smart campuses recommended by the Minister of Higher Education, there are several
universities have launched the concept of 'Cashless Campus' among them are Universiti Malaysia Sarawak
(UNIMAS), Universiti Sultan Zainal Abidin (UniSZA) and Universiti Teknologi Mara (UiTM) (Laila, 2018).
Nowadays, many universities have taken the initiative to work with the electronic wallet companies such as Boost,
Touch n Go, KiplePay and others to create a cashless campus in university.

Davis (1989) introduced the Technology Acceptance Model (TAM) to study the user behaviour towards the new
technology. This model is widely used by researcher to study the acceptance of information technology, as the
model helps to increase better understanding about the user behaviour in acceptance of information technology.
TAM model mainly focuses on two major factors which is perceived usefulness and perceived ease of use.
Besides, the model indicates that when new technology is introduced to consumers, a variety of variables influence
their decision as to how and when they will use it. These factors include the behavioural intentions, the attitude
and perceived usefulness of the system, the perceived ease of use of the system, the individual intention and the
facilitation or organizational situation.
Figure 1: Technology Acceptance Model
According to Hoong, Thi and Lin (2017), the aim of the model is to determine the primary determinant
of technology usage in any application. The purpose of the model is to control the personality of the individual to
use a particular method of technology application. Perceived usefulness (PU) and perceived ease of use (PEOU)
influence a person's state of mind in the technology usage of a particular tool.
2.1 Perceived Usefulness (PU)

Perceived Usefulness (PU) is defined as how often individuals feel that using a particular tool will boost the
efficiency of their tasks (Davis, 1989). Perceived usefulness is a crucial determinant that has a significant impact
on consumer convictions and the expectation that innovation will be used. Perceived usefulness (PU) prescribed
as the degree to which a person assumes that using a specific system would increase the efficiency of his or her
work. Perceived usefulness is the strongest factor in TAM that has a major effect on behavioural intent (Davis &
Bagozzi, 1989).
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2.2 Perceived Ease of Use (PEOU)

Perceived ease of use (PEOU) is defined by how often the user apply a particular tool and the effort (Davis, 1989).
Past research has shown that perceived ease of use (PEOU) impacts target in two ways: direct and indirect effect
through the utility of the tool (Davis, 1989). Perceived ease of use refers to the simple and understandable
interaction that users have with the new system, and how relaxed they feel when using the system. Theoretically,
perceived ease of use is viewed when the consumer thinks that the invention is not difficult to grasp, learn and
use (Liu & Tai, 2016).
2.3 Theoretical Framework
Figure 2: Theoretical Framework
Perceived
Ease of Use
Perceived Intention to use Actual Usage of

Usefulness Cashless Payment Cashless Payment
Privacy and
Security
Facilitating
Condition
Based on Figure 2, there are four of the factors that has been applied to describe the intention to use
cashless payment which are Perceived Usefulness (PU), Perceived Ease of Use (PEOU), Privacy and Security
(PS) and Facilitating Condition (FC) have been applied to measure behaviour intention towards the adoption of
technology.
The dependent variables in this study stated in the theoretical framework is Intention to use Cashless
Payment and Actual Usage of Cashless Payment. Ahmad, Hassan and Rosli (2019) had done the same study which
entitled “Consumer Intention of Using E-Wallet System Among Students in Public Institution”. The objective for
their study is to determine the factors that influence consumer intention of e-wallet system. The model that has
been used in this study is UTAUT model which it consists of performance expectancy, effort expectancy, social
influence, culture, and perceived risk. The previous study conducted is persistent with the current study which
focused on the technological adoption on the intention of cashless payment system in daily application.
3.0 Research Methods

The data collection method that being used for this research is primary data. The data were collected based on
primary sources by using nonprobability sample which is convenience sample. Primary data are obtained in
various ways such as questionnaire, survey, experiments as well as interview. In this study, the primary data is
obtaining through the questionnaire that distribute to the participants. In this study, the target population refers to
the group of individuals targeted by the researcher to collect data to achieve the research objective of this study
(Sekaran & Bougie, 2016). The main objectives of this research are to identify the factors that influence the
intention of using a cashless payment system among university students. Therefore, the target population of the
research is the university students who are using the cashless payment system. It is impossible to involve all
university students in all university in Malaysia due to the time constraint and limitation. Therefore, the target
population for the survey was targeted student in Universiti Teknologi Malaysia (UTM) at Johor Bahru. Since the
total number of students in UTM Johor Bahru are very huge, the survey will not involve all students and will be
focused on undergraduate students from one faculty only which is from Faculty of Built Environment & Surveying
due to condition that that the faculty has large number of students compare to other faculty.
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Table 1: Population of Universiti Teknologi Malaysia Students

POPULATION
Universiti Teknologi Malaysia (Consists of 7 faculties and schools): -
➢ Faculty of Engineering
➢ Faculty of Built Environment & Surveying
➢ Faculty of Science
➢ Faculty of Social Sciences & Humanities
➢ Razak Faculty of Technology & Informatics
➢ Azman Hashim International Business School
➢ Malaysia-Japan International Institute of Technology
Postgraduate Students 9,230
PhD Students 4,703
Undergraduate Students 15,678
International Students 4,761
Total Number of Students 34,372
Based on the Table 1, it shows the total number of all students in Universiti Teknologi Malaysia which
consists of seven faculties and schools. Besides, the table also show the total of the categories of students namely
postgraduate, PhD, undergraduate and international students.
Table 2: Target Population for this Research

TARGET POPULATION
Faculty of Built Environment & Surveying Undergraduate Students (2nd & 3rd Year)
Table 2 stated the selected faculty for the target population for this research. Target population for this
research are undergraduate student from Faculty of Built Environment & Surveying who are in second and third
year. In that faculty, there are nine program that offer for undergraduate students’ which researcher need to ensure
that the distribution of data collection for this study is fair according to the year (2 nd & 3rd year) and program (nine
bachelor program). This study using stratified random sampling techniques which is the type of probability
sampling that can be separate an entire population to be represent into homogenous group (strata). Within each
strata list, a sampling unit is picked randomly.
This sampling techniques is also called "random quota sampling". In this research, stratified sampling
technique was applied wherein the target population are students from Faculty of Built Environment & Surveying
and students from that faculty were stratified based on the year of study (second and third year). This technique
was being chosen in this research to ensure that each segment of the population has a fair probability of being
chosen. Sample sizes refer to the group of people selected from the population that have been drawn so that the
researcher can collect the information and perform the examiner based on the answers provided by the size of the
survey (Mei, 2019). According to Ahmad, Hassan and Rosli (2019) the minimum sample size that determined by
the rules is 30 and the maximum are 500 which it is appropriate for most research. The sample size for this study
were targeted 200. Data collected from the primary source of the questionnaire will be analysed using quantitative
methods. The use of SPSS software to analyse the data that has been collected is intended to facilitate data analysis
because it involves a large amount of data. SPSS also gives accurate decisions and can be implemented
immediately. The use of SPSS can provide a mean value which can identify the dominant factors that influence
the use of cashless payment. In addition, with the use of SPSS also can provide the significant value for the factor
where it can determine the factors that are have relationship between level of awareness and the intention to use
of cashless payment among university students.
The questionnaire that develops in google form format had been distributing to target respondent who are
undergraduate student which second and third years of Faculty of Build Environment and Surveying. There are
212 respondents are committed in answers the questionnaire which are received completed by researcher. The
total of 212 data received are including 22 data of pilot test. The 190 data collected after pilot test were recorded
and analysed by using SPSS software.
4.1 Reliability Analysis
Table 3: Reliability Statistic

Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
0.877 0.885 32
Based on the Table 3, its show the reliability analysis of overall for this study which shown the result of
Cronbach’s Alpha was 0.877. Based on Cronbach’s Alpha Rule of Thumb, alpha 0.9 > α ≥ 0.8 means the
consistency is good and have a very high relationship. Thus, the consistency of this research is good and reliable.
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4.2 Descriptive Analysis
4.2.1 To examine the level of awareness on cashless payment among university students.
Table 4: Means of Dependent Variable (Level of Awareness)

Dependent Variable Mean Mode
Intention to Use Cashless Payment 4.32 5
Actual Usage of Cashless Payment 4.07 4
Based on the Table 4, the study found that the Intention to Use Cashless Payment is at a high level with the total
average mean value which is 4.32. Besides that, in this research, most of the respondents were “Strongly Agreed”
to the question in Intention to use Cashless Payment variables. This can be proven with the mode score in Intention
to use Cashless Payment (I) is 5. Besides, the score means for Actual Usage of Cashless Payment that shown in
Table 4 also at high level with the total average of mean value is 4.07. Then, in this research, most of the
respondents were “Agreed” to the question in Actual Usage of Cashless Payment variables. This can be proven
with the mode score in Actual Usage (AU) mostly in 4.
4.2.2 To measure the factors that influence the intention of using a cashless payment system among university
students
Table 5: Factor that Influence the Intention of Using Cashless Payment

Independent Variable Mean Mode
Perceived Usefulness 4.29 5
Perceived Ease of Use 4.29 5
Privacy and Security 3.81 4
Facilitating Condition 4.04 5
Table 5 shown the result of analysis that shown the overall mean score for each factor that influence the intention
of using cashless payment among university students. The results of the analysis showed that the respondents had
a high level of awareness of the perceived usefulness factor when recording an overall mean score of 4.29. From
perceive usefulness, its show that many respondents are aware that using cashless payment cashless payment
method is efficient for them. Besides that, in this research, most of the respondents were “Strongly Agreed” to the
question in Perceived Usefulness variables. This can be proved with the mode score in Perceived Usefulness is 5.
Then, the result for perceived ease of use shown that the level of awareness towards the perceived ease of use is
high and it is indicated by the overall mean score of 4.29. The findings of the study showed that respondents are
strongly agree that the cashless payment system is easy and accessible to use. Furthermore, in this study, most
respondents “Strongly Agreed” to the question in the Perceived Ease of Use variables. This is shown by the fact
that the mode score of Perceived Ease of Use is 5.
The means score for the privacy and security also have a high influence for the respondents which leads
to the intention to use cashless payment by showing a mean rate of 3.81. Most of the respondents are aware that
the features in online transaction will assure the transaction validity and security. Aside from that, most
respondents in this study “Agreed” with the question in the Privacy and Security variables. This is shown by the
assumption that the mode score for Privacy and Security is mainly 4. Finally, the analysis revealed that
respondents had a high degree of awareness of the facilitating condition factor, with an overall mean score of 4.04.
It shown that most respondents acknowledged that they have the skills and abilities to use cashless payment system
to make payment. Other than that, in this research, most of the respondents were “Strongly Agreed” to the question
in Facilitating Condition (FC) variables. This can be proved with the value of mode score mostly are 5 in
Facilitating Condition (FC). Based on the 4.2, the result of the study showed that all factors have high level which
all are fall in the range from 3.81 to 4.29. The factor of Perceived Usefulness (PU) and Perceived Ease of Use
(PEU) has the same mean score value of 4.29 which is the highest mean score value compared to the other two
factors, Privacy and Security (PS), and Facilitating Condition (FC). This indicates that these two factors, Perceived
Usefulness and Perceived Ease of Use are the dominant factors in this study when it can be evidenced by the
overall value of the highest mean score of 4.29. Meanwhile, the Privacy and Security factor and the Facilitating
Condition factor got an overall mean score of 4.04 and 3.89, respectively.
4.3 Multiple Regression
4.3.1 To determine the relationship between the level of awareness and the intention to use cashless payment
among university students
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Table 6: Multiple Regression Analysis Model

Intention to Use
Model Standardized Coefficients (Beta) t Sig.
(Constant) 4.969 .000
Perceived Usefulness .672 7.197 .000
Perceived Ease of Use .095 1.042 .299
Privacy and Security .022 .294 .769
Facilitating Condition -.044 -.650 .517
Actual Usage
Model Standardized Coefficients (Beta) t Sig.
(Constant) 3.852 .000
Perceived Usefulness .535 5.714 .000
Perceived Ease of Use .050 .543 .588
Privacy and Security .151 2.054 .041
Facilitating Condition .079 1.157 .249
Based on this two of dependent variable which is Intention to Use and Actual Usage which shown in Table 6,
both are shown that the factors of Perceived Usefulness are significant with dependent variable. This can be proved
when the significant value of factors Perceived Usefulness recorded in same value 0.000 which have less than
alpha value 0.05. It shows that in this research, Perceived Usefulness have positive relationship between level of
awareness in using cashless payment among university students
4.1 Discussion on Level of Awareness on Cashless Payment among University Students

Based on the data analysis, the overall results showed that respondents had a high level of awareness on intention
to use cashless payment when Intention to Use and Actual Usage recorded a high mean overall score of 4.32 and
4.07, respectively. The high level of awareness among respondents are proven when they willing to use cashless
payment for other utilities and billing payment in future. In addition, they also intent to use cashless payment
whenever possible. So that, they will use the cashless payment system frequently and they will use cashless
payment method in any payment and billing system. It is important because the level of awareness measured is
the essence of the study and can be used as a criterion for the validity of the data obtained to assess the objectives
of the next. There are two dependent variables that are revealed to describe the level of awareness on intention to
use cashless payment which is Intention to Use and Actual Usage. The findings of the study on the level of
awareness towards cashless payment system is relevant with the study conducted by Tee & Ong (2016) that stated
cashless payment will increase the community perception on the usage of cashless system as a mechanism of
interchange for services and goods. The findings also indicated that the electronic payments have led the
community to believe and aware that the cashless society is important toward the digital transformation of a
business transaction (Kumari & Khanna, 2017).
4.2 Discussion on the Dominant Factor that Influence the Intention of Using Cashless Payment System
As refers to the findings on data analysis, the findings from descriptive analysis reveals that factor of perceived
usefulness and perceived ease of use have high level score than privacy and security and facilitating condition
factors. This finding is also parallel with research done by Kowang, et al. (2020) which factor of perceived ease
of use and perceived usefulness are scored high. In research by Kowang, et al. (2020), its stated perceived ease of
use factor is score higher that perceived usefulness. In addition, according to the research by Elizabeth & Guoxin
(2017), the factor of perceived ease of use have score as higher mean value (4.19) after relative advantage factors
(4.36). The research by Ozturk (2016) revealed that the factors of perceived usefulness are scored relatively higher.
4.3 Discussion on Factors that have Relationship between the Level of Awareness and the Intention to Use
Cashless Payment
The result shows in the data analysis that only one factors out of four that positively have relationship with the
level of awareness and intention to use cashless payment. The factor that has significance is factor of Perceived
Usefulness which have standard beta (β) value 0.535, 0.672 and have small significant value than alpha value,
0.000. This result is consistent with the study of Kustono, Nanggala, & Mas'ud (2020) which mention that
perceived usefulness has a positive impact that influence the behavioral intention to use and behavioral intention
to use which have significance with attitude to use which it directly affects the factor of perceive usefulness.
Besides that, according to Karim, Haque, Ulfy, Hossain, & Anis (2020), also mention that perceived usefulness
have positive and significant relationship with the behavioural intention to use with show the value of standard
beta and t value (β=0.308, t=4.461).
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5.0 Conclusion and Recommendation

As a conclusion, based on this study, all the three objectives had been achieved. In this research the dominant
factors that influencing the intention to use cashless payment among university students is factor of perceived
usefulness and perceived ease of use. While the significant factors that positively have relationship between level
of awareness and the intention to use of cashless payment is factor of perceived usefulness only. Finally,
researchers are hoping that this study can help other researchers in providing some knowledge and information
and exposure related to the level of awareness and intention to use cashless payment among university students
and make this study as reference for future application in cashless payment system. From the study, it is indicated
that that the university management plays an important role in generating awareness in students in using cashless
payment platform in transaction of selling and buying in the campus. Thus, university can do some program or
campaign regarding the culture to use the cashless payment method among students and staff. Besides, the
university also can instruct the existing stores in the campus area to add several payment methods such as by e-
wallet, QR code or by card in theirs store. Henceforth, the future researcher can do the research with use the of
different analytical methods to see the differences in the measurement of awareness level and to be able to obtain
more accurate and authentic information. Future researchers can also implement by identifying respondent
demographic factors such as gender and age influencing or not the level of awareness and intention to use cashless
payment. Consequently, the other researcher could also expand the scope of the study that related to the e-wallet
payment system.
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Paper ID: 088-086
THE RELATIONSHIPS OF MONETARY POLICY, STOCK MARKETS, MAIN COMMODITIES

AND COVID-19 ON CRYPTOCURRENCY PERFORMANCES: THE US, CHINA & MALAYSIA
Noor Azryani Auzairy1

Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia1.
1.0 Introduction
It has always been questioned on the roles of monetary policy when the markets started to use cryptocurrencies
as medium of exchange instead of government money. There is no government control on the amount of
cryptocurrency available to be used in this world. Thus we need to check whether the changes in monetary policy
could have significant relationship with the demand and supply of cryptocurrency, which could affect the crypto
prices. The monetary policies implemented by the three countries: the United States, China and Malaysia are
applied in this paper. The US is the country, most commonly referred to in terms of its monetary policy, the global
strength of its USD, and its biggest crypto investment gains. China contributed around 65%-75% world’s Bitcoin
mining, even though in June 2020, China was to shut down over 90% of its Bitcoin mining capacity and to ban
ICOs. China is the country with the highest raw crypto transaction, the second highest crypto investment gain and
the first major economy to issue digital currency. Despite the US and China, there is a need to also compare the
relationship of the crypto prices with Malaysia’s monetary policy, representing the other emerging countries. This
is to ensure of Malaysia’s feasibility or the need to work on this crypto or its own digital currency.
Other variables to take into account, which could affect the crypto prices, are stock markets and main
commodities: crude oil and gold performances. Covid-19 pandemic creates new norms in our daily lives. More of
electronic and digital transactions and activities are in power due to such new norms. There is a need to proof
whether covid-19 cases significantly able to influence the performance of cryptocurrency. If there is such
significant influence, then the crypto or digital currency must be looked into seriously and action must be done
immediately by the authorities.
This paper is to analyse the relationships of changes in monetary policy, stock markets, oil, gold on
cryptocurrency performances of US, China and Malaysia. Since Bitcoin is the largest distributed crypto in terms
of market capitalization, Bitcoin priced in USD is used to represent cryptocurrency. Indeed, Bitcoin is the leading
digital currency and remains as the go-to leader of the space. Monetary policy is represented by overnight policy
or interbank overnight interest rates and exchange rates (USD/SDR, USD/CNY and USD/MYR). In addition, this
paper is also examining the impact of covid-19 on crypto performances, knowing the significant influence of
covid-19 pandemic towards our new norms in these recent years. This paper is also contributing on the impact of
covid-19 on the relationships of changes in monetary policy, stock market, oil and gold prices on bitcoin returns.
2.0 Methods
Data is collected on daily basis from May 2019 to August 2020, which is eight months before and eight months
during covid-19 pandemic. Covid-19 was declared outbreak by the World Health Organization (WHO) in January
2020. The data is based on the United States (US), China and Malaysia data.
Data collected are Bitcoin price in US Dollar as the dependent variable, which represent cryptocurrency.
The independent variables are monetary policy factors: interest rates and exchange rates. Money supply is not
included due to its incomplete daily data availability. Other variables, which represent the market and economic
performances of the countries are stock market composite or main indices, oil price and gold price. In examining
the impact of covid-19 on cryptocurrency performance, daily new positive covid-19 cases and new death covid-
19 related cases for each country are collected. The performances of the variables are their returns, as below:
Rt or ∆Pt = (Pt - Pt-1) / Pt-1 (1)
Those data are tested for unit root in order to obtain stationary data to apply for OLS Multivariate
Regression models, as below:
Objective 1: to analyse the relationships of the monetary policy factors, stock market and main
commodities performances on bitcoin performances.
∆BTC = α + β1∆IRUS + β2∆IRCn + β3∆IRMy + β4∆ERUS + β5∆ERCn + β6∆ERMy + β7∆SMUS +

β8∆SMCn + β9∆SMMy + β10∆Oil + β11∆Gold + Ɛ (2)
Objective 2: to examine the impact of covid-19 on the relationship between monetary policy and
cryptocurrency.
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∆BTC = α + β1∆IRUS + β2∆IRCn + β3∆IRMy + β4∆SMUS + β5∆SMCn + β6∆SMMy + β7∆ERUS + β8∆ERCn +

β9∆ERMy + β10∆Oil + β11∆Gold + β12CPG + β13CDG + β14CPC + β15CDC + β16CPM + β17CDM + Ɛ (3)
Where ∆ = change in P; BTC = bitcoin price (USD/BTC); IRUS = US overnight interbank offer rate; IRCn =
China interbank offer rate; IRMy = Malaysia overnight policy rate; ERUS = US Dollar/Special Drawing Rights;
ERCn = US Dollar/Chinese Yuan; ERMy = US Dollar/Malaysian Ringgit;SMUS = New York Stock Exchange
Composite Index; SMCn = Shanghai Composite Index; SMMy = Kuala Lumpur Composite Index; Oil = Brentt
crude oil price in USD per barrel; Gold = gold price in USD per ounce; CPO = crude palm oil price
Generally, Bitcoin prices and returns are greatly influenced by their own previous performances. The OLS
multivariate regression indicates that the changes in interest rates are not significantly related to the performances
of bitcoin. The changes in the US dollar (USD), are positively related to Bitcoin returns. The greater the
appreciation of US dollar, the higher the price of Bitcoin. Both changes in China yuan and Malaysian ringgit have
no significant relationships with bitcoin returns. This could be due to the common use of USD in buying and
selling the Bitcoin, the greatest number of US investors investing and gaining from Bitcoin investment as well as
the country with the most crypto ATMs. In terms of stock markets, both US and Malaysia stock market returns
have significant relationship with bitcoin returns. However, unlike KLCI, the NYCI returns are inversely related
to Bitcoin return. This may indicate that either people put their investment in US stock market or in
cryptocurrency. Those two seem to be substituting each other. Surprisingly, Malaysia stock market plays
significant role on bitcoin as compared to China stock market with positive relationship. Between the two main
commodities, only changes in crude oil price has significant positive relationship with bitcoin returns.
OLS Regressions Results Summary

No Covid Cases With Covid Cases Outbreak Outbreak
(5/2019-8/2020) (5/2019-8/2020) No Covid cases (2020) with Covid Cases (2020)
DERUS 3.236** 3.291** 2.633*
DSMUS -0.493*** -0.509*** -0.560*** -0.621***
DSMMy 1.371** 1.322** 1.928*** 1.836***
DOIL 0.181*** 0.179*** 0.175** 0.165**
CDCn 2.1E-06* 3.1-05**
Adj R2 0.121 0.110 0.343 0.347
Taken into account the Covid-19 cases, which have been affecting the whole world, those same variables,
which are the changes in US dollar, US and Malaysia stock markets, and oil price remain having significant
relationship with changes in bitcoin price. Only new daily covid-19 death cases in China are positively related to
bitcoin returns, but not the global daily positive and death cases. If China’s covid death cases are to be the main
factor, thus it indicates how the big number of death suddenly reported by China’s authority could influence the
bitcoin investors’ decision on their investment in bitcoin. The higher the number of covid death cases, the greater
the changes in bitcoin prices. This could also due to the announcement on Wuhan’s lockdown, which had triggered
people’s minds on the need to deal with more online activities and transactions. This matter boosts the need and
demand for cryptocurrency.
Based on the analysis during Covid-19 outbreak and pandemic only, in 2020, all those significant
variables remain significantly related to Bitcoin returns. Indeed, the adjusted R2 is greater. However, when covid-
19 cases are added, the USD is no longer significantly related to bitcoin returns. Thus this proves that there is only
a weak relationship between the changes in USD (monetary policy) and changes in bitcoin price.
As a conclusion, central banks’ monetary policy, generally, could not relate to the performances of
bitcoin price. The only control could be done is on the USD, which mainly been used as the converted currency,
for the buying and selling of bitcoin for transactions and investment purposes. Thus, the control on USD by the
Federal Reserves could somehow influence the demand for bitcoin, and thus determine the bitcoin returns.
.Interest rates and other exchange rates play no significant relationship with crypto. The covid death cases doe
contribute to greater changes for bitcoin price. But such influence is only triggered by China. World cases and
world lockdown do not really give significant impact on bitcoin prices.
Acknowledgement
Grateful appreciation goes to FEP UKM Research Initiative Grant: EP-2020-054 for the financial support to
conduct this research activity.
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Paper ID: 099-098
THE IMPACT OF DIGITAL TECHNOLOGY AND BUSINESS REGULATIONS ON FINANCIAL

INCLUSION AND SOCIO-ECONOMIC DEVELOPMENT IN LOW-INCOME COUNTRIES
Yusef Ali Yusef Yakubi1, B. Basuki1, Rudi Purwono1, and Indrianawati Usman1
Faculty of Economics and Business, University of Airlangga (UNAIR) Indonesia 1.
1.0 Introduction
Digital technology and business regulations are said to have brought tremendous facilities, accountability, and
many other features to improve people’s lives and enhance their social and economic status in both developed and
developing countries. In the last few years numerous emerging economies particularly, low-income countries have
shown vigorous concerns to catch up with digital technology and be digitally involved. Additionally, many low-
income countries have followed initiatives at different levels to build some technical infrastructures and design
regulatory policy reforms to benefit from digital technology and regulations in the era of digital globalization.
Recently, large number of international players, local governments, donors, and development organizations
increasingly speak about the resulted gains of digital technology adoption besides the benefits of good business
regulations. They accordingly assign sizeable budgets, design various programs and provide limitless supports for
low-income countries to take on digital technology and enact regulatory framework reforms that can contribute
to low-income economies’ betterment.
The enormous growth and expansion of digital technology call forth a thorough and systematic inquiry
on its potentials for improving human lives, particularly through financial inclusion and socio-economic
developments. Evans (2018) argues that there is a deficiency in current literature that highlight the effect of
internet and digital mobile usage on financial inclusion. Similarly, business regulations are considered important
motivators for a favorable structural change and socioeconomic growth, therefore, their impact on the social and
economic development of low-income nations necessitate scrutinizing as well.
Digital technology and business regulations seem to share the quality of being growth and development
stimulators. This research is aimed to identify and analyze the role of digital technology (particularly digital
mobile technology) and business regulations on financial inclusion and socioeconomic development in low-
income countries.
Large number of population still lack access to banks in different parts of regions in low income countries
and digital technology is contemplated as a powerful tool to reach especially the unbanked people. Reynolds,
Klawitter, Biscaye, and Anderson (2018) clarified that conventional banks in low income countries recently made
a lot of efforts through digital financial services to expand their financial services and arrive at the underserved
individuals.
Low-income countries are confronted with multi-facet economic and social problems such as insufficient
access to essential financial services in addition to gender inequality, corruptions, and adversity. Many citizens
of low income or developing countries cannot approach formal banking channels to get the required services and
products. Furthermore, the majority of them particularly women still suffer from acute levels of disparities and
lack basic human development opportunities. Consequently, various organizations have realized the importance
of modern technology and business regulations to support populations in developing countries to get adequate
access to financial services, information and resources besides improving the business environments. And all this
can presumably reduce poverty in low-income countries and enable their population to rightfully enjoy suitable
living conditions via being exposed to better human and socioeconomic prospects.
The inherent benefits of digital technology in enhancing accessibility through digital financial inclusion
in addition to business regulations that shape financial services and elevate investment constitute a very important
phenomenon which perhaps requires further investigation. Business regulations seem to move unitedly together
with digital technology to contribute to the compelling and central goal of socio-economic developments
especially in low-income countries. Examining the relationship between digital technology or business regulations
and financial inclusion and socioeconomic growth has remained low in the literature. So, this study pursues to
tackle this gap. In this study, the adoption of digital technology and business regulations and their effects on
financial inclusion and socioeconomic development in low and lower middle-income economies will be
examined.
In fact, there are numerous empirical and theoretical studies that have tested the impact of digital
technology on financial inclusion and the influence of business regulations on economic growth. However, as far
as we know, no previous research has investigated the effect of the twins of digital technology and business
regulations as drivers for either financial inclusion or socioeconomic development.
85
Another thing, several theoretical and empirical studies separately revealed the significant relationships
between financial inclusion and economic growth as well as socioeconomic developments. Nevertheless, rare
research appeared to study financial inclusion as a means that is influenced by digital technology or business
regulations in particular to provoke socioeconomic developments so far. For this reason, this study seeks to fill
this gap.
The field of examining the impact of modern digital technology on socioeconomic development is now
maturing. O’Connell and Ghani (2016) argue that studying the role of technology and exploring its impact on
growth and development is still a new issue and at its initial stage, though increasing quickly.
The adoption of digital technology has grown enormously in low-income countries in the last few years.
Most low-income countries have undergone high growth rates far exceeding 50% in the number of mobile
subscriptions, individuals using internet and fix board subscriptions (International Telecommunication Union,
2019; World Bank IBRD, 2016).
What’s more, the growing adoption rates of digital technology is conceivably supposed to boost financial
inclusion in low-income countries. Yin, Xu, Chen, and Peng (2019) hence assert the importance of financial
inclusion to support financial stability, mitigate social and economic ills and inequalities and reduce poverty.
Moreover, financial inclusion has now become a fertile area of study and research that still attracts many
researchers and academics, Studying the impact of digital technology and ICT on economic growth is also a
current issue which is still open to investigation, as assertedly confirmed by Bahrini and Qaffas (2019). At the
same time, the relationships between the adoption of business regulations and business models improvement and
economic growth have been evidently manifested in several studies
To that end, this study aims to examine factors that arouse financial inclusion enhancement and socio-
economic developments as a result of digital technology and business regulations adoptions. As aim indicates, the
research will show the effects of taking on digital technology and business regulations for achieving inclusive
financial systems and improved socioeconomic communities.
2.0 Methodology
2.1 Method
This study utilizes a “causal research approach” and employs structural equation modelling (SEM). Oppewal
(2010), Sreejesh, Mohapatra, and Anusree (2014) explain that causal research always embraces the hypothesized
causes and their relationships with the resulted effects. SEM is nevertheless described by Hair et al. (2014) as a
“multivariate technique combining aspects of factor analysis and multiple regression”. McQuitty and Wolf (2013)
uphold that SEM is particularly well suited for evaluating the relationships among any number of observed and
latent variables. Thus, this study adopts predominantly a quantitative method which seems advantageous for its
high level of measurements and relies on data quantification which is usually analyzed and interpreted statistically
(Faryadi, 2019).
2.2 Population and sampling

The population of this study consists of 77 countries. Thygesen and Ersbøll (2014) maintain that this kind of
population could be regarded as an “all population sampling” technique since all the 77 low-income (and lower
middle) countries are included in the research. Selecting all population sampling is a powerful procedure that
allows all units to participate in investigation (Rahi, 2017). On the other hand, Etikan, Musa, and Alkassim (2016)
present “Total Population Sampling” as a type of purposive sampling method which uses the entire population
that meet the criteria incorporated in the research.
2.3 Data collection

This study used cross-sectional data based on chiefly secondary data and were collected from several resources
including World Bank, IMF and UNDP. Secondary data are described by Martins, Cunha, and Serra (2018) as
datasets that are formerly collected by someone else other than the researcher and appear convenient to address
the research questions of this study. Moreover, Ellram and Tate (2016) consider secondary data as a useful source
to be used in several fields. Secondary data are much preferred for the well-established measures they frequently
provide which could help researchers to study real phenomena with a great deal of clarity (Hair, Risher, Sarstedt,
& Ringle, 2019). Johnston (2014) adds that secondary data provide researchers with flexible and viable sources
that can be easily collected, compiled, and stored conveniently.
2.4 Data Analysis

After examining the empirical data, the analysis of reliability and validity measurements was established. Smart
PLS 3. Software Package was precisely employed for data analysis in this study, and it turned to be optimal to run
the measurement and structural analysis. The study examined the hypothesized relationships between variables
by following Partial Least Squares (PLS-SEM) path modelling. PLS-SEM is a variance -based technique
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renowned as a causal-predictive method of data analysis (Fatoki, 2019). Hair et al. (2019) clarify that PLS-SEM
is causal-predictive technique that attracts many researchers by its efficiency for estimating complex models with
many constructs and numerous structural paths besides being more flexible towards data distributional
assumptions. PLS-SEM is additionally found advantageous for conducting secondary data analysis “from a
measurement theory perspective”. The analysis involves the two consecutive stages of SEM Model assessments:
measurement and structural.
3.0 Results
3.1 Measurement Model Assessment

The initial stage of measurement model assessment requires an overall evaluation of the reliability of indicators
and validity of constructs. As explained by Hair et al. (2019), reliability typically involves indicator loadings to
be more than 0,70 in addition to the internal consistency reliability that is usually represented by composite
reliability and Cronbach’s alpha to be more than 0.70% too.
In fact, the evaluation of measurement model in this study included consistency reliability, convergent
validity, and discriminant validity. Table (1) demonstrates the levels of reliability and validity of the constructs
and their indicators. Composite reliability (CR) and Cronbach’s alpha were specifically used to examine the
internal consistency of the data and their values were found greater than the recommended standard value of 0.70
denoting that the measurement model in this paper has a good internal consistency. More specifically, CR
indicated that all constructs recorded higher values than 0.70 % for example Access (0.895) and BusReg (0.877)
implying adequate reliability for the study. Additionally, the values of Cronbach’s alpha exceeded the cutoff rate
of 0.70% for all constructs for example DigTech (0.855) and Usage (0.828) suggesting levels of acceptable
reliability too.
Factor loadings of all measures surpassed the 0.70%, e.g. A1 (0.898) and A2 (0.834), except B4 (0.696),
which reached the minimum level yet found significant and reliably contributed to its construct validity.
The next step was to estimate convergent validity of measures and discriminant validity of constructs.
Convergent validity refers to the degree “to which the construct converges to explain the variance of its items”
and it is evaluated by the average variance extracted (AVE) to be more than 0.50%. All values of AVE were also
beyond 0.50 e.g., Access (0.739) and BusReg (0.641).
Thus, results of convergent validity and consistency reliability of all constructs as measured by AVE,
CR, Cronbach’s alpha, and factor loadings, as shown on Table (1), are supported in this study.
Table 1: Outcomes of Validity and Reliability Measures

Composite Cronbach’s
Loadings AVE
Construct Code Items/Indicators reliability alpha
A1 ATMs per 100,000 adults 0.898
Access A2 Branches per 100,000 adults 0.831 0.739 0.895 0.824
A3 Access to a mobile phone (% age 15+) 0.848
B1 Ease of doing business score 0.855
B2 Protecting minority investors score 0.790
BusReg 0.641 0.877 0.811
B3 Getting credit score 0.852
B4 Dealing with construction permits score 0.696
D1 Digital Adoption Index 0.941
DigTech D2 Mobile cellular subscriptions (per 100 people) 0.827 0.777 0.912 0.855
D3 Individuals using the Internet (% of population) 0.872
Q1 Disclosure index (0-5) 0.709
Quality Q2 Dispute resolution index (0-1) 0.805 0.629 0.835 0.74
Q3 Getting credit: Distance to frontier (0-100) 0.858
SE1 GDP per capita, PPP (current international $) 0.728
SE2 Gender Development Index (GDI) 0.714
SocioEconom SE3 CPIA gender equality rating (1=low to 6=high) 0.908 0.625 0.869 0.799
CPIA policies for social inclusion/equity cluster average
SE4 0.798
(1=low to 6=high)
U1 Account (% age 15+) 0.855
U2 Deposit accounts per 1,000 adults 0.846
Usage 0.659 0.885 0.828
U3 Borrowed from a financial institution (% age 15+) 0.751
U4 Saved at a financial institution (% age 15+) 0.790
AVE= average variance extracted
On the other hand, discriminant validity was assessed by applying Fornell and Larcker Criterion (Table
(2) and the HTMT (heterotrait-monotrait) ratio of the correlations, Table (3). Discriminant validity refers to the
degree “to which a construct is empirically distinct from other constructs in the structural model” (Hair et al.,
2019).
87
Table 2 shows that the square root of AVE for every construct (bold value) is clearly above the
correlations of any other construct, e.g., the value of Access (0.860) is larger than the values of other five
constructs in this study. Moreover, Table (3) displays that HTMT values for all constructs are below 0.90%
implying absence of discriminant validity problems as maintained by Hair et al. (2019).
Table 2: Fornell-Larcker Criterion

Construct 1 2 3 4 5 6
Access 0.860
BusReg 0.62 0.801
DigTech 0.770 0.729 0.881
Quality 0.468 0.757 0.464 0.793
SocioEconom 0.728 0.706 0.773 0.485 0.791
Usage 0.75 0.706 0.657 0.564 0.659 0.812
Values on the diagonal (bolded) are square root of the AVE while the off- diagonals are correlations.
Table 3: HTMT ratio of Correlations Criterion

Construct 1 2 3 4 5 6
Access
BusReg 0.74
DigTech 0.89 0.861
Quality 0.55 0.839 0.537
SocioEconom 0.86 0.864 0.899 0.559
Usage 0.87 0.845 0.737 0.635 0.796
To conclude, the findings shown in the above tables (1), (2) and (3) confirm adequate levels of reliability
as well as convergent and discriminant validity of the measurement model of this study. Accordingly, structural
model assessment was attempted.
3.2 Structural Model Assessment

As recommended, Bias Corrected and Accelerated (BCa) bootstraps were selected at 0.05 significance level and
two-tailed testing was followed. The key results of the structural model assessment are provided in Table (4)
which shows the hypothesized causal relationship between the constructs of the model of this study. For evaluating
structural model in PLS-SEM, Hair Jr, Hult, Ringle, and Sarstedt (2017) recommend checking for collinearity and
estimating the significance of the path coefficients, the level of the R 2 values, the f2 effect size and the predictive
relevance Q2. As Hair et al. (2019) maintain, the first step is to confirm that the critical collinearity does not exist
by making sure that VIF (Variance Inflation Factor) values are not higher than 5.
Therefore, the inner and outer collinearity was first checked before conducting structural model
assessment. As a result, all indicators and constructs contained a VIF value less than 5 suggesting that they were
devoid of critical collinearity, Table (4).
Table 4: Path Coefficients (Hypotheses testing) Results

Std Std 95 % Bca 95 % Bca
Hypothesis Relationship Beta Error t-Value Decision f2 CILL CIUL VIF
H1 DigTech → Access 0.485 0.128 3.777** Supported 0.443 0.243 0.723 1.761
H2 DigTech →Usage 0.304 0.110 2.774* Supported 0.095 0.059 0.500 2.135
H3 DigTech → SocioEcon 0.346 0.141 2.455* Supported 0.105 0.066 0.655 3.516
H4 BusReg → Quality 0.756 0.073 10.344** Supported 0.829 0.587 0.859 1.615
H5 BusReg → Usage 0.484 0.103 4.695** Supported 0.240 0.277 0.677 2.135
H6 BusReg → SocioEcon 0.286 0.145 1.974* Supported 0.056 -0.005 0.596 4.486
H7 Access → SocioEcon 0.264 0.108 2.444* Supported 0.063 0.016 0.469 3.407
H8 Usage → SocioEcon 0.059 0.117 0.501 Not Supported 0.004 -0.182 0.284 2.966
H9 Quality → SocioEcon -0.048 0.111 0.436 Not Supported 0.003 -0.268 0.184 2.504
H10 Usage → Access 0.433 0.129 3.354* Supported 0.353 0.189 0.699 1.761
H11 Access→ Quality 0.002 0.091 0.022 Not Supported 0.000 -0.145 0.184 1.615
Notes:
Critical t-values. *1.96 (P < 0.05); **2.58 (P < 0.01)
R2 (Access =0.699; Quality=0.573; Socioeconom=0.676 and Usage=0.542)
Q2 (Access=0.479; Quality=0.289; Socioeconom=0.364 and Usage=0.334)
88
The following step was to evaluate R2 values of the endogenous constructs. Hair et al. (2019) point out
that R determines the explained variance in each endogenous construct and shows the “model’s explanatory
2
power” in addition to the “in-sample predictive power”. The rule of thumb for R2 values of 0.75, 0.50 and 0.25
are viewed as substantial, moderate, and weak, respectively. Consequently, the estimated R2 values in this study
for the four endogenous constructs are considered ranging from 0.57 for Quality to 0.70 for Access while the key
endogenous construct of Socioeconomic reached an R2 value above 0.67. This may reveal the acceptable level of
the “in-sample predictive power” of the whole endogenous constructs in this study.
After that and based on the threshold of the t-value for hypothesis testing, it is worth noting that most
coefficients are found statistically significant at the significance level of P*<0.05 and P**<0.001, indicating that
the majority of the study hypotheses are supported, Table (4).
In fact, results of the first and second sets of hypotheses relevant to the impact of digital technology and
business regulations on financial inclusion and socioeconomic development are all found significant. Yet, the
impact of business regulations on financial inclusion and socioeconomic development is relatively higher than
that of digital technology .That is to say, H1 ,H2 and H3 support significant positive relationships between
DigTech and Access (β0.485, p < 0.01); DigTech and Usage (β0.304, p < 0.05) and DigTech and Socioecon
(β0.346, p < 0.05) meaning that Digital Technology positively influence both financial inclusion and
socioeconomic development in low income countries. Similarly, H4, H5 and H6 support significant positive
relationships between BusReg and Quality (β0.756 p < 0.01); BusReg and Usage (β0.484, p < 0.01) and BusReg
and Socioecon (β0.286, p < 0.05) revealing that Business Regulations have also a positive impact on both financial
inclusion and socioeconomic development in low-income countries.
However, in regard to the impact of financial inclusion on socioeconomic development, only Access is
found significant, H7(β0.264, p < 0.05) while both Usage, H8 and Quality, H9 do not significantly affect
socioeconomic development in low-income countries. And finally, regarding the relationship among the three
financial inclusion components, it was found that Usage, H10 has a positive impact on Access (β0.433, p < 0.05)
whereas Access, H11 does not influence Quality.
Therefore, it can be concluded that digital technology and business regulations coincidently have a
significant impact on both financial inclusion and socioeconomic development in low-income countries. However,
financial inclusion influences socioeconomic development only through access to financial services.
Then again, the structural relations among constructs were additionally assessed using f2 effect size and
found effective ranging from small e.g., H6 (0.05) to large effect size e.g., H4 (0.82). In fact, f2 values were above
the minimum threshold of 0.02 for all supported hypotheses.
Finally, the predictive relevance of the structural model was also estimated in this study using the cross-
validated redundancy measure of Q2 as recommended by Hair Jr, Hult, Ringle, and Sarstedt (2017). They argue
that Q2 values that are greater than 0 indicate a predictive relevance for any endogenous construct. Thus, it can be
assumed that the model of this study has a good predictive relevance since the Q2 values of Access (0.479), Quality
(0.289), Socioecon (0.364) and Usage (0.334) are all above 0.
To sum up, after conducting the validity and reliability analysis, structural assessment was pursued to
test the study hypotheses and answer research questions. It was found out that digital technology and business
regulations influenced both financial inclusion and socioeconomic development significantly in low-income
countries. Though the influence of the business regulations was a bit higher. It was also found out that access to
financial services had a positive impact on socioeconomic development.
4.0 Discussion
This study tries to examine the relationship between the dual forces of digital technology and business regulations
for enhancing financial inclusion and socioeconomic development in low-income countries. The study generally
hypothesizes that there is a significant positive relationship between digital technology and financial inclusion
and socioeconomic development on one side, and a significant positive relationship between business regulations
and financial inclusion and socioeconomic development on the other. As seen above, findings demonstrate a
significant positive relationship among these hypothesized relationships. The first set of the structural
measurement analyses, that included hypotheses 1 to 6, examined the impact of digital technology and business
regulations on financial inclusion and on socioeconomic development in low-income countries and was supported.
It might be mentioned that the attained positive impact of digital technology on financial inclusion and
socioeconomic development is found in accordance with a few former studies. One of them is(Evans, 2018) who
concludes that access to internet and use of digital technology can reduce the cost of financial transactions and
enhance facilities that could trigger financial inclusion. The findings of Cohen et al. (2018) further revealed a
strong correlation between digital technology and individuals’ quality of life. A similar findings of a study by
Adaba et al. (2019) illustrates the power of digital technology to enhance financial inclusion in developing
countries. Moreover, results of this study seem in line with the findings of a recent research of Bahrini and Qaffas
(2019) which indicates that digital technologies especially mobile phones act as key drivers of economic growth.
89
In a similar fashion, the impact of business regulations on usage and quality as well as
socioeconomic development was also observed and was in conformity with the conclusions of Messaoud and
Teheni (2014) and Dima and Dima (2018) who found a significant association between business regulations and
economic development.
However, unlike the findings of some empirical studies that showed a full effect of financial
inclusion on socioeconomic development, such as Yin et al. (2019), this study finds that only access to financial
services has a significant impact on socioeconomic development in low-income countries. Thus, it became in line
with the results of Demirgüç-Kunt, Beck, and Honohan (2008) who previously emphasized the importance of
access to finance to poor countries to invest and improve life.
Finally, yet importantly, the results of this study suggest that the use of mobile technology and internet
besides the adoption of sound business regulations can lead to better levels of financial inclusion and improved
living standards and gender equality in low-income countries. Simultaneously, adequate access to financial
services and products could also be effective to raise social and economic status and strengthen gender equality
among low-income nations.
90
Track: Financial Well Being

Paper ID: 016-008
MONETARY POLICY AND BANK PERFORMANCE: THE CASE OF SUB-SAHARAN AFRICA
Adamu Yahaya1.2
School of Business and Economics, Universiti Putra Malaysia, Malaysia1, Department of Business
Management, Faculty of Management Sciences, Federal University Dutsin-Ma, PMB 5001, Dutsin-Ma, Katsina
State2.
1.0 Introduction
Monetary policy is a crucial control instrument of macroeconomic trend. Meanwhile, the effectiveness and
transmission of monetary policy in the post-crisis period have been widely doubted due to increasing complexity
of the market economy1. The monetary is the instrument used by the central banks monetary policy tools to
influence intermediate target and achieve preset policy objective. Monetary policy transmission instrument is
viewed differently by scholars based on the perspective of various schools. Moreover, the monetary policy is
transmitted via two main ways: the credit and money channel. The former consists of the bank lending channel
while the latter include interest rate, exchange rate and the asset price channel2.
The banks’ loan supply revision is initiated by adjustment in their reserve, which is affected by interest
rate decisions of the central bank3. The aim of this paper is to analyze the effect of interest rates on the performance
of banks. On the other hand, the paper examines the impact of the lending rate in the economy through banking
performance. The result reveals a significant negative association between interest rate and banking performance.
The empirical result further reveal that lending rate operates better when used as monetary policy indicator.
2.0 Methods
The aim of the study is to test the influence of interest rate on the performance of commercial across some selected
banks in sub-Saharan Africa. The study intends to use two-step system generalized method of moment. The choice
of the analysis technique is prompted by the numerous advantages of the technique particularly in addressing
endogeneity bias commonly found among banks variables and provide a more robust and consistent estimates.
Both the general and specific models are presented below:
𝑃𝐸𝑅𝑖𝑗𝑡 = 𝑃𝐸𝑅𝑖𝑗𝑡−1 + 𝛽0 + 𝛽1 𝐼𝑇𝑅𝑖𝑗𝑡 + 𝛽2 𝐿𝐸𝑉𝑖𝑗𝑡 + 𝛽3 𝑁𝑃𝐿𝑖𝑗𝑡 + 𝛽4 𝐶𝐴𝑆𝑖𝑗𝑡 + 𝛽5 𝑆𝐼𝑍𝐸𝑖𝑗𝑡 + 𝛽6 𝐼𝑁𝐹𝑗𝑡

+ 𝛽7 𝐺𝐷𝑃𝑗𝑡 + 𝜂𝑖 + 𝜆𝑡 + 𝜀𝑖𝑗𝑡
3.1 Regression Result

The aim of the regression is to examine the effect of monetary policy on bank performance using a dynamic
model. The lagged dependent which are all significant, indicate the appropriateness of using the dynamic model
in the study. The differenced and system one and two step are reported but the inference is based on the twostep
system generalized method of moment, this is due to numerous advantage it has in terms of high number of
instrument capable of mitigating endogeneity bias and provide consistent findings. The main variable of interest
is the monetary policy which is proxy by interest rate. Interest rate in this model is significant at 1 percent and
negatively associated with return on asset of banks in sub–Saharan Africa. This implies that an percentage increase
in the interest rate decreases the performance of banks within the region, this is consistent with the result obtained
by Apergis & Lau (2017).
Leverage is significant at 1 percent and positively associated with ROA. This indicate that increasing
rate of leverage positively affect the performance of banks in SSA, this is in line with Ippolito, Peydró, Polo, and
Sette (2016) and Varotto and Zhao (2018). Nonperforming loan is significant at 1 percent and negatively affect
the performance of banks in the region of SSA. This shows that decrease in the rate of NPL increase bank
performance, this conforms with the findings of Partovi and Matousek (2019) and Zhu, Wang, and Wu (2015).
Capital asset ratio is significant at 1 percent and positively affect bank performance. This implies that a rise in the
1
Ma, L., Yang, J., and Niu, Y. 2013. Simulation to effect of monetary policy with constraint threshold. China Finance Review International,
3(4):340–352.
2
Fan, Y. and Jianzhou, T. 2011. Studying on the monetary transmission mechanism in China in the presence of structural changes. China
Finance Review International, 1(4):334–357.
3
Apergis, N. and Alevizopoulou, E. 2012. The bank lending channel and monetary policy rules: Evidence from European banks. International
Advances in Economic Research, 18(1):1–14.
91
rate of CAS increase bank performance, this is similar to the result by Varotto and Zhao (2018). Bank size is
negative and significant at 1 percent. This indicate a decreasing bank performance with increase in bank size, this
is consistent with Luo, Tanna, and Vita (2016) and Waemustafa and Sukri (2015).
The macroeconomic variables employ in the study are inflation and gross domestic product. INF is
positively and significant at 1 percent likewise GDP. This implies that an increase in either or all the
macroeconomic variable positively affect the performance of banks in the region, this findings is in line with result
obtained by Albertazzi and Gambacorta (2009) and Dietrich and Wanzenried (2011).
3.2 Correlation
The correlation matrix has a moderate relationship between dependent and independent variables which clearly
indicate absence of multicollinearity. The two dependent variable are positively correlated with a value of 0.0395.
ROA maintain a negative association with ITR. LEV and CAS maintain a positive association with ROA while
NPL and BSZ maintain a negative relationship with ROA. INF and GDP maintain a positive association with
ROA. The alternative dependent variable; EPS also maintain a low negative association with ITR. LEV and BSZ
are positively associated with EPS while NPL and CAS maintain a negative correlation. The association between
INF and EPS is negative while the relationship between GDP and EPS is positive as indicated in the correlation
matrix.
Correlation Matrix
ROAijt EPSijt ITRijt LEVijt NPLijt CASijt BSZijt INFjt GDPjt
ROAijt 1
EPSijt 0.0395 1
ITRijt -0.2246* -0.0553* 1
LEVijt 0.2004* 0.0722* -0.1269 1
NPLijt -0.0571* -0.0857* -0.1257 -0.0172* 1
CASijt 0.1276* -0.0116* 0.1601* -0.0555 0.0494 1
BSZijt -0.3008* -0.3015* -0.0082 0.088*3 -0.0265 0.0831* 1
INFjt 0.0062* -0.3584* -0.0427* -0.0188 0.1712* 0.1899 -0.0908 1
GDPjt 0.2719* 0.1422* 0.0426 -0.1747 0.0066 -0.0044 -0.3353 -0.1637* 1
Source: Author’s computation using STATA 15
3.3 Discussion of Main Findings and Hypotheses Testing

The study, which seek to examine the effect of monetary policy on the performance of banks in SSA region. The
study found a significant and negative association between interest rate and bank performance. This implies that,
an increase in interest rate decreases bank performance within SSA banks. Therefore, any attempt to increase
interest rate will negatively affect bank performance. on the other hand, a decrease in the interest will enhance the
performance of the banks. The two hypotheses developed in the study are both supported by the findings of the
study.
92

Paper ID: 034-027
PROFITABILITY FACTORS OF INSURANCE COMPANIES LISTED ON INDONESIA STOCK

EXCHANGE
Jonathan Teopilus1 and Stella1
Trisakti School of Management, Indonesia1.
1.0 Introduction
In recent years, competition among firms is greatly increasing. If a firm does not maximize its profit, it cannot
have adequate cash inflows to meet its obligations, and the firm will not sustain 1. Firm’s profitability gives
assurance of firms’ financial health. Profitability shows the efficiency of companies’ overall performance and
shows how managers use available resources to make profit. High profitability indicates that the company is-able-
to manage its resource effectively and efficiently2. High profitability may ensure the sufficient residual amount
for dividend as well since firms’ ultimate-goal is to maximize the wealth of shareholders3. It means, profitability
has an important role for a firm. Therefore, the purpose of this research is to analyze the impact of firm size (FS),
volume of capital (VOC), Asset tangibility (AT), premium growth (PG), liquidity (LQ) and underwriting risk
(UR) on firm’s profitability.
2.0 Methods
Sampling techniques used is purposive sampling method. Insurance companies listed in Indonesia Stock Exchange
period 2010-2019 are chosen as the sample based on the criteria below.
No Sample Criteria Number of companies

1. Insurance companies listed on Indonesia Stock Exchange during 2010-2019 10
2. Companies that have financial statements for the period 2010 – 2019 10
3. Companies that have financial statements end by December 31 10
Companies that fit the sample criteria 10
Company that has outlier data (1)
Companies sampled 9
Research period 10 years
The amount of data sampled 90 data
Variables Definition Mathematical Formula

Ratio used to see the performance of a 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
Return on Assets (ROA) company based on the amount of assets used 𝑅𝑂𝐴 =
and how much return the expected profit 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
The amount of earned premium that can show
Firm Size (FS) 𝐹𝑆 = 𝐿𝑜𝑔(𝑁𝑒𝑡 𝐸𝑎𝑟𝑛𝑒𝑑 𝑃𝑟𝑒𝑚𝑖𝑢𝑚)
the size of a company
The amount of assets that are financed by 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦
Volume of Capital (VOC) 𝑉𝑂𝐶 =
owners’ investment 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
Measurement on how much firm’s tangible 𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡𝑠
Asset Tangibility (AT) assets compared to the total assets owned by 𝐴𝑇 =
the firm 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
𝐺𝑊𝑃𝑡 − 𝐺𝑊𝑃𝑡−1
Premium Growth (PG) Year-to-year gross written premium change 𝑃𝐺 =
𝐺𝑊𝑃𝑡−1
Measurement on how quick an asset is 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
Liquidity (LQ) converted into cash to pay short-term 𝐿𝑄 =
liabilities 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Measurement of company’s ability face future 𝑇𝑜𝑡𝑎𝑙 𝐶𝑙𝑎𝑖𝑚 𝐼𝑛𝑐𝑢𝑟𝑟𝑒𝑑
Underwriting Risk (UR) 𝑈𝑅 =
loss by using earned premiums 𝑇𝑜𝑡𝑎𝑙 𝑁𝑒𝑡 𝐸𝑎𝑟𝑛𝑒𝑑 𝑃𝑟𝑒𝑚𝑖𝑢𝑚
The regression model for this research is as follows:
ROA= b0 + b1FS + b2VOC + b3AT + b4PG + b5LQ + b6UR + ε
1
Nanda, S. and Panda, A.K. 2018. The determinants of corporate profitability: an investigation of Indian manufacturing firms. International
Journal of Emerging Markets,13:66-86.
2
Sunjoko, M.I. and Arilyn, E.J. 2016. Effects of inventory turnover, total asset turnover, fixed asset turnover, current ratio and average
collection period on profitability. Jurnal Bisnis dan Akuntansi, 18(1):79-83.
3
Zutter, C. J. and Smart, S. B. 2019. Principles of managerial, Finance Fifteenth Edition. Pearson Education Limited, United States of America,
665p.
93
where b0 is intercept or constant. b1, b2, b3, b4, b5, b6 are the regression coefficient. FS is firm size, VOC is volume
of capital, AT is asset tangibility, PG is premium growth, LQ is liquidity, and UR is underwriting risk. ε is error.
Descriptive statistical analysis conducted is as follows:
Variable N Mean Median Max. Min. Standard Deviation

Return on Asset 90 0.052952 0.050219 0.124002 0.002734 0.026316
Firm Size 90 11.72599 11.76521 12.64166 10.93556 0.423526
Volume of Capital 90 0.435555 0.421308 0.863204 0.149883 0.178145
Asset Tangibility 90 0.046664 0.033051 0.199331 0.002813 0.046186
Premium Growth 90 0.146067 0.130190 1.356659 -0.255106 0.216854
Liquidity 90 7.105381 3.706347 29.25656 0.256663 7.208927
Underwriting Risk 90 0.654037 0.551660 6.095078 0.031967 0.851654
Source: Processing result Eviews 9
Multiple regression and hypothesis testing results are as follows:
Var. Coef. Std. Error t-Statistic Prob.

C 0.251462 0.102023 2.464767 0.0158
FS -0.018724 0.008609 -2.174838 0.0325
VOC 0.059422 0.022094 2.689467 0.0086
AT -0.190020 0.076895 -2.471159 0.0155
PG 0.012707 0.009650 1.316702 0.1916
LQ 0.000248 0.000623 0.398446 0.6913
UR 0.000627 0.003224 0.194547 0.8462
Dependent Variable: ROA
Source: Processing result Eviews 9
Based on the result from multiple regression and hypothesis testing, firm size and asset tangibility have
negative significant relationship with profitability, while volume of capital has positive significant relationship
with profitability. Premium growth, liquidity and underwriting risk have no significant relationship with
profitability.
Firm size is significant due to the efficiency and capacity of the company to generate profit 4. Asset
tangibility is significant because the investment in fixed asset increase expenses and may drag the profitability5.
Volume of capital is significant because profitable insurance companies relied more on owner’s equity than debt
for their financing6. Premium growth is not significant as the company too obsessed to the market penetration and
may neglect the profitability7. Company that pursues the liquidity target might compromised the profitability that
makes liquidity not significant8. The underwriting risk faced by a company depends on the risk appetite. It means
the underwriting risk that the company bear is acceptable for them and has no effect to the profitability 9.

The results of this research may provide information for management of insurance companies about the factors
affecting the profitability. Management shouldn’t put too much focus on premium growth, liquidity, and
underwriting risk. On the other side, management should be wise to determine their long-term investment in fixed
asset and maintain the efficiency of the company as well. Management might rely more on owner’s equity for the
source of financing. Hence, management can use the information to make a better financial decision to maximize
the profit.
This research also can be used as a reference in conduction future research with some suggestions to add
other independent variables that might affect the profitability and updating the research period.
4
Derbali, A. 2014. Determinants of performance of insurance companies in Tunisia: The case of life insurance. International Journal of
Innovation and Applied Studies, 6(1):90-96.
5
Suganthi, P. and Rajaram, S. 2016. Determinants of Financial Performance of Indian Life Insurance Sector: Panel Evidence. IUP Journal of
Applied Finance, 22(4):22:76-89.
6
Sambasivam, Y. and Ayele, A.G. 2013. A study on the performance of insurance companies in Ethiopia. International Journal of Marketing,
Financial Services & Management Research, 2(7):138-150.
7
Mehari, D. and Aemiro, T. 2013. Firm specific factors that determine insurance companies’ performance in Ethiopia. European Scientific
Journal, 9(10):245-255.
8
Ezirim, C.B., Eniekezimene, D., Ali, O.U., and Elike, U. 2018. Company-specific correlates of corporate profitability: Evidence from quoted
insurance companies in Nigeria. African Journal of Business and Economic Research, 13(1):81-113.
9
Charumati, B. 2012. On the determinants of profitability of Indian life insurers: An empirical study: Proceedings of the World Congress on
Engineering. London UK, 1:505-510.
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Paper ID: 104-114
ASSESSMENT OF RISK FACTORS IN DEVELOPING DIABETES AMONG PUBLIC IN MALAYSIA

AND THEIR WILLINGNESS TO PAY FOR TAKAFUL
Sharifah Fairuz Syed Mohamad1, Mohd Radzniwan A Rashid2, Zurina Kefeli3, Nurul Aini Muhamed3,
Azrul Azlan Iskandar Mirza3, Junaidah Abu Seman3 and Saharuddin Ahmad4
Faculty of Science and Technology, Universiti Sains Islam Malaysia, Malaysia1, Faculty of Medicine and
Health Science, Universiti Sains Islam Malaysia, Malaysia2, Faculty of Economics and Muamalat, Universiti
Sains Islam Malaysia, Malaysia3, Department of Family Medicine, Faculty of Medicine, Universiti Kebangsaan
Malaysia, Malaysia4.
1.0 Introduction
Malaysia is not excluded from the alarming increase in type 2 diabetes among its population, similar to most other
Asian countries. The prevalence of diabetes is not only associated with physical and mental effects; but if kept
untreated, it would also result in the spike of medical and treatment costs. This is especially crucial for those who
are in the low-income household category and those who do not have any health insurance or takaful. It is therefore
important for the public to understand the risk factors of developing type 2 diabetes to curb the long-term effects
so that they are well aware on the components associated with developing such risks. Therefore, this paper
attempts to identify and assess the risk factors of developing diabetes type 2 among public in Malaysia, then
further categorize the risk levels into several clusters of risk: low, intermediate, and high. Additionally, the paper
aims to identify the relationship between some socio-demographic and risk factor variables with willingness to
pay (WTP) for takaful product relating to diabetes type 2.
2.0 Methods
The study implemented a cross-sectional survey on respondents or public who may be considered as at risk of
developing diabetes over the long term. The respondents are not diagnosed as having diabetes yet, therefore they
are considered non-diabetic. The sampling strategy was based on convenience sampling approach, conducted
through online questionnaire, due to the COVID-19 restrictions of to limit social and face to face interactions.
Information collected include the socio-demographic factors of respondents such as age, income, number of kids,
residential area and education level. Other factors in relation to the risk factors are also requested from respondents
such as their own perception of risk and the actual components contributing to the risks of developing type 2
diabetes. These components include weight, height, body mass index (BMI), physical lifestyle, eating behavior
on fruits and vegetables and whether they have been on medication for high blood pressure etc. In categorizing
the risk components into three clusters, the paper followed the diabetes assessment tool that required the
components to be numbered accordingly based on the risk factors including age, gender, smoking status etc.
The analysis was done using SPSS Software using both descriptive and inferential statistics. Descriptive
statistics were basically used to identify the distribution and pattern of socio-economic variables, including age,
gender, household income and education level. While inferential statistics such as multiple linear regression and
multinomial logistic regression are used into identifying the relationship between variables.
3.1 Respondents’ Background

The respondents are all Malaysian, consisting of 860 people who participated in answering the survey. From the
results, majority of them are Malay and Muslims. More than half of the respondents are female (63.3%) while
with respect to age, 40% are in the 21–25-year-old category. Results also show that most of the respondents are
degree holders and above; however, they mostly fall in the B40 category of household income with almost 70%
in this group.
3.2 Risk Assessment Factors

Looking at the components under risk assessment for diabetes type 2, BMI results show that majority of the
respondents fall under the ‘overweight’ and ‘obese’, where the combination of these two categories make up a
49.8% which means that most of the respondents are in the higher level of risk. For active lifestyle and frequency
of eating vegetables and fruits, the percentages are 50.1% and 61.4% respectively. This indirectly shows that more
than half of the public respondents are considered practicing an active lifestyle and making sure they have a
balanced diet with daily intake of vegetables and fruits. Furthermore, the analysis related to insurance and takaful
policies, looks at whether respondents are interested to have takaful related to diabetes or not; where results show
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that 60.7% would be interested to participate. This is supplemented with data on the willingness to pay (WTP)
where overall, respondents are willing to pay as much as maximum of RM50 for a takaful policy related to
diabetes. With respect to the risk categories, the study found that respondents from the survey are distributed more
on the intermediate level with 46% of them in this category. For low and high levels, the percentage are 26.3%
and 27.7% respectively. This shows that over the long run, Malaysian public could be at intermediate or high risk
for developing diabetes type 2. As for the inferential statistics, multiple logistic regression on the willingness to
pay for takaful related to diabetes, results found only marital status, household income and education to be
significant, while those related to risk are not significant. This indirectly shows that Malaysian public are more
concerned of getting takaful product related to diabetes based on their income levels, marital status and education
level as compared to other factors including health risks that they are facing. Since our respondents are distributed
more on the lower income side, this result tallies with the coefficient for household income, which shows
significant positive relationship with their willingness to pay.
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Paper ID: 109-109
OIL PALM SMALLHOLDERS ENTREPRENEURS AND FINANCIAL LITERACY
Mara Ridhuan Che Abdul Rahman1, Azhar Ahmad1, Norazlan Alias1, and Hasimi Yaacob1
1.0 Introduction
There is a study conducted in Malaysia found that nearly 70% of oil palm smallholders who involve in micro and
small business only yields gross income less than RM2,000 per month 1. Smallholder’s income remains
unsatisfactorily despite much business driven plans have been in place to improve their income such as business
co-operatives, integrated oil palm plantation with agriculture and aquaculture and micro business credit schemes.
Lack of financial literacy is common among famers around the world particularly in developing countries. Failure
in managing business is argued to be contributed by lack of financial literacy. This problem is prevalent in micro
and small enterprises as this form of entity is fully run by single owner without assistance from financial literate
staff. The problem is worse in case of farming entrepreneurs because of the lack guidance and business network
that contribute to lack of spill over effects2. For example, Abdullah and Mustapha (2009) reveals that agro
entrepreneurs in Trengganu were so poor in managing finance and accounts 3.
However, financial literacy can be best defined as knowledge of financial concepts, ability in managing
personal finance, skill in making decisions and confidence in future financial planning 4. Many prior empirical
studies documented the advantages of financial literacy on business sustainability and financial access (Brown et
al., 2006)5. Fatoki (2014) found that financial literacy among micro entrepreneurs positively influences good
financial decision, household well-being and business survival6. Not merely influencing business success, high
level of financial literacy also led to capability of entrepreneur’s access financing7. Kojo (2010) discovered that
youth entrepreneurs skills was enhanced with their financial literacy level.8 On the other hand, lacking of financial
literacy is dangerous for business sustainability as reported in prior researches. Most of financial illiterate people
are not well-informed decision makers. Without well financial information, it can lead to lending at a higher
interest rate (Moore, 2003)9, accumulating less assets and lack of retirement planning (Lursadi & Mitchell,
2008)10, less invest in stock but accumulating excessive debt (Rooij et al., 2007). 11
In Malaysia, many financial products and assistances have been introduced to support business among
oil palm farmers. However, should the large proportion of farmers have only a limited knowledge and experience
of financial literacy would hinder them to success in managing their business. In the long run, the objectives of
government to escalate rural economy will be impaired. Therefore, assessment on the financial literacy among oil
palm smallholders entrepreneurs is essential. In particular, this study objective is to examine the relationship
between attitude towards financial literacy, level of financial literacy, financial practices, business and financing
performance among smallholders entrepreneurs.
2.0 Methods
Data of this study was taken in 2019 shortly before Covid-19 pandemic. The sample of this study was drawn from
the population of small holder entrepreneurs reported in Felda Annual Report 2018. There were around 26,000
small holder entrepreneurs in various segment of business across Malaysia. Of 11 territories, this study selected
1
Ahmad, A., Omar, A.R.C., Osman, L.H., Shukor, M., Alias, N., Ridhuan, M., Ishak, S., and Jusoh, M.A. 2017. The push factors in business:
The case of oil palm smallholders. Advanced Science Letters, 23(1):453-456.
2
Proscovia, N.R., Johnny, M., Robert, B., Diana, N., and Robert, K. 2021. Influence of informal financial literacy training on financial
knowledge and behavior of rural farmers: Evidence from Uganda. Journal of Development and Agricultural Economics, 13(3):192-204.
3
Abdullah, N.C. and Mustapha, R. 2009. A case study of SMI Bumiputera agropreneurs in Terengganu. Jurnal Pendidikan Malaysia, 34:143-
165.
4
Remund, D.L. 2010. Financial literacy explicated: The case for a clearer definition in an increasingly complex economy. Journal of consumer
affairs, 44(2):276-295.
5
Brown, R. B., Saunders, M. N., and Beresford, R. 2006. You owe it to yourself: The financially literate manager. Accounting Forum,
30(2):179-191
6
Fatoki, O. 2014. The financial literacy of micro entrepreneurs in South Africa. Journal of social sciences, 40(2):151-158.
7
Owusu, J., Ismail, M. B., Osman, M. H. B. M., and Kuan, G. 2019. Financial literacy as a moderator linking financial resource availability
and SME growth in Ghana. Innovations, 16(1):154-166.
8
Oseifuah, E. K. 2010. Financial literacy and youth entrepreneurship in South Africa. African Journal of Economic and management
studies,1(2):164-182.
9
Moore, D. 2003. Survey of financial literacy in Washington State: Knowledge, behavior, attitudes and experiences. Washington State
University Social and Economic Sciences Research Center Technical Report 03–39.
10
Lusardi, A. and Mitchell, O. S. 2008. Planning and financial literacy: How do women fare? American Economic Review, 98(2):413-17.
11
Rooij M.V, Lusardi, A., and Alessie, R. 2007. Financial literacy and stock market participation. DNB Working paper No.146, Michigan
Retirement Research Centre Research Paper No. 2007-162. Available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1014994
97
only 6 territories Felda. These territories account the largest fraction of entrepreneurs such as Wilayah Johor Bharu
(19.4%), Wilayah Mempaga Pahang (16.9%), Jengka Pahang (10%), Wilayah Raja Alias Negeri Sembilan (9%),
Trolak Perak (6.5%) and Alor Setar Kedah (4%). A total of 1,500 questionnaires were proportionately sent to
entrepreneurs located at the selected territories. The questionnaire distribution and collection were assisted by
Felda represented officers.
The questionnaire was categorised into 6 parts such as i) respondent profile, ii) attitude towards financial
literacy, iii) financial literacy test, iv) business financial practices. v) bank loan and government grant
performance; and vi) self-rating business performance. Part ii, iv, v and vi were measured using Likert scale and
part iii is literacy test that based on true and false questions. There are 12 basic questions of financial literacy were
tested that encompassing financial and management accounting, finance, insurance and tax knowledge. This study
applied Structural Equation Modelling in Smart PLS to examine the relationship.

A total of 216 questionnaires were returned, representing 14.4% response rate. The highest response is Wilayah
Johor Bharu (61), followed by Wilayah Jengka (50) and Wilayah Raja Alias (50), Wilayah ALor Setar (38) and
Wilayah Segamat (10). The least is Wilayah Trolak (1). The data shows that 50.9% of respondents involve in
services sector, 40.7% in retail and whole seller sector and only 8.3% in manufacturing sector. In term of year of
operation, 1% operate less than 5 years, 29.2% operates between 6-10 years, 60.2% operates between 11-15 years
and 10% more than 15 years. Average score for financial literacy is 61.1% which can be considered the
respondents show fair knowledge in financial.
Literature suggest that observed variables with outer loading 0.7 or greater are acceptable. Data of this
study as shown in Table 1 indicates that Cronbach’s Alpha and Composite Reliability for all items are above 0.7
which confirm the convergent validity and internal consistency of the measurement model. It can also be
confirmed by Average Varian Extracted above 50% for all items (Hair et al., 2007).
Table 1: Construct Reliability and Validity

Composite Average Variance
Cronbach's Alpha
Reliability Extracted (AVE)
Attitudes towards financial literacy 0.849 0.897 0.689
Financial practices 0.885 0.908 0.526
Business performances 0.885 0.912 0.634
Government loan/grant performance 0.845 0.883 0.721
Bank loan performance 0.864 0.915 0.784
Discriminant analysis was conducted to ensure manifest variables in any construct is distinct from other
construct in the path model. The Fornell and Larcker (1981) criterion and cross loading were conducted to examine
the discriminant validity where squared correlation were compared with the correlations from other latent
constructs12. Table 2 shows that all of the correlations were smaller than squared root of AVE which prove the
discriminant validity of the model.
Table 2: Discriminant Validity

performance
performance
performance
Government
Bank loan
loan/grant
Financial
Financial
Attitudes
Business
practices
financial
towards
literacy
literacy
Attitudes towards financial literacy 0.830

Financial practices 0.489 0.402 0.725
Business performance 0.390 0.364 0.549 0.797
Financial literacy 0.238 0.062 0.207 0.196 -
Government loan/grant performance 0.118 0.564 0.252 0.251 0.012 0.849
Bank loan performance 0.346 0.885
Table 3 shows that all VIF are less than 10 which indicates that there is no collinearity between variables
were detected in this study. The value of R² is as shown in Figure 1 explain that 5.7% of attitude explain the
financial literacy and 4.3% of financial literacy can explain financial practices among smallholder entrepreneurs.
12
Fornell, C. and Larcker, D. F. 1981. Evaluating structural equation models with unobservable variables and measurement error. Journal of
Marketing Research, 18(1):39-50.
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Finally, the financial practices of the entrepreneurs capable to explain 16.2% bank loan performance, 6.3%
government grant performance and 30.2% business performance.
Table 3: Path Coefficients

Original Standard
T Statistics VIF
Sample Deviation
Attitude → Financial literacy 0.238 0.058 4.129*** 1.000
Financial literacy → financial practices 0.207 0.069 2.989*** 1.000
Financial practices → Gov loan/grant performance 0.252 0.070 3.610*** 1.000
Financial practices → Bank loan performance 0.402 0.072 5.551*** 1.000
Financial practices → Business performance 0.549 0.045 12.165*** 1.000
Path analysis reports positive relationship for all construct as indicated in Figure 1. It can be seen from
the path cooficient between attitude and financial literacy (0.238), financial literacy and financial practices
(0.207), and finally the relationship between financial practice and i) government loan/grant performance(0.252),
ii) bank loan performance (0.402) and iii) business performance (0.549). All the relationship are significant at
0.001 level. It can be concluded that positive attitude towards financial literacy would encourage entreprenuers to
be more financial literate and in turn making them to practice what they know into their business. The proper
financial practice eventually would be a contributor to their business, bank and government loan. Therefore it is
important for respective bodies to shape positive attitude about financial literacy among smallholder enteprenuers.
Figure 1: Path Analysis
4.0 Practical Contribution

The respective government agencies to entrepreneurship and lending institutions need to play more role to shape
positive attitude towards financial literacy among micro and small farming in order to help them to be well-
informed entrepreneurs. In addition, the findings of this study can provide input for any training program to focus
on the gap of financial literacy area.
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Track: Managerial Performance

Paper ID: 008-016
THE IMPACT OF TRUST, RESPONSIVENESS AND ASSURANCE ON CUSTOMER

SATISFACTION
Manisah Othman1, Nor Azlina Kamarohim1, and Nur Arisya Sukri1
School of Business and Economics, Universiti Putra Malaysia, Malaysia1.
1.0 Introduction
Considering many dimensions of existing businesses, including the creation of new companies with new business
models, business opportunities and new methods of business processing, the advent of e-commerce has led to
dramatic changes (Lim, Tuli & Grewal, 2020). These changes could offer a new type of competitive advantage to
the management of customer relationships (CRM). Fotiadis and Vassiliadis (2017) provides the CRM systems as
an infrastructure that enables the company to increase its customer offerings and to gain the confidence and
confidence of its business partners. It is important to make every effort to attract potential custodians and to
maintain current customers in a dynamic and complex competitive market. Enhanced communication channels
eliminate many of the problems and place electronic CRM (E-CRM) into the business as a revolutionary
phenomenon. The companies, therefore, use CRM applications based on information technology to support the
company's strategies (Dehghanpouri, Soltani & Rostamzadeh, 2020). The CRM is a composite business process
to eliminate customer needs, implement all components of the system and meet all expectations (Ghalenooie and
Sarvestani, 2016). The main objective of CRM is to improve customer relations throughout its relationship
(Galvão, de Carvalho, de Oliveira & de Medeiros, 2018; San-Martín, Jiménez & López-Catalán, 2016). To
achieve customer satisfaction and increase sales, CRM, tools, technologies and processes support a relationship
with the customer (Erdil and Öztürk, 2016).
CRM identifies new customers, develops relationship strategies, binds the customer by meeting their
financial needs, and ensures that customers do not compete (Kaur, 2016). In recent years, the use of internet
transactions has grown in importance in developing countries, and the service experience seems to differ from the
non-electronic service (Mang unyi et al., 2018). In the past decade, they have increased dramatically because of
their access to entertainment and professional services. Therefore, dedicated CRM software applications are
increasingly used as a practical tool by many companies and organizations to expand or build customer
relationships (Coltman, 2007; Harrigan et al., 2011). New marketing tactics and tools have been developed
through Internet technologies to help businesses convert, acquire, and retain customers. The exploitation of
customer data is also facilitated by Internet technologies with which basic CRM principles such as the
personalization of product offers, and the calculation of customer profitability are implemented. In practice,
Internet and web technologies are used in most cases to provide representatives with functionality, information
and process management in CRM (Dehghanpouri, et. al., 2020).
In addition, e-CRM is a collection of processes and concepts that enable an organization to get the most
value from its e-business asset. At the same time, creating interaction through customization helps organizations
and companies improve customer relationships. Acquisition and profitability are the most important metrics when
assessing E-CRM readiness. Reaching a satisfied and satisfy customer is the main goal of CRM (Aldaihani & Ali,
2018). Dehghanpouri, et. al., (2020) considered responsiveness and efficiency as two main indicators of the
success of E-CRM. Salameh, Hatamleh, Azim, and Kanaan (2020) identified improved customer service and
support as well as greater efficiency and cost reduction as important critical success factors in E-CRM. If
organizations and companies want to be successful with E-CRM, they should adapt the products to customer
requirements. In three phases, including retaining good customers, increasing customer value and acquiring
customers, the goal is to intelligently manage the customer's life cycle (Mahdavi et al., 2008). The identification
of the successful CRM implementation is increasingly becoming a topic of E-CRM (Aldaihani & Ali, 2018;
Soltani and Navimipour, 2016).
1.1. Scope of Study

The mobile telecommunications industry has become a very competitive and dynamic sector in Malaysia. Many
studies have looked at the impact of the services offered on customer satisfaction. However, the literature is very
incomplete on the impact of trust, responsiveness and security on Customer Satisfaction in the
telecommunications sector in Malaysia (Othman & Kamarohim, 2021). It has been found that the basic
dimensions of quality are positively related to customer satisfaction. Moreover, research in telecommunication
services has shown that service quality influences customer satisfaction. Therefore, the proposed work aims to
provide such a comprehensive framework that incorporates not only service quality and trust but also customer
value as predictors of customer loyalty, with perceived price fairness as a moderator and customer satisfaction as
100
a mediator in the Pakistani telecom sector. In addition, the impact of customer satisfaction on customer loyalty
was also investigated.
1.2. Research Questions

i. Does trust have impact on customer satisfaction?
ii. Does responsiveness have impact on customer satisfaction?
iii. Does assurance have impact on customer satisfaction?
1.3. Objectives of Research

i. To investigate the effect of trust on customer satisfaction.
ii. To investigate the effect of responsiveness on customer satisfaction.
iii. To investigate the effect of assurance on customer satisfaction.
3.0 Theoretical Framework

The model for the research considers impact of trust, responsiveness and assurance on customer satisfaction: Case
study on telecommunication sector of Malaysia.
Figure 1: Research Model
Trust
Responsiveness Customer Satisfaction
Assurance
3.1 Research Hypothesis

H1: Trust have a positive impact on customer satisfaction
H2: Responsiveness have a positive impact on customer satisfaction
H3: Assurance have a positive impact on customer satisfaction
4.0 Research Methodology

This study focuses on measuring the impact of the salesperson ethical treatment, trust and service quality in
Selangor, Malaysia. Our study was empirically conducted on Telecommunication’s customer in Selangor,
Malaysia and we distributed online survey (263 responses) to random customer through any social media platform
(e.g., WhatsApp, Facebook, Instagram and others), and distributed hardcopy using a convenient sample to 150
customers for any telecommunications service provider. A total of 100 questionnaires was obtained. Study
constructs used showed a good level of reliability, as shown in Table I, which exceeds 0.70 values as a cut-off
point (Nunnally and Bernstein, 1994).
The research instrument used is a structured questionnaire; the first section entails personal information
about the respondents and has 4 items. The second section measures overall satisfaction and includes five items.
The third section is the constructs measured using five points scale (ranging from 1 = “not important” to 5 = “very
important”). We managed to get a good response rate, as targeted customers were highly cooperative and live in
a small country that has excellent internet facilities and efficient post system. Achieving high mean values in
respect of these scores, indicated a better service quality across all the dimensions.
Table 1: Summary of Construct Measurement

Construct Number of items Number of Cronbach’s Alpha
Trust 4 0.887
Responsiveness 4 0.931
Assurance 6 0.917
Customer Satisfaction 4 0.860
The research instrument used is a structured questionnaire; the first section entails personal information
about the respondents and has 4 items. The second section measures overall satisfaction and includes five items.
The third section is the constructs measured using five points scale (ranging from 1 = “not important” to 5 = “very
important”). We managed to get a good response rate, as targeted customers were highly cooperative and live in
a small country that has excellent internet facilities and efficient post system. Achieving high mean values in
respect of these scores, indicated a better service quality across all the dimensions.
101
We used the SmartPLS 3 software (Ringle et al., 2015) to create, estimate and evaluate the underlying
conceptual model. PLS-SEM can be applied to both reflective and formative measurement models (Sarstedt et al.,
2016), supports the estimation of relatively complex models (Ali et al., 2018) and is a causal predictive approach
for SEM that researchers can use also allows to assess the predictive quality of the results (Sarstedt et al., 2017).
PLS-SEM is therefore particularly useful when researchers want to estimate a structural model that explains an
important target construct of interest (Richter et al., 2015; Rigdon, 2012).
Given that one of this study’s aims is to predict customer satisfaction from various service quality
dimensions and not to test a theory per se, we chose a PLS-SEM approach. Furthermore, unlike CB-SEM, which
is subject to factor scores indeterminacy (Rigdon, 2012; Rigdon et al., 2017), PLS-SEM provides fixed latent
variable scores, which are required to run an IPMA. The latter compares the structural model’s total effect on a
predictor variable with the predictors’ average latent variable scores (Hair et al., 2019; Ringle and Sarstedt, 2016).
5.0 Results
5.1 Sample Profile and Groups

The sample characteristics (Table 2) reveal that most of the respondents were female (n = 71, 71%). The age
Below 20 in the sample were fewer (n = 9, 9%) than the above 20 (n = 91, 91%). The respondents in the sample
were employed, with around 62% (n = 62) and about 33% is student (n=33). Most of the respondents subscribe to
CELCOM (n = 31, 31%) and MAXIS (n = 25, 25%).
Table 2: Sample Profile of the Respondents

Variables Frequency Percent
Gender
Male 29 29
Female 71 71
Age
Below 20 9 9
20-30 59 59
30-40 16 16
Above 40 16 16
Status
Student 33 33
Employed 62 62
Unemployed 1 1
Self Employed 4 4
Mobile Service Provider
Digi 20 20
Maxis 25 25
Celcom 31 31
U-mobile 20 20
Others 4 4
5.2 Findings
Structural model was assessed for overall explanatory power of constructs through R 2 value, predictive relevance
through Q2 value and path coefficient β-values. Findings of structural model are presented in Figure 2.
These results indicate that proposed model have only 42.3% of explanatory power for customer
satisfaction with R2 = 0.423 Moreover, it is found that strong effect of trust to customer satisfaction (β =0.563; t-
value =2.763; p = .006) is supported for H1. Findings of SEM analysis support H2 which is the effect of
responsiveness to customer satisfaction (β = -0.284; t-value =2.036; p = .042) is supported. Further, there is no
effect between assurance and customer satisfaction (β = 0.315; t-value =1.675; p = .094) not supported for
hypothesis H3. A summarized overview of these findings is presented in Table 3.
As depicted in Figure 2, R2 value of our structural model is 0.423, which indicates that proposed
conceptual model have adequate explanatory significance. Here caution must be taken, because supporting a
model only on the base of R2 value is not a good approach (Hair et al., 2017, Radovic-Markovic et al., 2017).
Therefore, Stone-Geisser’s (1974) Q2 test was used for assessing the predictive relevance of structural model. As
a rule of thumb, if a Q2 value is larger than zero, it suggests that latent exogenous constructs involved in the
structural model possess predictive relevance for latent endogenous constructs (Chin, 2010, Hair et al., 2017). The
Q2 value of our model is 0.293; which supports the underlying assumption of this study, that the endogenous
construct (i.e. Customer Satisfaction) involved in this study have medium predictive relevance.
102
Figure 1: Findings of Structural Model.
Table 3: Hypothesis Assessment
Hypothesis Path β-value t-value p-value Decision

H1 Trust -> Customer Satisfaction 0.563 2.763 0.006 Supported
H2 Responsiveness -> Customer Satisfaction -0.284 2.036 0.042 Supported
H3 Assurance -> Customer Satisfaction 0.315 1.675 0.094 Not Supported
6.0 Discussion and Implications

This research analyses the role of trust, responsiveness and assurance provided by service provider on customer
as perceived by the customer in developing customer satisfaction in the Malaysian telecommunication industry.
In conclusion we verified our study with the reliability of our variables and their combinations. Our study was on
Malaysian telecommunication, so customers were important part of our study. We tried to study those variables
which play important roll to for customer satisfaction and defined different relationships among variables. In
this study we discussed relationship of trust, responsiveness and assurance with customer loyalty. From this study
it is reveals that the correlation between customer satisfaction and with only two independent factors that at the
average strengths, however, there exists a relationship between three dimensions of independent variables and the
dependent.
This is surprising given the fact that the results show that service assurance is perceived not affected to
the customer satisfaction in telecommunication industry. These finding are contrast with the finding of Khan
(2014) that shown service quality assurance and their influence on customer satisfaction in banking industry.
Findings of this study have shown that better customer trust will enhanced the customer satisfaction in
telecommunications industry. These results support the Cheshin, Amit & Van Kleef (2018), Yildiz (2017) which
have proven the positive and significant influence between trust and customer satisfaction. Trust and satisfaction
are strongly associated in their relationship and some of the concepts of trust even include satisfaction as a
component of trust (Sidershmukh et al., 2002; Sahadev and Purani, 2008). This study has also provided evidence
for the fact that batter reponds by service provider will positively affect customer satisfaction level. These findings
endorse the results of previous studies, such as Farooq et. al. (2016) who observed that service quality is one of
the critical success factors in today's service industry, especially when it is considered as one of the distinguishing
factors.
The research results and contributions have some implications for the telecommunications service
provider. The research results provide the telecommunications service provider with some knowledge and
feedback in the development of management strategies to increase customer satisfaction. Telecommunications
service providers must emphasize the importance of customer trust and responsiveness in their strategic business
planning to increase customer satisfaction. While the research results provide some insight to the researchers,
these results should be viewed with a few caveats in mind. In summary, the limitations associated with the research
results are: (1) The judgmental sampling method was used in this study. Thus, the result cannot be generalized;
(2) This study was carried out as a cross-sectional study; (3) Our research data is collected from urban area only,
where people have different preferences for the selection of network compared to rural area. Thus, the changes
and differences in customer satisfaction over a period are not recognizable.
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Track: Managerial Performance

Paper ID: 077-069
TURN-OF-THE-MONTH-EFFECT IN INDIAN STOCK MARKET: A CASE STUDY OF SECTORAL

INDICES
Ruchita Verma1, Dhanraj Sharma1, and Heavendeep Singh1
Department of Financial Administration, Central University of Punjab, India 1.
1.0 Introduction
Calendar anomaly is one of the anomalies that are found in the stock market. Efficient Market Hypothesis which
says that the market reflects all the information in its price & it is impossible to beat the market and earn
supernormal profit in any way. In recent time many studies were conducted which are against the efficient market
hypothesis which is called anomalies. Certain types of anomalies exist in the global market like momentum, value,
size & calendar etc anomalies. In the calendar, their day-of-the-week (DOW), Month-of-the-year (MOY),
Monthly effect or turn of the month effect, Holiday effect, Halloween & festival effect are the types of anomalies
that are found at the global level.
Ariel (1987)1 in his paper he compared the first half of the month with end half of the months return &
found higher return in the first half of the month. TOM in the study by other authors using a window day some
last days of the month & first few days of the month & returns were compared with other days of the month called
as Rest of the month (ROM) returns.
Sharma & Narayan (2014)2 in his paper mentioned that different industry has different characteristics so
it became important to study on industry base as well. Most of the studies conducted in the literature are based on
the market indices at the international & national levels, some are the basis of size in the Indian stock market in
recent time. A few studies are conducted based on the sector at the international level & no study is conducted at
the national level using the recent data of sector about (TOM) effect. This paper will fill the gap by studying from
a sector point of view.
2.0 Methods
2.1 Sample Profile

In this paper, we used data of NSE sectoral indices. The samples are select by using the purposive sampling of
non-probability sampling technique. Indices are selected based on the availability of data. Out of 15 sectoral
indices of NSE, we considered 9 sectoral indices on the basis of availability of data. Following table shows the
list of all secotral indices of NSE along with their base year and launch date. The sectoral indices which are
considered as sample of the study are NIFTY BANK, NIFTY AUTO, NIFTY FMCG, NIFTY IT, NIFTY MEDIA,
NIFTY PHARMA, NIFTY PSU BANK, NIFTY PVT BANK & NIFTY REALTY.
2.2 Study Period and Sources of Data

The study period which is considered for data analysis is 10 years from January 2011 to December 2020. The data
is collected from the official website of NSE. The daily closing value is used to calculate the return from the
indices. The total number of observations for each index is 2477 days.
2.3 Hypothesis of the Study

There is no significant difference between Turn of the Month returns and the Rest of the Month returns of sectoral
indices during various windows (1+1, 2+2 and 3+3).
2.4 Analysis
First, we calculated the daily return from the daily closing price of the indices. For calculation, we use the log
return formula (Newest closing value divided by the price before newest closing value -1) X 100.
For analysis of descriptive stats as well as we used Independent sample t-stats to check the significant
difference between the return on the turn of the month (T-O-M) & the Rest of the month(R-O-M).
The window for the Turn of the month was chosen as (1+1, 2+2 & 3+3) here (1+1) means last day of
previous month & first 2 days of next month as the turn of the month and remaining as rest of the month. (2+2)
1
Ariel, R. A. 1987. A monthly effect in stock returns. Journal of financial economics, 18(1):161-174.
2
Sharma, S. S. and Narayan, P. K. 2014. New evidence on turn-of-the-month effects. Journal of International Financial Markets, Institutions
and Money, 29:92-108.
104
means last 2 days of the previous month & first day of next month as the turn of the month and remaining as rest
of the month & so on.
In literature, we found different some studies were taking Calendar days of the month & some were using
trading days as the window. In our study, we are using Trading days as the window.
It can be seen that there is a difference in returns (R-O-M) & (T-O-M). But for purpose of statistical significance,
we applied two tales T-test to check the significance of the result. The results are shown in following table.
Table 1: Results of Independent Sample t-test

TOM and ROM (1+1) TOM and ROM (2+2) TOM and ROM (3+3)
INDEX Mean t-stat Mean t-stat Mean t-stat
Difference (p-value) Difference (p-value) Difference (p-value)
NIFTYAUTO 0.197 2.078 0.132 1.860 0.097 1.568
(0.037)** (0.062)* (0.117)
NIFTYBANK 0.077 0.720 0.069 0.874 0.026 0.387
(0.471) (0.381) (0.698)
NIFTYFMCG 0.144 1.624 0.095 1.666 0.038 0.771
(0.105) (0.095)* (0.440)
NIFTYIT 0.139 1.522 0.068 2.030 0.122 2.073
(0.128) (0.042)** (0.038)**
NIFTYMEDIA 0.28 2.372 0.237 2.955 0.169 2.427
(0.018)** (0.003)*** (0.015)**
NIFTYPHARMA -0.109 -1.304 -0.088 -1.401 -0.12 -2.198
(0.192) (0.161) (0.028)**
NIFTYPRIVATEBANK 0.073 0.684 0.077 0.964 0.042 0.605
(0.493) (0.334) (0.545)
NIFTYPSUBANK 0.218 1.497 0.109 1.440 0.064 0.677
(0.134) (0.149) (0.498)
NIFTYREALTY 0.45 3.143 0.338 3.165 0.262 2.817
(0.001)*** (0.001)*** (0.004)***
Source: Researchers’ Compilation, Note: (*), (**), & (***) mean results are significant at 10%, 5% & 1% levels, respectively.
The results are significant at a 1% level of significance for NIFTYREALTY & NIFTYMEDIA, at a 5%
level of significance for NIFTYAUTO and at a 10% level of significance for NIFTYFMCG in Window (1+1) day
time frame. In the case of (2+2), window results are significant at a 1% level of significance for NIFTYREALTY
& NIFTYMEDIA, at a 5% level of significance for NIFTY50 & NIFTYIT, 10% level of significance for
NIFTYFMCG & NIFTYAUTO. The results are significant at a 1% level of significance for NIFTYREALTY, at
a 5% level of significance for NIFTYIT, NIFTYMEDIA & NIFTYPHARMA Window (3+3) day time frame.

EMH says that it is difficult to beat the market but this evidence showing that market not always behaves
efficiently. There is some situation where abnormal return can be generated by beating the market. These results
will be helpful for traders and investor to the better decision for their investment.
105
Track: Law and Ethics

Paper ID: 075-067
REGULATING SOLICITOR'S CLIENTS' MONEY: A STITCH IN TIME SAVES NINE
Noraziah Abu Bakar1, Mazlifah Mansoor1, Nurasma Yahya1, and Nurazlina Abd Raof1
Faculty of Law, Universiti Teknologi MARA, Malaysia1.
1.0 Introduction
Solicitors hold client's money in various circumstances, including receiving payment for the balance purchase
price and advance payment for disbursements in a conveyancing transaction, such as payment for the stamp duty
on the instrument of dealings.1 The primary regulation is the Solicitors Account Rules 1990 (SAR) in managing
clients' money. However, SAR only provides a minimum rule on maintaining clients' money with no fund security
and is primarily based on trust and confidence in the solicitor's profession. Only the manner of depositing,
withdrawal, method of withdrawal and keeping of clients’ account are provided under the SAR without imposing
any penalty for non-compliance of the provisions. Hence, mismanagement and misappropriation of client's monies
are expected, resulting in the solicitors charged for criminal breach of trust of clients' money under the Penal Code
(Act 574). In 2019, 21 lawyers are being sought by police for criminal breach of trust involving RM340 million. 2
A statistic from the Commercial Department, Royal Malaysian Police from 2015 until 2020, 484 cases involving
lawyers for criminal breach of trust.This paper aims to evaluate a legal firm's compliance in managing the client's
money under the SAR to protect the dignity and integrity of the profession, and to offer protection to the clients
who have entrusted money and relied on the expertise of the lawyers to perform the clients’ legal tasks in reliance
of the solicitors’ fiduciary duty to client satisfactorily.
2.0 Methods
The paper employs doctrinal legal research to analyse the law relating to clients' money management in a client
account by legal firms. A doctrinal legal research is a research into legal doctrines through analysis of statutory
provisions and cases by the application of power of reasoning.3 It is normally a two-part process, because it
involves first locating the sources of the law and then interpreting and analysing the text. It gives emphasis on
analysis of legal rules, principles or doctrine.4 Even though it is less rigorous, it is in-depth and flexible that
provides room for critical analysis of the legal framework on the management of clients' money by lawyers and
the impact of on non-compliance of the law. In conducting this legal research, the literature review is carried on
both digital and non-digital libraries comprising primary sources which are the original sources such as statutes,
codes, regulations, non-legislative texts which include procedures, guidelines, reports, and unreported case law,
and secondary sources which consist of textbooks, law journals, law committee reports and the statistics of lawyers
involving in the criminal breach of trust according to the States in Malaysia from 2015 to 2020. Besides that,
comparative based analysis is employed to facilitate a more effective law reform from other jurisdictions. 5
Self Regulatory by lawyers with the minimum obligations under the SAR
The SAR was introduced to regulate the clients’ account. Rule 3 of the SAR only provides for clients’ money
received to be deposited “without delay” into clients’ account. In furtherance to the above, reconciliation of
clients’ account shall be made every six months. No provision for monitoring compliance of this Rule. At the
same time, merely auditing the clients’ account without a simultaneous audit of the firm's other accounts is
meaningless since amounts that should have been paid into the client's account could be diverted into other
account.6 The compulsory retention of the books of accounts is only for six (6) years as provided under Rule 11(5)
of the SAR. Lawyers deserve the guidance, instructions, or compliance check to complement the concept of self-
regulatory law to ensure protection to both lawyers and clients without the need to increase the use of disciplinary
1
Rohani, M.S. 2013. Client's money: Ethical legal consideration in misappropriation and criminal breach of trust, 5th International Conference
on Financial Criminology ‘Global Trends in Financial Crimes in The New Economies'. 28 – 29 May 2013, Holiday Inn Glenmarie, Shah
Alam
2
STAR newspaper on 3 October 2019 (https://www.thestar.com.my/news/nation/2019/10/03/cops-looking-for-21-lawyers-over-rm304mil-
in-cbt-cases.
3
Vibhute, K. and Aynalem, F., 2009. Legal Research Methods. Teaching Material. Sponsorship of the Justice and Legal System Research
Institute", <https://chilot.files.wordpress.com/2011/06/legal-research-methods.pdf>.
4
Ibid.
5
Gutteridge, H.C. (1946). Comparative law: An introduction to the comparative method of legal study and research (2nd Ed 1949).35p.
6
Note 1
106
sanctions.7 A setback to the minimum standard imposed by the SAR, lawyers have the opportunity to take
advantage of their vulnerable clients who relied on them.8
Judicial Cognisance of Lawyers’ Misappropriation of Clients Money

In the case of Choong Yik Son v Majlis Peguam Malaysia,9 The Disciplinary Board ordered the solicitor to be
struck off the Roll of Advocates and Solicitors of the High Court of Malaya for withdrawing clients' money from
clients' accounts to pay the medical bill for himself and his late wife. Appeal was dismissed because the Court
viewed that it amounts to a proffessional misconduct for misappropriation of clients’ money. In Majlis Peguam
Malaysia v Lim Yin Yin,10 clients’ money in clients’ account was utilised to purchase the family’s house. The High
Court replaced the struck-off Roll of Advocate and Solicitor order made by the Disciplinary Committee with a
three-year suspension. The Court of Appeal restored the order made by the Disciplinary Board. In brief, the
incidences of utilizing and withdrawing clients' money for their purpose are rampant that need a deterrent penalty
to reflect the seriousness of the misconduct. It was reflected from the courts’ decision that the integrity of the legal
profession is vital in order to safeguard the interest the clients, the profession itself and the court.11
Benchmarking from Other Commonwealth Countries

The principles of utmost good faith, undertaking to uphold the profession's integrity and only to use clients' money
for that clients' matters are embedded into the Hong Kong Solicitors' Account Rules (Chapter 159F) (Hong Kong
SAR) under Rule 1A. Under Rule 9A of Hong Kong SAR, imposes a duty to remedy the breach promptly upon
discovery on the lawyers. Sub Rule 2 of the same Rule indicates each principal of a firm shall be jointly and
severally liable to perform the duty to remedy any breach of the Hong Kong SAR. Finally, the reconciliation shall
be done once a month as provided under Rule 10A of Hong Kong SAR. In addition to the above, the Law Society
of Hong Kong issued a Manual on Solicitors Accounting to its members. The guidelines help demonstrate clients’
money management by legal firms that complement the Hong Kong SAR, especially to newly set-up legal firms.
Under the UK Solicitors Account Rules (UK SAR) 12 the Handbook, together with guidance notes of the UK SAR
is also issued by the Solicitors Regulation Authority to explain the Rules and providing the examples and
rationales of the UK SAR. Complementing the SAR with illustrations through the production of a handbook is a
commendable effort by the Law Society to reach and educate its members on the importance of safeguarding
client's money held by lawyers. In fulfilling lawyers' professional duty, he should maintain the highest standards
of ethical conduct.13In brief, the provisions of the SAR from Hong Kong and United Kingdom reflect the
seriousness on part of the governing body of lawyers to regulate the management of clients’ money, where the
clients’ money shall be deposited into clients’ account and can only be utilised for clients’ purpose. The aid of
Handbook and Guidelines is useful to ensure better understanding of the SAR.

The findings of this research are significant in providing evidence of the existence of an apparent weakness of the
Rules that regulate lawyers on the management of clients’ monies. This issue has placed the lawyers in a
vulnerable position where they could be criminally implicated. The absence of apparent law and policy relating
to the effect of non-compliance of the law may adversely affect the clients’ interest because no means under the
SAR to recover the loss from the lawyers or the legal firms in the event of misappropriation of clients’ money.
7
Soule, G.D. 1976. Attorney misappropriation of clients' funds: A study in professional responsibility. U. Mich. JL Reform, 10:415.
8
Narayan, R.D., Dhaliwal, G., Lutz, M., and Hagerty, C. 2020. Professional misconduct among Lawyers: A study of Canadian lawyers,
International Journal of Multidisciplinary Thought, 08(01):79–90.
9
[2008] 10 CLJ 101
10
[2018] 1 LNS 2003
11
Iacovino, L. 2002. Ethical principles and information professionals: Theory, practice and education. Australian Academic & Research
Libraries, 33(2):57-74.
12
https://www.sra.org.uk/solicitors/standards-regulations/accounts-rules/
13
De Silva, K. 2015. Professional ethics for lawyers. Proceedings of 8th International Research Conference, KDU.
107
Track: Knowledge Management

Paper ID: 011-006
INFORMATION ASYMMETRY AND INDUSTRY 4.0 AMONG SMALL AND MEDIUM

ENTERPRISE (SME) IN MALAYSIAN HALAL INDUSTRY
Mohd Hasimi Yaacob1 and Ng Suat Thing2
Centre for Governance Resilience and Accountability Studies (GRACE), Faculty Economics and Management,
Universiti Kebangsaan Malaysia (UKM)1, Faculty Economics and Management, Universiti Kebangsaan
Malaysia (UKM)2.
1. Introduction
Information asymmetry is a growing worldwide concern as this particular issue brings about negative
consequences to organizations. Additionally, most researchers have focused their research from the perspectives
of the shareholders. For example, there are allegations that management does manipulates accruals, employs
constructive and imaginative accounting transactions, and even discloses false information to mislead their
investors who rely on such information (Healy & Palepu 2001; Lie 2005). In fact, information asymmetry plays
a significant problem in the stakeholder perspective. An individual tends to be involved in the information
asymmetry for their own interests, i.e., their benefits or to realize their organization's objective (Connelly et al.
2011; Hagedoorm 2006; Zaheer & Soda 2009). Hence, Bergh et al. (2019) further defines a new concept of
information asymmetry from the stakeholders' perspective into private information, different information, hidden
information, lack of perfect information, and information impactedness. Therefore, this particular concept of
Information Asymmetry will be used to focus on the various solutions towards alleviating information asymmetry
to improve corporate governance and performances. For instance, some researchers have suggested that
monitoring management behavior and rewards will reduce these information asymmetries. In contrast, some other
researchers have argued that corporate should exploiting by engaging information concealment behaviors as
mitigation. However, these resolutions consider costly, and the provided system of mitigating information
asymmetry became a challenge to corporate. Hence, it remains inefficient (Mejia & Balkin 1992).
Information asymmetry is generally related with agency theory. Agency theory is considered as a general
theory in management research. It explains the relationship between principal and agent, which the agent is
employed by the principal to act on their behalf (Mahaney & Lederer 2003). However, the principal and agent do
not inevitably share the same interest (Eisenhardt 1989). The agents tend to gain better information than the
principal and this provides an opportunity for the information-rich party to engage with self-serving benefits.
Hence, when one party gains more or better information than another within this, they will engage with self-
serving interests or activities, this problem known as information asymmetry (Akerlof 1970). We can infer that
the existence of information asymmetry is caused by the behavior of market participants. Thus, their intention(s)
on mitigating information asymmetry needs to be examined as this will impact the effects of the solutions in
mitigating information asymmetry. As the intention(s) of mitigating information asymmetry remains unknown,
the solution(s) of mitigating information asymmetry is not effective as expected. Hence, the problem(s) of
information asymmetry is still being unresolvable and has negative consequences. Therefore, it is perhaps
necessary to adopt technology on mitigating the problem of information asymmetry as these disruptive
technologies enables informational transparency.
The disruptive technologies are blockchain, Cyber-Physical Systems (CPS), Internet of Things (IoT),
and Cloud computing, which are collectively known as Industry 4.0 (IR4). Many of these disruptive technologies
can improve information asymmetry problems while decreasing the cost and increasing the performance. The
definition of IR4 is based on the integration and interconnected systems through the actions of data volumes uses
and the emergence of analytics and business-intelligence capabilities. It will generate new forms of human
machine interaction, and improvements in the transferring of digital instructions to the physical world to bring a
new value in the organizational value-chain and management across the product lifecycle (Baur &Wee 2015;
Kagermann 2013). Therefore, adopting IR4 to mitigate information asymmetry will impact the traditional methods
of industrial production, corporate governance, and business regulations. Additionally, it will further improve
corporate performance and gives the organization into the new edge. For instance, blockchain technology
mitigates information asymmetry by introduces a new way of governing groups in a decentralized manner. This
will disrupt the traditional governance structures by reducing the transaction costs and agency problem of moral
hazard (Tapscott & Tapscott 2016; Shermin 2017). Some earlier IR4 studies have shown the benefits of using
IR4. For instance, IR4 will decentralize the corporate governance structure, and the disclosed information would
have high transparency, is traceable, and is tamper-proof (e.g., Yu, Lin & Tang 2018). IR4 will further contribute
to product quality and corporate performance. Therefore, this issue creates opportunities for a further study of the
linkage between IR4 to mitigate information asymmetry.
108
This study will primarily focus on the Malaysian Small and Medium Enterprises (SMEs) within the halal
industry. The Halal industry is a vital contributor to Malaysia's economy with Malaysia having a comprehensive
halal ecosystem. This advantage the Malaysia to trying position itself as the halal hub in the Asian region and the
rest of the world. Malaysia External Trade Development Corp (Matrade) deputy chief executive officer Datuk
Wan Latiff Wan Musa says that Malaysia is ranked No.1 in terms of the halal economy (The Star 2019). In a
simple explanation, the halal industry makes a significant contribution to Malaysia's economics. Malaysia's export
value of halal-certified products was worth RM40 billion in 2018 and RM40.2 billion in 2019 and estimated to
hit RM50 billion by 2020 (The Star 2020). However, the existence of information asymmetry had drag down the
developmental progress of the halal industry. The Malaysian government is ramping up efforts to mitigate this
problem by implementing IR4 for SMEs, including those in local halal industry. Moreover, the Malaysian
government has unveiled the country’s Digital Economy Blueprint in a bid to catch up in the digitalization race.
The 10-year road map aims to transform Malaysia into a digitally driven, high income nation and a regional leader
in the digital economy (The Edge Markets 2021). However, the results are not as expected, and the Malaysian
government is still figuring out the problems.
The biggest challenges of the current local halal industry are most of the participants tend to involve
themselves in hoarding its information for personal benefits. They tend to think that sharing information will
increase their competitiveness risks, and it is self-defeating to share such information. Hence, the top management
of the local halal industry used to hide or share different information within the company for their self-serving
benefit. Moreover, these top management tends to keep the information private to avoid competition within the
industry. Thus, it slows downs the developmental progress of the local halal industry. This is a serious problem
that we should be focused on as it will lead to other negative consequences in the local halal industry. It known
as information asymmetry, the common problem that existed in any exchange relationship. The problem of
information asymmetry correlates with the participant’s behavior on hoarding its information as previously
mentioned. According to Datuk Wan Latiff Wan Musa, information asymmetry is believed to cause about 98%
of the local halal industry participants being unable to meet the demands of the global halal market (The Edge
Markets 2019). The major problem is due to a lack of perfect information regarding investments, skills, global
alignment, and rationalization of halal standards, and other international standards required from these Malaysian
SMEs (The Edge Markets 2019). If the local halal participants continues to hoard information when running their
business and ignore these information asymmetry, it will drag down the development progress of its industry in
short, Besides, it will negatively influence Malaysia’s position in the global halal status if the problem grows
continuously without control. Therefore, the Malaysia government is ramping out efforts to mitigating the
information asymmetry problem by suggesting the adoption of technology. Recently, the Malaysian government
focused on adopting disruptive technology known as IR4 – a technology that enables informational transparency.
However, the disruptive technology’s adoption to mitigating information asymmetry among SMEs in the halal
industry is relatively slow. There is only about 15 to 20 percent of companies in the country adopting IR4 (New
Straits Times 2019). The major reason is because lack of information, high cost of adoption, and terminologies
issues. The deciding factor is the behavior of local halal industry when running their business. They tend to hoard
information for the personal benefits and organizations’ objective. The phrase “buat apa nak pening kepala” best
describes the accompanying mindset (The Edge Markets 2019).
We can conclude that the behavior of local halal industry on running their business brings negative
consequences, such as information asymmetry and the rejection to adopt technology to change and grow. This
issue provided an opportunity to conduct an exploratory research to investigate the perspective of the local halal
industry towards information asymmetry and investigate the main reason on why the adoption of industry 4.0 are
slow in the local halal industry. Prior studies had classified information asymmetry issues into a new conceptual
model, which are private information, different information, hidden information, lack of perfect information, and
informational impactedness. We study the information asymmetry issues faced by the local halal industry
participant(s). Therefore, the objectives of the study are: (i)to investigated the information asymmetry issues faced
by the top management in the local halal industry and their intetion of mitigating this information asymmetry
issue, and (ii) to investigated the moderating effect of IR4 towards the linkage between information asymmetry
faced by the top management in the local halal industry and their intention of mitigating this information
asymmetry issue.
2.0 Method and Study Area

This study focused on the top management of the halal industry Malaysia under the Halal Industry Development
Corporation (HDC). The top management tends to involve themselves in managing information. For instance, the
top management is the first person who receives information from the horizontal and vertical organization. Then,
they will share the received information by sending it to subordinates. Besides, the information is important to
them in the decision-making process. This study was conducted using cluster random sampling, which the halal
industries are Small and Medium Enterprises (SMEs) located in the Selangor state. The questionnaire, which was
adapted from prior studies (e.g., Demirkasimoglu, 2016; Singh, 2019; Serenko&Bontis, 2016; Fullwood et al,
109
2013; Lin, 2007; Van der Vegt et al., 2000; Lin & Lee, 2004; and Bergh et al., 2019) is divided into four sections,
from Sections A to D. Section A consists of questions about demographic background, such as gender, age, ethic,
education level, position, business model, sales turnover, and employment rate. Section B examines the issues of
information asymmetry faced by the top management in the halal industry Malaysia. These issues are divided into
several dimensions: private information, different information, hidden information and lack of perfect
information. Section C investigate the moderator effect of IR4. The factors are including perceived usefulness,
perceived ease of use, perceives system quality, perceived content quality, and perceived cost. Section D
investigate the top management’s intention of mitigating information asymmetry. The questions in Section B and
Section D were measured through 5-point Likert-type rating scale. A total of 100 questionnaire were distributed
online. This study used partial least squares (PLS) modeling using the Smart PLS 3.2.8 version (Ringle et al.,
2005) as the statistical tool to examine the measurement and structural model. The data analysis and results will
be discussed in the following section.
3.0 Data Analysis and Discussion

The majority of the respondents are Malay (82%), followed by Chinese (12%) and others (6%). More than half of
the respondents are male (53%), and the remaining (47%) are female. As for age, the majority of the respondents
are between 30 to 45 years old (68%), followed by 29 years old and below (19%) and the remaining aren46 to 60
years old (13%). Most of the respondents are married (70%). Meanwhile, other respondents are remaining single
(24%) or divorced (6%). Only 7 percent of the respondents have master’s degree, majority of the respondents
have a bachelor’s degree (45%), and remaining have diploma (34%) or other qualification certified (14%). Almost
all of the respondents are manager (81%), and others are the director (19%). Majority of the respondents work in
the current position more than seven years (31%), following 1 to 3 years (30%), other respondents are work
between 4 to 7 years (28%) and less than a year (11%). The respondents are all from SMEs Halal industry,
including the manufacturing sector and service sector. From the perspective of the manufacturing sector, 21
percent have the sales turnover between RM300,000< RM15 mil and only 7 percent have the sales turnover
between RM15 mil < RM50 mil; 17 percent of the respondents have the employment rate from 5 to < 75 and 11
percent of the respondents have the employment rate from 75 to <200. From the perspective of the service sector,
60 percent have the sales turnover between RM300,000< RM3 mil and only 12 percent have the sales turnover
between RM3 mil < RM20 mil; 60 percent of the respondents have the employment rate from 5 to < 30 and 12
percent of the respondents have the employment rate From 30 to <75. More than half of the respondents have
more than one location (68%) and only have one location (32%). Almost 75 percent of the respondents doing
online business and 25 percent of the respondents no doing online business. Finally, 56 percent of the respondents
serving business to both consumer and business, 36 percent of the respondents serving business to consumer and
8 percent only serving to business.
The data was collected using a single source. Thus, we first tested the issue of Common Method Bias by
following the suggestions of Kock and Lynn (2012), and Kock (2015) by testing the full collinearity. In this
method all the variables will be regressed against a common variable and if the VIF≤3.3 then there is no bias from
the single source data. The analysis yielded VIF less than 3.3 thus single source bias is not a serious issue with
our data.
Table 1: Full Collinearity Testing

PI DI HI LPI II I
1.266 1.539 2.366 1.805 1.594 1.741
Note:PI= Private Information, DI= Different Information, HI= Hidden Information, LPI= Lack of Perfect Information, II= Informational
Impactedness, I=Intention of Mitigating Information Asymmetry.
We followed the suggestions of Anderson and Gerbing (1988) to test the model developed using a 2-step
approach. We tested the measurement model to test validity and reliability of the instruments used following the
guidelines of Hair et al. (2019) and Ramayah et al. (2018). For the measurement model we assessed the loadings,
average variance extracted (AVE) and the composite reliability (CR). The values of loadings should be ≥0.5, the
AVE should be ≥0.5 and the CR should be ≥0.7. The AVEs are higher than 0.5 and the CRs are all higher than
0.708 (Hair et al., 2019). Then in step 2, we assessed the discriminant validity using the HTMT criterion suggested
by Henseler et al. (2016) and updated by Franke and Sarstedt (2019). The HTMT values should be ≤0.85 according
to the stricter criterion. As shown in Table 2, the values of HTMT were all lower than the stricter criterion of
≤0.85 as such we can conclude that the respondents understood that the constructs are distinct. Taken together
both these validity test has shown that the measurement items are both valid and reliable.
110
Table 2: Discriminant Validity

1 2 3 4 5 6
Different Information
Hidden Information 0.615
Informational Impactedness 0.463 0.577
Intention 0.292 0.586 0.486
Lack of Perfect Information 0.303 0.586 0.787 0.521
Private Information 0.141 0.468 0.244 0.379 0.298
3.1 Information Asymmetry and the Intention of Mitigating Information Asymmetry

We followed the suggestions of Hair et al. (2019) to reported the path coefficients, the standard errors, t-values
and p-values for the structural model using a 5,000-sample re-sample bootstrapping procedure (Ramayah et al.,
2018). Also based on the criticism of Hahn and Ang (2017) that p-values are not good criterion for testing the
significance of hypothesis and suggested to use a combination of criterions such as p-values, confidence intervals
and effect sizes. Table 3 shows the summary of the criterions we have used to test the hypothesis developed.
In this study, we tested the 5 predictors on the intention of mitigating information asymmetry, the R 2 was
0.885 which shows that all the 5 predictors explained 88.5% of the variance in the intention of mitigating
information asymmetry. Private information (β = 0.166, p<0.05, t-value ≥ 1.645), hidden information (β = 0.389,
p<0.05, t-value ≥ 1.645) and lack of perfect information (β = 0.199, p<0.05, t-value ≥ 1.645) were positively
related to intention of mitigating information asymmetry, thus H1, H3 and H4 were supported. However, different
information (β = -0.037, p0.05, t-value ≤ 1.645) and informational impactedness (β = 0.117, p0.05, t-values ≤
1.645) were negatively related to intention of mitigating information asymmetry, thus H2 and H5 were not
supported.
Table 3: Hypothesis Testing Direct Effects

Hypothesis Std Beta Std Error T-values P-values
H1 Private Information -> Intention 0.166 0.096 1.739 0.041
H2 Different Information -> Intention -0.037 0.107 0.344 0.365
H3 Hidden Information -> Intention 0.389 0.090 4.326 0.000
H4 Lack of Perfect Information -> Intention 0.199 0.094 2.120 0.017
H5 Informational Impactedness -> Intention 0.117 0.115 1.014 0.155
Note: We use 95% confidence interval with a bootstrapping of 5,000.
Overall, the results appeared to partly support the conceptual model of information asymmetry suggested
by Bergh et al. (2019) in agency theory. Accordingly, in the research, the top management tend to withhold private
information as follow the organization standard of procedure and confidential issues. This result supported the
argument of prior studies which related the concept of information asymmetry as a condition wherein the top
management have the authority to gain private information and holds the information for personal benefits (Bergh
et al., 2019; Connelly et al., 2011; Makadok, 2011; Ecker et al., 2013). However, the result shows that top
management has a high intention of mitigating private information. They thinks that the private information that
follows the organization’s standard of the procedure is actually limited to the decision-making process and the
development of the organizations. We can conclude that the stricter the stricter’s standard of policy, the more
serious the problem of private information in the organization. Hence, the top management will have a higher
intention of mitigating it as they think that private information brings negative consequences to the organization.
This result shows that the current top management prefers to share private information within the organization as
they think it can improve the subordinate's sense of self-importance. It hence enhanced the loyalty of the
subordinates and mitigate the rate of information asymmetry happened in the organization. Therefore, we suggest
the organization should adopt disruptive technologies as it decentralized governance (Shermin 2017; O'Leary
2017; Cong & He 2018; Eling & Lehmann 2018).
On another hand, the results supported the conceptual model of information asymmetry as the top
management of the local halal industry involved in sharing information with expecting a return (Linz&Semykina,
2012; Vanhaverbeke, Duysters & Noorderhaven, 2002). The results show that the top management willing to
share useful information because they perceived that having a rewarding system will motivate more employees to
share useful information. Moreover, the results also show that the top management agree that sharing useful
information will create strong bolds and bring positive vibes in the organization, hence improving the sense of
self-worth as a motivation to work harder to improve the organization (Fullwood, Rowley &Delbridge, 2013; Lin,
2007). In a simple explanation, the top management encourage that we adopt the concept of hidden information
to enable a new strategy to mitigate information asymmetry. It means the top management have a higher intention
on mitigating information asymmetry. Therefore, we suggest the organization should implement a set of rewarding
systems to encourage employees involve themselves in sharing information within the organization. Besides, we
111
suggest the organization to adopt disruptive technologies such as industry 4.0 as it representational faithfulness of
reporting (McCallig, Robb & Rohde 2019; Yu, Lin & Tang 2019). Thus, it will mitigate the fraud in rewarding
system.
Besides, the results proved that the issue of lack of perfect information is positively related to the
intention of mitigating information asymmetry. The top management intend to mitigate the lack of perfect
information issues in their organization as they prefer complete or perfect information to make a decision and help
business growth. Therefore, we suggest that the organization should adopt disruptive technologies to improve the
information system. For instance, adoption industry 4.0 enable higher information transparency. Besides, adoption
industry 4.0 represent faithfulness of financial reporting and enable smart contracts (McCallig, Robb & Rohde
2019; Yu, Lin & Tang 2019; Reinsberg 2019). Thus, it can fulfil the intention of top management on mitigating
information asymmetry to have a perfect information for decision making.
Surprisingly, the two conceptual models of information asymmetry, which are different information and
informational impactedness, are not significant related to the intention of mitigating information asymmetry. The
results disagree the argument of Hambrick and Mason (1984) and Schimidt and Keil (2013) that the market
participants tend to provide different information to all organizations in the market for the personal benefits. Being
a part of the halal industry, the top management need to follow the regulations of the Syariah and Malaysia Halal
institutions to running their business. It is unethical to share different information according to the Syariah
(Ismaeel & Blaim, 2012). Thus, different information will not influenced the intention of mitigating information
asymmetry in the local halal industry. The last concept of information asymmetry, informational impactedness
explains as a resolution to act when market participants were facing a lack of information. The results showed that
local halal industry prefers to use technology infrastructure to improve its business when facing information
asymmetry. Therefore, the abovementioned discussion suggesting adoption of disruptive technologies to achieve
their intention of mitigating information asymmetry. However, it is more relevant to a solution to mitigating
information asymmetry instead of factor which will influence the intention of mitigating information asymmetry,
thus informational impactedness is negatively relevant to the intention of mitigating information asymmetry.
3.2 Moderating Effect of Adoption Industry 4.0

Two-stage approach (Henseler and Chin 2010) was used to test the moderating effect of adoption IR4 on the
relationship between information asymmetry and the intention of mitigating information asymmetry. A two-stage
approach is advocated as a more appropriate method for determining whether a variable has a moderating effect
on the relationship between two other variables when formative measures are involved in the model (Henseler
and Chin 2010). In applying the first step analysis, the variable in data is categorized into three kinds of variables.
Firstly, the variable in data, Intention on Mitigating Information Asymmetry -I (I1 to I7) as reflective exogenous
variables. Secondly, information asymmetry (Combination of the variables of (PI, DI, HI, LPI and II) will be
endogenous variables, which also known as formative measurement. Lastly, Adoption IR4 (PU1 to PC38) will
play a significant role in a moderator variable, which also known as reflective measurement.
In the second step, R2 and F2 values play a significant role to present the moderator effect (Ramayah et
al. 2018; Kenny 2016). In the case of where a positive moderator effect is present, a technique which known as
effect size result was applied to show the moderator's outcome in the relationship between the predictors and
criterion variable. Therefore, this research will follow Ramayah et al. (2018) 's suggestions to analyse the R 2
changes to test the interaction effect and follow the interpretation of the F 2 by following the guidelines of Kenny
(2016).
Table 4 present the bootstrapping results of the moderating effect of adoption IR4 on the relationship
between information asymmetry and the intention of mitigating information asymmetry. The results show a
statically positive on the moderating effect of adoption IR4 on the relationship between information asymmetry
and the intention of mitigating information asymmetry ((β = 0.054, p<0.05, t-value ≥ 1.645). Thus, hypothesis 6
were supported.
The positively moderating effect of adoption IR4 on the relationship between information asymmetry
and the intention of mitigating information asymmetry was also further analysis by using the calculation of effect
size results. Table 5 show the previous R2 change for the primary effect model is 0.426, and now in the interaction
effect model, the R2 is 0.936. The R2 change of 0.51 indicated that with the addition of one interaction term, the
R2 had increased by about 51% (additional variance). Based on the effect size result, the F2 of 7.9688 marks
indicated a large effect size, as Kenny suggested (2016). Thus, hypothesis 6 were also supported.
Table 4: Hypothesis Testing Indirect Effects

Hypothesis Std Beta Std Error T-values P-values
H6 Information Asymmetry*Adoption IR4 -> Intention 0.054 0.025 2.153 0.016
Note: We use 95% confidence interval with a bootstrapping of 5,000.
112
Table 5: Effect Size Results

Included Excluded F-squared Effect Size
R-squared 0.936 0.426 7.9688 Large
This research revealed that adoption IR4 moderates the relationship between the information asymmetry issues
faced by the top management and their intention of mitigate information asymmetry. Implicitly, the findings
suggested that the top managements of the local halal industry will be intended to alleviate the problem of
information asymmetry in their organization as they perceived adoption IR4 is usefulness, easy to use, affordable
cost, provide high system quality and content quality. Indeed, the effect size results, which has been explained
earlier suggested that the adoption IR4 leading to the higher intention of managers or directors on mitigating
information asymmetry. In a more general perspective, there is evidence that adoption IR4 can mitigate the
problem of information asymmetry as the enabling technologies of IR4 open information transactions,
decentralized governance, representational faithfulness of financial reporting, enable smart contracts and enhance
market competitiveness and social welfare (e.g., O’Leary 2017; O’Leary 2018; Reinsberg 2018). Specifically,
the findings are consistent with technology acceptance theory which views that market players will accept and
adopt a new technology (e.g., IR4) when the factors of perceived usefulness, perceived ease of use, perceived
system quality, perceived content quality, and perceived cost can provide benefits to the market players (Davis
1989; Braun 2013). On the other hand, the enabling technologies of IR4 such as blockchain, cyber-physical
system, internet of things and cloud computing evolve the corporate governance especially from the aspect of
information sharing (e.g., Xu et al. 2018; Viryasitavat et al. 2018). It will increase the top management of the local
halal industry’s intention of mitigate information asymmetry indirect relationships or non-direct relationships.
Therefore, IR4 positively moderates the relationship between the information asymmetry issue and the top
management’s intention of mitigate information asymmetry.
113
Track: Human Capital

Paper ID: 017-010
EXAMINING THE IMPACT OF SOCIAL MEDIA USAGE ON PERCEIVED ORGANIZATIONAL

PERFORMANCE: AN EMPIRICAL STUDY IN THE MALAYSIAN SERVICE SECTOR
Rosmah Mohamed1, Tan Xin Yu1, Anuar Shah Bali Mahomed1, Anusuiya Subramaniam1, and Saadiatul
Ibrahim1
School of Business and Economics, Universiti Putra Malaysia, Malaysia1.
1.0 Introduction
In this digitalization age, social media is on the cusp of changing how businesses operate. It plays a vital role in
increasing the productivity and efficiency of the organizations. The adoption of electronic devices such as smart
phones, laptops and tablets have become part and parcel of human life. Everyone is connected to each other via
numerous applications such as Zoom, Facebook, WhatsApp and Instagram. Today, being ‘social’ has become a
common phenomenon and brand-newdefinition for human1. Data from the Global Web Index showed that in
January 2019, over 4.5 billion people globally were using the internet2. Users aged between 16 to 64 years old
spend an average of 6 hours 43 minutes on the internet. However, this number varies across different countries.
For example, in Malaysia, the average amount of time users aged between 16 to 64 years spend online per day
is 7 hours and 57 minutes, whereas in the Philippines and Japan, the average time spent online is 9 hours 45
minutes and 4 hours 22 minutes respectively. In terms of social media, there are over 3.6 billion people in the
world using social media and this number is expected to increase to almost 4.41 billion in 2025 3. On average,
internet users spend 2 hours 24 minutes per day on social media and messaging apps. Furthermore, the most
popular social network worldwide is Facebook which has approximately 2.7 billion monthly active users. In
Malaysia, 62% social media users were active in 2016 and this percentage increased in 2017 and 2020 by 73%
and 81%, respectively4. The most popular platform used by internet users in Malaysia is YouTube (93%),
followed by WhatsApp (91%), Facebook (89%), Instagram (72%), and Facebook Messenger (63%). In terms of
the main purpose of using social media among Malaysians, the majority of Malaysians use social media to keep
up with latest news and current events (72%), connect with close friends (69%), share photos, videos or other
contents such as Instagram’s story (51%), search funny or engaging contents (48%), and researching or exploring
new products (45%)5. Today, social media is also used for work related purposes. Approximately 32% of
Malaysians use social media for work purpose. The Small and Medium Enterprise’s (SME) survey in 2018 found
that about 70.5% of the total respondents use social media, such as Instagram, WhatsApp and Facebook, in their
daily business activities6. Sixty nine percent of the social marketers said that their main goal to use social media
was to increase brand awareness, and 46% to increase the number of customers. From the customer perspective,
the majority of the customers (89%) said that they will buy products from a brand they have followed on social
media; and they will increase their spending with brands they followed on social media (75%) 7. Social media
allows customers to post their reviews about their experience on the products or services purchased, and this can
influence the potential customers’ behaviour8. Organizations that take advantage of this usage and the newest
social media technologies will perform better than their rivals and gain advantages such as reduced expenses
and increased profitability9. The utilization of social media has significant implications on organizational
1
Naik, D. A. 2015. Organizational use of social media: The shift in communication, collaboration and decision-making. Retrieved from:
https://commons.lib.jmu.edu/master201019/54/.
2
Kemp, S. 2020. Digital 2020: Global digital overview. Retrieved from: https://datareportal.com/reports/digital-2020-global-digitaloverview.
3
Tankovska, H. 2021. Number of global social network users 2017-2025. Statistics. Retrieved from:
https://www.statista.com/statistics/278414/number-of-worldwide-social-network-users/.
4
Müller, J. 2020. Active social media users as percentage of the total population in Malaysia from 2016 to 2020. Retrieved from:
https://www.statista.com/statistics/883712/malaysia-social-media-penetration/.
5
Kim, K. S. and Sin, S. C. J. 2016. Use and evaluation of information from social media in the academic context: Analysis of gap between
students and librarians. The Journal of Academic Librarianship, 42(1):74-82.
6
Seraph Studio. 2019. The digital landscape 2019-Malaysia. Retrieved from: https://seraphstudios.net/the-digital-lanscape-2019-malaysia/
7
Afshar, V. 2020. Social media accelerates business growth and relevance. Retrieve from: https://www.zdnet.com/article/social-mediacan-
accelerate-business-growth-and-relevance/.
8
Tapscott, D. and Williams, A. D. 2006. Wikinomics: How mass collaboration changes everything. Portfolio, New York
9
Harris, A. L. and Rea, A. 2009. Web2.0 and virtual world technologies: A growing impact on IS education. Journal of Information Systems
Education, 20(2):137-144
114
performance10,11,12,13. Therefore, organizations should adopt the usage of social media in their daily work to gain
a competitive edge. Social media is a powerful platform for connecting and engaging with both the potential and
current customers14. Previous studies have focused on the adoption of social media in SMEs 15,16,17. By using a
content analysis of 55 articles on organizational adoption of technologies, Tajudeen discovered that majority of
the studies have investigated the intention to use the technology, and only ten studies investigated the actual
usage of social media18. Furthermore, majority of the previous studies used data collected from senior managers.
Therefore, studies measuring the usage of social media in the service sector among employees are still limited.
This research examines the impact of social media usage on perceived organizational performance in Malaysian
service sector.
2.0 Method
This research tests four research hypotheses: H1 There is a significant positive relationship between social media
for marketing tools and perceived organizational performance in Malaysian service sector; H2 There is a
significant positive relationship between social media for customer relations and services and perceived
organizational performance in Malaysian service sector; H3 There is a significant positive relationship between
social media usage for information accessibility and perceived organizational performance in Malaysian service
sector; and H4 There is a significant positive relationship between social media for decision making and
perceived organizational performance in Malaysian service sector. Data was collected from 184 employees who
worked in the service sector in Negeri Sembilan Malaysia, using a self-administered questionnaire. A judgmental
sampling technique was used in this research whereby the respondents were chosen based on three criteria,
namely (i) employees working in the service sector; (ii) employees working in the marketing and sales
department; and (iii) the organization has adopted social media for business and regular job purpose. The usage
of social media was measured using marketing tools, customer relations and services, information accessibility
and decision making19,20. Ten items were used to measure the perception of employees on organizational
performance21. All items were measured using a Likert scale ranging from 1 (strongly disagree) to 5 (strongly
agree). The data was analyzed using the SPSS version 21 software.
The majority of respondents were female (53.8%), aged between 21-30 years old (78.3%), possess a bachelor’s
degree (60.3%) and consumed more than 3 hours daily on social media in their jobs (50.5%). Facebook was the
most popular social media used for marketing activities such as advertising and promotion (42.1%), followed by
Instagram (31.6%), and YouTube (9.8%). Whereas WhatsApp was the most popular social media used for
interaction with customers, colleagues and managers (38.2%), followed by Facebook Messenger (20.9%),
Instagram (18.9%), and WeChat (17.6%). The regression results indicated that three out of four dimensions of
social media usage (marketing tools, information accessibility, and decision making) have significant and
positive impacts on perceived organizational performance. There was no significant impact of the other one
dimension of social media usage (customer relations and services) on perceived organizational performance.
Therefore, this research proposes that employees should consider the usage of social media for effective
marketing tools, information accessibility and decision making to increase organizational performance. This
research contributes to existing studies on the usage of social media and perceived organizational performance.
10
Ainin, S., Jaafar, N. I., and Tajudeen, F. P. 2018. Understanding the impact of social media usage among organizations. Information and
Management, 55(3):308-321
11
Dodokh, A. M. I. 2017. The impact of social media usage on organizational performance: A field study on dead sea product companies in
Jordan. Master Thesis. Faculty of Business, Middle East University, pp.1-122.
12
Parveen, F., Jaafar, N. I., and Ainin, S. 2016. Social media’s impact on organizational performance and entrepreneurial orientation in
organizations. Management Decision, 54(9):2208-2234
13
Hassan, Z. and Basit, A. 2020. Impact of social media usage on organisational image mediated by customer trust. International Journal of
Business Management and Technology, 4(6):21-46.
14
Hsu, Y. L. 2012. Facebook as international e-marketing strategy of Taiwan hotels. International Journal of Hospitality Management,
31(1):972-980.
15
Ahamat, A., Ali, M. S. S., and Hamid, N. 2017. Factors influencing the adoption of social media in service sector small and medium
enterprises (SMEs). International E-Journal of Advances in Social Sciences, 3(8):338-348.
16
Dodokh, A. M. I. and Al-Ma'aitah, M. A. 2019. Impact of social media usage on organizational performance in Jordanian dead sea cosmetic
sector. European Journal of Business and Management, 11(2):75-91.
17
AlRahbi, H. S. A. 2017. Factors influencing social media adoption in small and medium enterprises (SMEs). Doctoral Dissertation. Brunel
University London.
18
Tajudeen, F. P. 2014. Social media usage and its impact on Malaysian organizations. Doctoral Thesis. Faculty of Business and Accountancy,
University of Malaya.
19
Parveen, F., Jaafar, N. I., and Ainin, S. 2016. Social media’s impact on organizational performance and entrepreneurial orientation in
organizations. Management Decision, 54(9):2208-2234.
20
Dodokh, A. M. I. 2017. The impact of social media usage on organizational performance: A field study on dead sea product companies in
Jordan. Master Thesis. Faculty of Business, Middle East University, pp.1-122
21
Tajudeen, F. P. 2014. Social media usage and its impact on Malaysian organizations. Doctoral Thesis. Faculty of Business and Accountancy,
University of Malaya.
115
It extends the use of diffusion of innovations theory, technology-organization- environment framework, and
resource-based view theory in explaining the relationship between social media usage and performance at
organizational level in the service sector. The results provide new and valuable insights for managers and
business owners in Malaysia in understanding the implication of social media usage on organizational
performance particularly managers in service sector. Managers and business owners are recommended to
embrace the usage of social media for marketing tools, information accessibility and for decision making to
enhance their organizational performance. Future research could put emphasis on extending this study to another
country or sector.
116
Track: Organizational Dynamics

Paper ID: 029-022
A SURVEY ON MARKETING DECISION SUPPORT SYSTEM (MDSS) APPLICATIONS
Suddin Lada1, Azaze-Azizi Adis1, Brahim Chekima1, Bamini KPD Balakrishnan1, and Syed Nasirin2
Faculty of Business, Economics, and Accountancy, Universiti Malaysia Sabah, Malaysia 1, Faculty of
Computing & Informatics, Universiti Malaysia Sabah, Malaysia2.
1.0 Introduction
The marketing decision support system (MDSS) is used to assist companies in exploring various scenarios by
manipulating data gathered from previous events. MDSS is a critical method for gaining a competitive advantage
and considering potential business scenarios while making strategic marketing decisions1. MDSS helps in the
collection and review of unbiased marketing data2; it aids in the management of information overflow through the
speed and ease of data retrieval3. Furthermore, the current marketing trend is the expanded use of decision support
(DSS) technology to help in strategic decision-making4. This is where MDSS has strategic marketing
considerations in mind. However, the structural design of proprietary MDSS faces significant challenges.
Understanding the structure, scope of operation, model or method, and analytical capacity is needed. MDSS
models often necessitate a high level of expertise. Marketing managers and MDSS analysts must collaborate to
build systems that are reliable, scalable, flexible, versatile, easy to integrate, and simple to use. The literature
reviewed thus far indicates substantial differences in how marketers and MDSS developers interpret systems and
their role in marketing decision-making. The primary goal of this research is to survey MDSS applications from
1990 to 2020. Based on DSS classifications reviewed by Alter 5, Holsapple, and Whinston6, and Power7, the study
intended to provide insight to MDSS researchers and practitioners regarding history, trends, implications, and
future directions and to organize a systematic reference for the burgeoning research on MDSS applications.
Understanding the distinctive features of the DSS and the MDSS may aid in the resolution of marketing issues
and challenges.
2.0 Methods
2.1 Phases and Selection Criteria

The MDSS application survey is carried out in two stages in the report. In Phase 1, selection criteria were
determined and relevant research articles were compiled; in Phase 2, selected research articles were reviewed and
analyzed. The following requirements are used to pick relevant research papers in the first phase: (1) Research
papers were chosen based on their publication in Scopus-indexed journals. (2) To reflect the past of the MDSS
application until recently, the timeline was set from January 1990 to December 2020. (3) Relevant keywords for
literature searching were chosen, such as "marketing decision support system," marketing, and MDSS. Based on
Oguduvwe8, the establishment of these selection criteria is critical to provide an overview and scope of the current
study. All of the selected research papers from the first stage are carefully reviewed and analyzed in the second
phase. All relevant data gathered was classified into two categories: (1) MDSS Type and (2) MDSS Classification.
Based on the information gathered, a summary, review, and assessment of the MDSS application history, trend,
or patterns are conducted, as well as potential research and development. A thorough conclusion is reached, along
with guidelines for future MDSS research.
1
Malhotra, N. K. and Peterson, M. 2001. Marketing research in the new millennium: Emerging issues and trends. Marketing Intelligence &
Planning, 19:216–232.
2
Cassie, C. 1997. Marketing decision support systems. Industrial Management and Data Systems, 97(8):293–296.
3
Wöber, K. and Gretzel, U. 2000. Tourism managers’ adoption of marketing decision support systems. Journal of Travel Research, 39(2):172–
181.
4
Malec, R. 2002. Using Dss for Marketing Decision-Making: The Mdss. Issues in Information Systems, 3:420–426.
5
Alter S. L. 1980. Decision support systems: Current practice and continuing challenges. Addison-Wesley: Reading, Massachusetts.
6
Holsapple, C. W. and Whinston, A. B. 1996. Decision support systems: A knowledge-based approach. West Pub. Co.
7
Power, D. J. 2004. Specifying an expanded framework for classifying and describing decision support systems. Communications of the
Association for Information Systems. 13:158-166.
8
Oguduvwe, J. I. P. 2013. Nature, scope and role of research proposal in scientific investigations. IOSR Journal of Humanities and Social
Science (IOSR-JHSS), 17(2):83-87.
117
2.2 Analysis
The systematic literature review method suggested in the previous study was used in this study's analysis 9. A total
of 120 papers were selected for the analysis. As a result, to study the MDSS application history, trends, or patterns,
as well as future research and development, we evaluate and summarize the survey results based on (1) the MDSS
area of application; (2) the year of publication in each area of application; (3) the distribution of underlying models
in MDSSs; (4) a collection based on Alter10, Holsapple, and Whinston11, and Power12 taxonomy; (5) the
administration level (operational, tactical, and strategic) for which the MDSS was invented.
This paper provides a new survey finding based on an analysis of newly available data that is consistent with the
previous survey paper covering the period from January 1990 to December 2020. The study lends support to the
growth of MDSS as a powerful decision-making method. The presence of MDSS would aid managers in making
wise decisions by providing a simple definition and classification that meets current needs. The advanced and
well-structured MDSS has a large amount of input data. This is a convincing reason for using modern technology
in the collection, reviewing, managing, upgrading, and forwarding of information. Besides, this study revealed
that strong support from top management would be a critical factor in successfully implementing the MDSS.
Keywords: Marketing decision support systems (MDSS), decision support systems (DSS), application, survey.
9
Kim, E. B. and Somarajan, C. 1998. A survey of decision support system applications (1988-1994). Journal of the Operational Research
Society, 49(2):109–120.
10
Ibid
11
Ibid, 1
12
Ibid, 1
118

Paper ID: 029-032
THE EFFECTIVENESS OF E-SERVICESCAPE TOWARDS CUSTOMERS’ LOYALTY:
ONLINE SHOPPING APP CONTEXT
Nur Aqilah Samsuddin¹, Bamini KPD Balakrishnan1, and Suddin Lada1
Faculty of Business, Economics & Accountancy, Universiti Malaysia Sabah, Malaysia1.
1.0 Introduction
Internet shopping preferences for customers have increasingly moved from websites to applications as the
popularity of the digital economy is rapidly growing1. The popularity of online shopping app has grown in recent
years, enhancing the interest in identifying the effectiveness of e-servicescape towards customers’ loyalty.
Centered on the stimulus-organism-response (S-O-R) model as a theoretical background, this paper aims to
conceptually examine how the view of the e-servicescape affects the customer's flow experiences and their loyalty
to an online shopping app. Since a mobile terminal has many features, this paper will concentrate on applications
(apps), considering they have been commonly used in the area of e-commerce retailing to support online internet
shopping2. In e-commerce retailing practices, many retailers pay particular attention to improve their online
shopping websites (which in this study is online shopping apps) to improve the overall online experience of
customers, which can influence their emotional reactions and behaviors (i.e., loyalty). Satisfactory app designs
will thus, help to captivate the attention of the customers.
2.0 Methods
This conceptual research is designed to investigate the effectiveness of the online servicescape dimensions through
aesthetic appeal, layout and functionality, financial security, and social factor on customers’ loyalty to online
shopping apps. Flow experience was also investigated as a moderation effect. The Stimulus-Organism-Response
(S-O-R) model served as the theoretical foundation for this research3.
The novelty of this conceptualization lies in the integration of flow experience to moderate in strengthening the
influence of e-servicescape dimensions (aesthetics, layout and functionality, financial security, and social factor)
on online shopping app customer loyalty. There is still a scarcity of empirical research to address how the overall
online environment affects the response of customers towards online shopping app. Therefore, this paper
specifically, has conceptually addressed e-servicescape based on the S-O-R model by drawing propositions to be
examined in future studies. In terms of industry perspective, this study highlighted the importance of the online
environment dimensions as the e-servicescape. Apart from having an attractive online environment and easy-to-
use design, this study is also highlighted the development of social factors, their effects on the customers’
perception as well as their loyalty to the online shopping app. Therefore, online retailers who have shopping apps
should pay special attention to customers’ interpretations and experiences of the atmosphere, design, and social
factors of the app. The e-servicescape dimensions could be well integrated into the app development process as
the e-servicescape might influence online consumers’ flow experiences and their response. Hence, a better
knowledge of e-servicescape would provide retailers with more knowledge and ways to enhance their online
shopping app. Addressing the e-servicescape dimesnsion through this study contributes further to the enhancement
of service marketing literature.
Keywords: E-servicescape, flow experience, consumers’ loyalty, online shopping app
1
Xiong, L, Xiaodong, Z, W. and Xu, W, P. 2020. Measuring ease of use of mobile application in e-commerce retailing from the perspective
of consumer online shopping behavior patterns. Journal of Retailing and Consumer Services, 55(2020):102093.
2
Kim, S. and Baek, T. H. 2018. Examining the antecedents and consequences of mobile app engagement. Telematics and Informatics,
35(1):148-158.
3
Mehrabian, A. and Russell, J. 1974. An Approach to Environmental Psychology, MIT Press, Cambridge, MA.
119

Paper ID: 029-033
INTERNAL BRANDING DIMENSIONS, JOB SATISFACTION, AND ORGANIZATIONAL

COMMITMENT: PRIVATE HOSPITAL NURSES PERSPECTIVES
Nur Jannah¹, Bamini KPD Balakrishnan¹, Oscar Dousin¹, Suddin Lada¹, and Leila Afshari²
Faculty of Business, Economics & Accountancy, Universiti Malaysia Sabah, Malaysia¹, La Trobe Business
School, La Trobe University, Melbourne, Australia².
1.0 Introduction
Employees’ organizational commitment is crucial for any organization’s survival in this current world. Most
businesses only focus on external customers while neglecting internal customers, and now it is time for
organizations to put more attention on employees as internal customers. Orgnisational commitment are equated
the the loyalty of external customers. Organizational commitment has received great attention over the years1 and
most attention given to organizational commitment results from its relationship with turnover 2. Organizational
commitment is the concept describing the strength of the bond between employees and their organizations. In this
study context, organizational commitment is defined as a psychological link between the employee and the
organization that makes it less likely that the employee will voluntarily leave the organization 3. Besides, this study
focuses on the mediating effect of job satisfaction on the relationship between internal branding (internal customer
orientation, interdepartmental connectedness, and internal service quality) and organizational commitment among
the private hospital nurses in hospitals of Kota Kinabalu, Sabah.
2.0 Methods
This research is based on Psychological Contract Theory4, which comprises five major constructs. The five
constructs (internal customer orientation, interdepartmental connectedness, internal service quality, job
satisfaction, and organizational commitment) were measured using multiple-item scales adapted from previous
research. Using the purposive sampling method, the questionnaires were distributed using Google Forms to nurses
in those targeted private hospitals in Kota Kinabalu, Sabah. A total of 150 respondents were involved in this study.
Meanwhile, SEM-PLS regressional analysis were used to assess the hypothesis and mediating effect.
The results do not support the idea that internal consumer orientation and interdepartmental connectedness have
a minimal impact on job satisfaction. However, internal service quality was found to have a significant relationship
with job satisfaction among nurses in private hospitals. Job satisfaction, on the other hand, has been found to have
a significant relationship with organizational commitment. In other words, nurses' job satisfaction affects their
organizational commitment. Concerning the mediating effect, the result supports the findings that job satisfaction
significantly mediates the relationship between internal service quality and organizational commitment. Lastly,
the present study suggests that to improve the organizational commitment (loyalty) among the private hospital
nurses in Kota Kinabalu, Sabah, the management could further enhance and promote internal service quality.
Moreover, furture research could also investigate and explore the role of customer orientation and
interdepartmental connectedness in affecting job satisfaction and organizational commitment of nurses through a
qualitative approach.
Keywords: internal branding, organizational commitment, job satisfaction
1
Lok, P. and Crawford, J. 2001. Antecedents of organizational commitment and the mediating role of job satisfaction. Journal of Managerial
Psychology, 16(8):594-613.
2
Cohen, A. 2017. Organizational commitment and turnover: A meta-analysis. Academy of management journal, 36(5):1140-1157.
3
Arbabisarjou, A., Hamed, S., Sadegh, D.M., and Hassan, R. 2016. Organizational commitment in nurses. International Journal of Advanced
Biotechnology and Research. 7(5):1841-1846.
4
Chaubey, D. S., Thapliyal, S. P. and Bisht, S. 2015. Analysis of Psychological Contract at the Workplace: A Cluster Analysis. Management
Convergence, 6.
120

Paper ID: 029-034
THE EFFECT OF ENVIRONMENTAL STIMULI ON CONSUMER'S AFFECTIVE CONDITION

AND IMPULSIVE CONSUMPTION VIA ONLINE LIVE STREAMING
Siti Nor Bayaah Ahmad¹, Sri Nithilak Kumari², Azizah Omar 3, and Suddin Lada1
Universiti Malaysia Sabah¹, UNITAR International University², Universiti Sains Malaysia³.
1.0 Introduction
The use of the Internet has created new opportunities for the growth of online live streaming commerce.
Interestingly online transactions are now occurring on a new platform which is social media, in unison with the
Internet's movement to Web 2.01. However, the abundance of content and socially supportive environment
contribute to the ease of impulse consumption2. Previous research determined the amount of environmental
stimulus, the influence of online live streaming and also sought to examine their impact on pre-mediated
consumption3. A past investigation of Stimuli Organism and Responses-ism4 first adapted the S-O-R framework
to study the phenomenon. As they describe the content and social aspects of the online live streaming ineffective
commitment, the three influences proved to be related to the study's conclusion: "emotional energy affects
impulsion"5. Therefore, this study's main objective is to study the effect of the affective condition and the use of
digital media on impulsiveness. The study includes several impulsive and cognitive-affective purchasing theories
to discover the role of external stimuli in Online Live Video for E-Commerce (OLVE) use.
2.0 Methods
This study explores the influence of products on online live streaming activities on overall purchasing and usage
behaviours in Malaysia with the primary objective to obtain the empirical information that has previously been
lacking. An online survey has been employed to collect a total of 266 streamers in Malaysia through the Internet
and confirmed by the author6. The online survey consists of 40 measurement items adapted from various studies
with the Cronbach alpha value ranges between 0.7 to 0.94 with 5 points Likert Scale from 1 (strongly disagree)
to 5 (strongly agree). The measurement constructs primarily capture the broadcaster attractiveness and physical
appearance to the viewer's perception7. The information quality8 mainly assesses the relevance of the information
quality and valuable information and usefulness of the information shared among streamers.
On the other hand, para-social interaction was adapted from Rubin & Perse9 to gather the viewers'
perception of whether the broadcasters make the viewers feel comfortable and feel like they are part of the group
with other viewers. Also, the product type constructs10 were used to access the viewers' perceptions based on the
product types such as fashion, electronic gadget, and cosmetic. Lastly, affective condition 11 and the impulsive
consumption's items12 were adapted to measure streamers' emotion and frequency of purchase. The Partial Least
Square Regression (PLS-SEM) was used to analyse the data.
The results indicate significant associations between information quality towards affective condition (B=0.164,
t=3.031), between product type and affective condition (B=0.223, t=3.853), and also between affective condition
towards Impulsive purchase (B=0.235, t=4.048). The results postulate that viewers' cognitive attributes
concerning information quality and product preference influence the emotional state, which subsequently affect
the impulsive purchasing during OLVE. The results reveal that both the content and social components affect
1
Aragoncillo, L. and Orús, C. 2018. Impulse buying behaviour: An online-offline comparative and the impact of social media. Spanish Journal
of Marketing - ESIC, 22(1):42–62.
2
Xu, X., Wu, J., Chang, Y., and Li, Q. 2019. The investigation of hedonic consumption, impulsive consumption, and social sharing in e-
commerce live-streaming videos.
3
Ibid
4
Mehrabian, A. and Russell, J.A., 1974. An approach to environmental psychology. the MIT Press.
5
Ibid
6
Easterby-Smith, M., Thorpe, R., & Jackson, P. R. 2018. Management and Business Research (6th Editio). SAGE Publications Ltd.
7
Jamil, R.A. and Rameez ul Hassan, S. 2014. Influence of celebrity endorsement on consumer purchase intention for existing products: A
comparative study. Syed Rameez ul Hassan, RAJ (2014). Influence of celebrity endorsement on consumer purchase intention for existing
products: A comparative study. Journal of Management Info, 4(1):1-23.
8
Cavallero, L. 2016. Website quality elements and online shopper behaviour: adapting the unified theory of acceptance and use of technology
to fashion retailers’ websites. Journal of Retailing and Consumer Services, 41(C):131–141.
9
Rubin, A. M. and Perse, E. M. 1987. Audience activity and soap opera involvement a uses and effects investigation. Human communication
research, 14(2):246-268.
10
Rook, D. W. and Fisher, R. J. 1995. Normative influences on impulsive buying behavior. Journal of Consumer Research, 22(3):305-313.
11
Güre, İ. 2012. Understanding consumers’ impulse buying behavior (Doctoral dissertation).
12
Ibid
121
streamers' cognitive state and emotional state. In contrast, the product type and information quality influence the
emotional state more. These findings could be due to the differences in settings and buyer behaviour in Malaysia.
Besides, the para-social interaction exerts the most decisive influence on emotional energy and cognitive
assimilation. This study has provided an understanding of how consumers in OLVE settings think. If the OLVEs
want to boost sales, the information quality and product type information are essential to the viewers. The
merchants should see that the content characteristics are more important than the social features and thus revise
their marketing approaches. Besides the conventional face-to-face approach, the merchants should develop
credible, valuable, and relevant OLVE sessions. More investigation confirms previous theories about the influence
of emotions on impulsive purchasing, which support the situation.
Keywords: Impulse buying, online live streaming, affective condition, environment stimuli
122

Paper ID: 038-064
THE EFFECTIVENESS OF KNOWLEDGE MANAGEMENT PRACTICES IN DEVELOPING

INNOVATIVE BEHAVIOR: A CASE STUDY PUBLIC SECTOR OF PALESTINE
Muhammad Alawneh1
1. Introduction
Knowledge management plays an important role in any organization by facilitating capturing, storing, transferring
and disseminating knowledge in order to achieve organizational goals. Knowledge management is often a
collaborative and integrated approach that is adopted at the enterprise level to ensure that the knowledge assets of
the organization are better used to increase organizational performance. Knowledge assets include those found in
documents, books, reports, web pages, etc. (Basbous, 2013).
The main steps in the knowledge management process include: Generating new knowledge; Access to
valuable knowledge from outside sources; Use of accessible knowledge in decision-making; Embedding
knowledge in operations or services; Knowledge representation in documents, databases and software; Facilitating
knowledge growth through culture and incentives; Transferring existing knowledge to other parts of the
organization; And measuring the value of knowledge assets (Dalkir, 2011).
It is necessary to clarify that “management” in knowledge management does not mean control, but rather
the promotion and participation of knowledge creation activities in the organizational space. Thus, knowledge
management allows the creation of a smart organization capable of learning from past experiences, whether those
experiences were successful or unsuccessful, in addition to creating new knowledge (Ahmadi & Ahmadi, 2012).
The world today is witnessing radical developments in the field of technology as one of the knowledge
elements most associated with economic development. The global economy is gradually moving towards a
knowledge-based economy, where the knowledge assets are accompanied by generating an added value for
products greater than the value generated by traditional production factors. The clear global competition between
countries and institutions revolves around how to generate technology, which has become concentrated in a few
countries and institutions, which have relied in the production, transfer and generation of this technology on the
exchange of knowledge and technological information between research and development structures such as
research centers and universities and between the industrial sector (Al Ahbabi, et al., 2019).
The clear interest in the topic of innovation began on the part of many researchers, and it occupied a
fundamental and pivotal position in the economic literature, and this is in view of the changes witnessed by the
institutions, especially the problem of product imitation, where innovation has been purified as a function
independent of the function of research and development, in addition to the establishment of an independent
management of innovation in many from institutions. The latter evidenced a new dimension of propagating
knowledge-based competition and a powerful engine for economic development. Its success is linked primarily
to the ability of states and institutions to acquire, absorb and absorb modern technology, then adapt and spread it
within the active institutions within the national economy (Alias, et al., 2019).
In light of global challenges and crises, there must be innovation and renewal in public institutions and
private companies operating in Palestine. This requires a kind of behavioral innovation to be able to deal with
current and future circumstances. The innovation process is an important process for different groups, whether for
societal institutions or for international institutions, as it has become a standard for determining the progress and
development of countries, and an important factor in achieving economic, political and social development, and
from this standpoint the importance of conducting this study emerged.
In light of the above mentioned, the proposed research aims to measure effectiveness of knowledge
management practices in developing innovative behavior at public sector in Palestine.
2.1 Research Design

The research design keeps all the research components together (Edmonds and Kennedy, 2017). According to
(Sanders et.al. 2013), the research design is “the conceptual structure by which the entire research is implemented.
It provides the blueprint upon which the data collection, measurement, and analysis are conducted”.
2.2 Research Setting

The study focused on public sector to identify the effectiveness of knowledge management practices in developing
innovative behavior at public sector in Palestine.
123
Proper arrangements for data collection will be highly considered by the researcher, in accordance with
the target population, to save time and cost.
2.3 Target Population

Smith (2015) stated that the population of the study is “the totality of all units from which the sample is drawn”.
The subjects of the current study will be drawn from the managers of public sector that will be affected by the
knowledge management practices in developing innovative behavior.
2.4 Sampling Techniques

Sampling Procedure
Sampling is “the process that the researcher follows to gather subjects/individuals, places of thing for the purpose
of the study. It includes the selection of representative individuals from the entire population to be studied, as it
would be difficult to study the entire population” (Sanders, et.al, 2013), they also defined a sample as a “finite
part of a statistical population whose properties are studied to retrieve information about the whole population”.
According to (Zikmund 2003), the sampling process helps collect adequate respondents because a
suitable sample size provides overall higher accuracies of the collected data (Yin, 2004).
Two sampling methods are generally used for research “probability sampling method and non-
probability sample method”. According to Experimental research.com, the “non-probability sampling method”
refers to “a sampling technique where the samples are gathered in a process that does not give all the individuals
in the population equal chances of being selected”. In contrast, the probability sampling method is defined as “the
selection of the sample purely based on chance” (Saunders et al, 2013).
In this study, the probability sampling method will be used to collect samples as it covers all public sector
in Palestine. Thus, probability sampling method has been found to be more suitable than the non-probability
sampling method.
Sample Size
According to (Sanders, et.al, 2013), the selection of the sample size should take into consideration the required
accuracy, the sampling procedure, the nature and characteristics of the population, the time and financial resources
available and the tools of data collection.
2.5 Data Collection Methods

The researcher will use two types of data, primary and secondary data. Primary data are those data that are
collected afresh and for the first time and thus happen to be original in character. On the other hand, secondary
data are those have been passed through the statistical process (Yang, 2018).
2.6 Data Collection Tool

The researcher will use a semi-structured interview because of the nature of the study, the number of respondents
and the available resources. The semi-structured interview will be designed and refereed by a group of specialists
before distributing it among the sample of the study.
Semi-structured Interviews:
Compared to other styles of interviewing, semi-structured interviews will be widely used to measure effectiveness
of knowledge management practices in developing innovative behavior at public sector in Palestine. Semi-
structured interviews allow managers to tell their ‘stories’ which help reveal more detailed aspects of their
management practices (Kallio, et al., 2016).
2.7 Data Analysis

For this part, the researcher will apply the following steps to analyze the interviews:
1. Transcription of interview data.
2. Description of the interviewees' background.
3. Coding Process, which involve:
a. Generating initial themes.
b. Coding data according to the initial themes.
c. Development of key themes based on research questions.
d. Coding data according to the key themes.
4. Interpretation of themes.
5. Integration of the interpretation of the themes with quantitative data findings.
124

Paper ID: 043-042
PART-TIME POSTGRADUATE EDUCATION AMONG PROFESSIONALS: MOTIVATIONS AND

CHALLENGES
Asrif Yusoff1
PETRONAS Leadership Centre1.
1.0 Introduction
Part-time postgraduate education is a growing endeavour among professionals, especially at the back of the shift
of work and education into the online world as a result of the global COVID-19 pandemic. As an example, 86%
of online Master of Business Administration (MBA) programmes in the US have reported growth over the first
year of the pandemic (GMAC, 2020)1. This development adds on to the number of online offerings at US business
schools which has more than doubled over the past decade (AASCB, 2020) 2.
These observations and outlook call for an understanding on the primary drivers that motivate
professionals to undertake part-time postgraduate education, and the challenges that they face in realising this
pursuit. An appreciation of both of these aspects can potentially enable employers to fully leverage on the
continuous learning energy among their workforce -- for the benefit of organisational progress.
This study involved the interview of 63 professionals in understanding their motivations and challenges from
their part-time postgraduate experience. Further, several opportunities are highlighted for employers to consider
towards implementation for talent development policy enhancement or process improvement within their
respective organisations.

As this study is interested in the developmental pursuit of professionals, it is apt to base the research on the
influential work of Super (1980)3 whose theory of self-concept which demarcates the stages of life and career
development into Growth, Exploration, Establishment, Maintenance, and Decline. The demography of this study
falls mostly within the Establishment stage (age 25 – 44) whereby the focus is on skill building and stabilisation
of career through work experience. The majority of professionals interviewed correlate with this stage group.
Prior research specific on motivations and challenges of part-time postgraduates are available, but only
pockets across the literature. Pratt et al. (1999) 4 conducted a study on the motivations of part-time postgraduate
education in the UK context which suggested that non-pecuniary motives were more apparent as drivers for the
learners, as opposed to the belief of most policy-makers. In localised study on the Hong Kong context Ho et al.
(2012) 51examined the rise in part-time taught postgraduate programmes in the country which highlighted main
factors including qualification, career progression, and networking growth, among others.
Expanding beyond the individual motivations and challenges of professionals, Prince et al.
(2014)62touched on the effects of part-time education on the relationship between professionals and their
employers. Sampling from a group of part-time MBA students, the study observed positive effects onto the
employee-employer integration levels as a result of their undertaking of part-time MBA programmes. The positive
findings from this study support further exploration on the existing and future modes of employer support for
workforce who are also part-time postgraduate students.
3.0 Research Method

In conducting this qualitative study, a set of written interviews were conducted online with 63 professionals who
have had experiences in pursuing part-time education while working full-time. In the interviews, the interviewees
were mainly asked about the drivers that motivated them to decide on undertaking postgraduate education, the
challenges that they faced in the process, and actions that could be taken by employers in improving and enhancing
their support of staff who intend to further their education. Given the nature of the study which is qualitative,
subjective, and opinionated in nature, the questions were all open-ended.
1
Lovick, S. 2020. Applications to business schools increase amid COVID-19 pandemic, BusinessBecause.com (Nov 2020).
2
Thomas, P. 2020. Schools debut a slew of online MBAs, WSJ.com (Sep 2020).
3
Super, D. E. 1980. A life-span, life-space approach to career development. Journal of Vocational Behavior, 16(3):282-298.
4
Pratt, J., Hillier, Y., and Mace, J. 1999. Markets and motivation in part-time postgraduate education. Studies in Higher Education, 24(1):95-
107.
5
Ho, A., Kember, D., and Hong, C. 2012. What motivates an ever increasing number of students to enroll in part-time taught postgraduate
awards? Studies in Continuing Education, 34(3):319-338.
6
Prince, M., Burns, D.J., and Manolis, C. 2014. The effects of part-time MBA programs on students: The relationships between students and
their employers. Journal of Education for Business, 89(6):300-309.
125
The sampled interviewees were mostly mid-career professionals aged between 30 – 40 years old with 10
– 20 years of working experience -- from both the public and private sectors. These include government officers,
corporate executives, as well as medical professionals and entrepreneurs who run their own businesses. In terms
of geography, the interviewees were a mix of professionals currently residing in Asia, Europe, Africa, North
America, and Australia. The majority of the interviewees (71%) hold MBA degrees while the remainder studied
other master’s degrees (19%) or doctoral degrees (10%).
In processing the information received from the written interviews, the first level of analysis is in the
form of keyword assessment which scans the input provided by interviewees to ascertain common themes that are
highlighted. The second level of analysis is an interpretation of the answers provided by the interviewees in their
responses. Through these activities, the aim is to identify similarities in individual motivations and challenges at
a high level -- as well as scrutinising specific elements that could signal unique cases among the sample.
4.0 Findings & Discussion
4.1 Motivations
In terms of motivations and drivers for professionals in undertaking part-time postgraduate education, the findings
are largely consistent with previous findings. Career development and progression feature prominently as a main
motivator of most interviewees -- which correlates with their decision to remain at work while pursuing their
respective postgraduate programmes.
Acquisition of new knowledge and skill are also apparent, mainly towards developing both breadth and
depth in their respective professions. A minority of respondents who have completed their MBA cited ‘career
change’ as a reason, given the nature of the MBA curriculum which enables both building of breadth as well as
specialty or depth in a specific quantitative or qualitative discipline.
4.2 Challenges
In terms of challenges faced during their postgraduate studies, most professionals cited time as a major hurdle.
This factor features prominently across the responses received, given that the majority of interviewees had to
juggle between work, family, and studying as they were doing it on a part-time basis. On a larger extent, this
factor is also related to the challenges that they faced in getting their prioritisation right in allocating their time
across the many commitments that they had -- especially those who were married and have children.
A smaller number of interviewees highlighted the adjustment required for them in getting back to the
rigour of studying as a main challenge. This comes at the back of being away from a tertiary education setting for
up to, or more than a decade, and re-adjusting themselves into the classroom setting -- as well as adapting to the
need prepare, edit, and submit their assignments on time and in compliant to the pre-requisites. Most interviewees
seemed appreciative of the support their received in this adjusting period from both faculty and peers.
4.3 Considerations for Employers

While financials did not feature at all in the challenges faced by the interviewees, funding support from employers
seem to be highly desired. This information seems to correlate with the fact that most of the interviewees were
self-funding, and had already allocated an amount of savings for their part-time postgraduate education.
Nevertheless, as a form of employee motivation and retention, it was highlighted how employer sponsorship or
financial assistance for part-time postgraduate education can be a much-appreciated benefit.
In correlation with time as a major challenge among the interviewees, it was consistently highlighted that
flexibility in time management is highly sought after. This can come in the form of provision of study leave or at
the very least, an adherence to the stipulated working hours -- which could help in allowing them to focus on other
commitments in life. An interesting observation is the common feedback among interviewees on the benefits of
integration between their studies and their workplace. This comes in the forms of peer learning on specific subjects
related to their studies, or direct application of theories into practices at their organisations.
5.0 Conclusion & Limitations

From the findings of this study, it could be concluded that from an appreciation of the discussed motivations and
challenges can form several guidelines in shaping policies, programmes, and practices at the organisational level.
The findings of this study are based on historical experiences of learners prior to changes during COVID-19.
Further research a few years after the pandemic could complement this study as practices in part-time postgraduate
education could also evolve over time. While access to distance learning could grow part-time offerings, there is
also the factor of limited funding as people re-purpose their financial allocations.
126

Paper ID: 063-057
KEDWICEKATAN KONTEKSTUAL DAN PRESTASI PKS: PERANAN KAPASITI PENYERAPAN

SEBAGAI PENYEDERHANAAN
(Contextual ambidexterity and SMEs Performance: The Role of Absorptive Capacity as Moderation)
Mohamad Rohieszan Ramdan1,2, Nor Liza Abdullah1, Rosmah Mat Isa1, dan Mohd Hizam Hanafiah1
Fakulti Ekonomi dan Pengurusan, Universiti Kebangsaan Malaysia, Malaysia1, Fakulti Pengurusan dan
Ekonomi, Universiti Pendidikan Sultan Idris, Malaysia2.
1.0 Pengenalan
Kedwicekatan kontekstual merupakan keupayaan dinamik yang penting dalam meningkatkan prestasi organisasi
terutama PKS dalam era masa kini. Keupayaan dinamik ini merupakan kompetensi PKS untuk melaksanakan
eksplorasi dan eksploitasi sumber secara serentak dalam membantu firma mencapai prestasi yang baik dalam
jangka panjang. Namun begitu, untuk melaksanakan eksplorasi dan eksploitasi secara serentak bukanlah mudah.
Terdapat firma yang menghadapi cabaran ketidakseimbangan kerana tidak mempunyai kapasiti untuk menyerap
pembelajaran organisasi. Dengan menggunakan Teori Pembelajaran Organisasi sebagai sandaran, kajian ini akan
menguji peranan kapasiti penyerapan dalam menyederhanakan hubungan antara kedwicekatan kontekstual dan
prestasi PKS.
2.0 Metodologi
Tinjauan soal selidik diedarkan kepada pelbagai firma PKS di Malaysia yang terdiri daripada industri kecil dan
industri sederhana. Sebanyak 280 firma sampel dianalisis menggunakan analisis PROCESS macro.
3.0 Dapatan Kajian

Hasil penemuan ini mengesahkan kajian sebelumnya yang membuktikan terdapat hubungan positif yang
signifikan antara kedwicekatan kontekstual dan prestasi PKS. Di samping itu, hasil kajian menunjukkan bahawa
kapasiti penyerapan secara positif menyederhanakan hubungan antara kedwicekatan kontekstual dan prestasi
PKS. Lebih penting lagi, penemuan menunjukkan bahawa kedwicekatan kontekstual sebagai faktor kontekstual
yang kompetitif yang akan memberi kesan baik terhadap prestasi PKS.
4.0 Perbincangan
Secara teorinya, kajian ini menjelaskan kepentingan kapasiti penyerapan sebagai sokongan pemangkin yang dapat
menguatkan lagi hubungan antara kedwicekatan kontekstual dan prestasi PKS, manakala secara praktikal kajian
ini memberitahu firma PKS pentingnya penyerapan pembelajaran organisasi untuk mencipta kejayaan firma
ketika berhadapan dengan era globalisasi pada masa ini.
127

Paper ID: 068-060
LINKING HUMAN RESOURCE PRACTICES AND TRUST IN MANAGEMENT TO PERCEIVED

ORGANIZATIONAL SUPPORT: EMPIRICAL EVIDENCE FROM MALAYSIAN HIGHER
EDUCATIONAL INDUSTRY
TAN Luen Peng1, CHOE Kum Lung1, and TAN Mom Zee1
Faculty of Business and Finance, Universiti Tunku Abdul Rahman, Malaysia 1.
1. Introduction
At present, there are 20 public universities, 53 private universities, and 6 foreign university branch campuses
(Study Malaysia, 2015) across Malaysia. The establishment of these private higher education institutions is due
to the nation’s vision of becoming an education hub in this region by reducing the migration of local students to
overseas, and at the same time attracting foreign students to study in Malaysia (Tham, 2013). Malaysian
universities are ambitious by setting high standards pertaining to academics’ works to remain competitive.
Malaysian academics are now expected to perform with upmost responsibilities by extending their traditional
work tasks such as teaching and researching to a more “contemporary” work expectations which includes
community service, student recruitment, green activities etc. Faculty members are the main asset of a university
in academic profession which will affect the overall university performance (Ali Hemmati Afif, 2018).
Perceived organizational support (POS) is widely defined as an employee’s belief that organization
values his or her work contribution and well-being (Eisenberger, Huntington, Hutchison & Sowa, 1986).
Perceived organizational support created by human resource practices such as the level of attention to employees
can generate positive workplace behaviour to retain the employees (Colakoglu, Culha & Atay, 2010).
The relationship between support and trust in organizational environment is rarely explored by empirical
studies (Singh and Malhotra, 2015). Trust in management is also played an important role in organization
citizenship behavior and employee loyalty which employees contributed the outcomes of cooperative behavior to
the organization itself (Shockley-Zalabak, Ellis, and Winograd, 2000).
The purpose of our research is to provide a better realization to the top management of higher education
industry in Malaysia about the impact of human resource practices and trust in management on perceived
organizational support in Malaysian universities.
Perceived Organization Support (POS)

POS is viewed as the assurance that assistance is readily available when support is needed for an efficient job or
to cope with stressful circumstances from the organization (Rhoades & Eisenberger, 2002). POS is viewed as an
important part of the connection between their employee and their manager (Eisenberger at al., 1986). This
indicates the workers ' trust in what the company is going to do to them. Employees' obligation on organizations’
welfare will be enhanced by improving POS and helping to achieve the aims of the organization based on the
norm of reciprocity (Eisenberger, Armeli, Rexwinkel, Lynch & Rhoades, 2001).
Human Resources Practices

Human Resource Practices (HRP) are practices within the organizations concerning with improving competence,
satisfaction, dedication and the growth of employees. The HRP may be a program, a procedure, an operation, a
custom, a law, or just a way. HRP can inspire workers, because social interactions influence the sharing of
resources and benefits (Jiang, 2016). There are three dimensions of HRP, namely participation in decision making,
fairness of rewards, and growth opportunities.
Participation in Decision Making

Organizational psychologists have exclaimed that employee involvement in organizational decision-making is a
vital part of job gratification, enthusiasm and performance, and employee psychological growth (Bakan et al.,
2004). Employee participation in decision-making is a process of leadership, motivation and interaction, providing
employees with opportunities to take part of organizational decision-making (Likert, 1967).
Participation is the practice by which employees participate in solving problems and making decisions
(Gürbüz, 2009). Participation in decision-making is often explained as the interaction between supervisors and
subordinates in an organization (Stashevsky and Elizur, 2000). Organization will achieve maximum
organizational performance if participation in decisions making match with the organizational culture, which
means that employees involved in decision making are ready to share advanced information that contributes to
company performance (Han et al., 2010). As employees enthusiastically participate in the decision-making
process (set personal goals), they internalize organizational objectives (Irawanto, 2015).
128
Fairness of Rewards
The level of a person to judge between his or her efforts and achievement of the effort brings the determination
of fairness (Adam, 1965). Shore and Shore (1995) indicate that focuses on employee’s rewards and well
distribution of compensation might positively influence on POS. The fairness of rewards based on the employee’s
effort that illustrated by HRP had the strongest indication of POS (Shore and Shore, 1995).
When employees believed that the distribution of rewards in an organization is fair, then they will believe
the organization cares them. In order to improve the employees’ loyalty to the organization at the same time to
decline the rates of employees’ perceived inequity, the HRP of the company might play an important role on
justice of rewards such as pay and bonus (Shaw, Delery, Jenkins and Gupta, 1998).
Growth Opportunities
Growth opportunity refers to how the employers provide the opportunities for employees to grow and enhance
their ability (Velez-Castrillon, White, & Brown, 2018). The opportunities provided by the employer for the
employee to grow will attract and retain the talent in the organization. The career growth opportunity more likely
based on the training provided by the organization and the reputation or prestige of the organization in the firm
(Nouri & Parker, 2013). The professional growth considers as the opportunity for employee to gain the new skills
and the work experience that have positive impact for them to achieve the goal in their own career (Aarto-Pesonen
& Tynjala, 2017). The research study had shown the four types of growth opportunities which are financial growth
opportunity, career growth opportunity, professional growth opportunity, and personal growth opportunity.
Trust in Management
Trust is referred to as “a psychological state that includes the intent to accept vulnerability based on a positive
expectation of the intentions or behaviors of others” (Rousseau et al., 1998). In organizations, trust has proven to
be an important predictor of outcomes, for instance cooperative behavior, organizational citizenship behavior and
employee loyalty (Shockley-Zalabak, Ellis, and Winograd, 2000). "Trust-centricity" is the key to changing control
and building long-term trust is important for change (Morgan and Zeffane, 2003). Trust is important in different
types of relationships. Trust can be horizontal (between colleagues), vertical (between managers and employees
or between employees and managers), or institutional (between employees and organizations). Institutional trust
is employee trust in organizational procedures, technology, management, goals, vision, competence and justice
(Krot and Lewicka, 2012). Horizontal trust is the willingness of employees to be vulnerable by the actions of their
colleagues, whose actions and behaviors are beyond their control. Vertical trust is generally more complex than
horizontal trust. Our study focuses on vertical trust which is trust in management. Trust has multiple aspects:
integrity, benevolence, and competence. Benevolence is unusual behavior that enhances the trustor’s wellbeing.
Competence is the level of performance that meets the formal requirements of an employee's job while integrity
is the extent to which the trustee's actions reflect the trustee's acceptable value (Krot and Lewicka, 2012).
2.0 Proposed Framework

Allen, Shore & Griffeth (2003) found that there is significant positive relationship between the HRP and POS.
They mentioned that HRP are important to develop POS as they recognize employee contributions. They
highlighted that the three dimensions of HRP as proposed are linked to job satisfaction. Participation in decision
making found positively related to commitment which leads to employees perceived that their contributions are
valued.
Organizational rewards are found to have positive relationship with POS as rewards and benefits
increased company’s supportiveness on employees’ perception (Rhoades, Eisenberger & Armeli, 2001).
Moreover, growth opportunity such as promotions and developmental experiences indicate future support from
the organization which leads to employee perceived that organization appreciate their efforts.
Participation in decision making can meet self-esteem needs; fairness of rewards can meet physiological
needs; growth opportunities can meet employees' potential development needs and trust in management satisfy
employee social life needs (Liu, 2004). For the role of HRP, most research has found that it enhances human
capital.
Celep and Yilmazturk (2012) revealed that organizational trust included trust to management, trust to
work setting, trust to work team related to POS. Organizational trust and support are important issue to affect level
of commitment of employees in their work life. This research focuses on organizational image and organizational
trusts in educational institutions. The researcher examine that the teachers contribute more in the workplace when
their organizational commitment is higher. The researcher mentioned that employees trust to leaders and
colleagues who impact on their perceived organizational support improve the organizational success and
organizational loyalty. Based on the result of simple regression analysis, organizational trust influence POS in
which trust to management show 18% of the total variance of POS, trust to work setting show 16%, and trust to
work team show 18%.
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Trust is often seen as an essential element of interpersonal communication in personnel management.

When there is insufficient trust in the organization, individuals will have to spend more time monitoring the
actions of others to protect their own interests (Cummings & Bromiley, 1996).
3.0 Hypotheses Development
3.1 The Relationship between Human Resource Practices (HRP) and Perceived Organizational Support (POS)
HRP played an important role in the development of individual POS. Researchers disputed growth opportunities
imply the organization acknowledges and respects the efforts of their workers and suggests potential funding from
the company (Wayne et al., 1997). Allowing employee involvement in decision making would signal an
appreciation of employee contributions (Allen, Shore, & Griffeth, 2003). Supportive HRP activities acted as a
discretionary treatment of the company to help the workers and to care about the well-being of the workers and
thereby contributed to eventual incentives that could contribute to an increase in the judgment of the employees
on organizational support through such constructive evaluation (Aizzat Nasurdin et al., 2008). HRP of
discretionary compensation care strategies have strengthened the employee's judgement on organizational
support. Rewards and equal recognition seem to indicate that an organization cares for the employees’ welfare
and is prepared to invest in them (Fasolo, 1995).
3.2 The Relationship between Participation in Decision Making and Perceived Organizational Support (POS)
HRP advocate investing in employees and indicate acknowledgement for their contributions (e.g.: value employee
participation), which indicates that the organization supports employees and is looking for establishment or
continue to build social exchanges. Therefore, perceptions of organizations providing these practices should be
positively correlated to POS (Shore & Shore, 1995). Similarly, allowing employees to participate should
demonstrate that employees' contributions are appreciated. When employees are involved in decision-making as
result their overall job satisfaction might increase, he or she can trust his or her supervisors and lead to high degree
of POS (Gürbüz, 2009). According to organizational support theory, employees value POS partly because POS
meets their needs for approval, respect and affiliation, and provides comfort during times of stress. Therefore,
when good supervision and HRP (e.g.: partaking in decision making) lead to a higher POS, employees will be
more gratified with their job, more closely linked to the institution, and more enthusiastic to perceive the
organization's goals as their goals, and are more loyal and loyal to the organization (Eisenberger et al., 2016).
H1 : There is a significant relationship between participation in decision-making and perceived organizational
support.
3.3 The Relationship between Fairness of Reward and Perceived Organizational Support (POS)
Eisenberger et al. (1986) proposed that the fair salary should paid by the organizational to make the employee feel
meaningful when work in the workplace and feel the higher level of POS. Dinç (2015) proved that the fairness of
reward is positively influenced the POS. When the employees feel the reward given by the organization is always
fair to everyone, then they will always perceive that they have received the support from the organization.
Majority of the organizations normally believe their own reward systems are quite fair, but most of the
employees disagree with this statement. This will cause the decrement of level in POS due to the unfair reward
provided by the organization.
H2 : There is a significant relationship between fairness of reward and perceived organizational support.
3.4 The Relationship between Growth Opportunity and Perceived Organizational Support (POS)
The growth opportunities and some of the HRP are also related to POS (Spector, 1997), however, the most strongly
relationship that systematically correlated to POS is the growth opportunity. The requirement of the employee’s
capability and inherent to be expanded by organization are the main growth opportunity of employees.
H3 : There is a significant relationship between growth opportunity and perceived organizational support.
3.5 The Relationship between Trust in Management and Perceived Organizational Support (POS)
There are few studies have reconnoitered the relationship between support and trust in an organizational
environment (Singh and Malhotra, 2015). In the study of Celep and Yilmazturk (2012), the relationship between
organizational trust and POS has been examined and they found that effect of organizational trust on POS is
significant, teacher’s trust to management could influence POS. POS and trust are positively and significantly
correlated (Shukla & Rai, 2015). Some of the organizations are based on values, the focus of trust in other
colleagues and administration, and the organizational provision play an vital role in work life and work. From this
perspective, determining the effectiveness of organizational trust on organizational support remains an important
issue (Celep and Yilmazturk, 2012). Enhancing the sense of trust in the organization may arouse employees' sense
of care and support for the organization (Stinglhamber et al., 2006).
H4 : There is a significant relationship between trust in management and perceived organizational support.
130

The questionnaires are distributed through Google Forms and E-mail to the staff in Malaysian universities.
Table 1: Reliability result Analysis

Number of Cronbach’s Alpha
Variable Results of Reliability
Items Pilot Study Actual Study
Dependent Variable (DV) Perceived Organisation Support 16 0.930 0.934 Very good reliability
Independent Variable (IV) Participation of Decision Making 3 0.880 0.895 Very good reliability
Fairness of Reward 3 0.954 0.909 Very good reliability
Growth Opportunity 4 0.941 0.833 Very good reliability
Trust in Management 7 0.773 0.881 Very good reliability
Table 2: Origins of Constructs

Variables Developed from Total items
IV: Fairness of Rewards Hassan (2002) 3 items
IV: Growth Opportunities Silbert (2005) 4 items
IV: Participation in Decision Making Han, Chiang and Chang (2010), Denton and Zeytinoglu (1993) 3 items
IV: Trust in Management Cook and Wall (1980), Jiang and Probst (2019) 7 items
DV: POS Eisenberger et al. (1986) 16 items
Table 3: ANOVA
Model Sum of Squares df Mean Square F Sig.
Regression 82.121 4 20.530 69.745 <0.000
1 Residual 43.566 148 0.294
Total 125.687 152
a. Dependent Variable: Perceived Organisational Support
b. Predictors: (Constant), Participation in Decision Making, Fairness of Rewards, Growth Opportunity, Trust in
Management
Note. Generated from SPSS software (Version 20)
Table 4: R-square Value’s Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate
1 0.808 0.653 0.644 0.54255

Note: Generated from SPSS software (Version 20)
Table 5: Multiple Regressions on Independent Variable and Dependent Variable (Coefficient)

Model Unstandardized Coefficients Standardized t Sig.
Coefficients
B Std. Error Beta

(Constant) 0.579 0.344 1.684 0.094
Participation in Decision Making 0.196 0.073 0.229 2.677 0.008
1
Fairness of Rewards 0.186 0.067 0.215 2.760 0.007
Growth Opportunity 0.255 0.095 0.223 2.677 0.008
Trust in Management 0.255 0.071 0.252 3.579 0.000
Note: Generated from SPSS software (Version 20)
Multiple Regression Equation

POS = 0.579 + 0.196 (Participation in Decision Making) + 0.186 (Fairness of Rewards) + 0.255 (Growth
Opportunity) + 0.255 (Trust in Management)
5.0 Discussion of Major Findings
5.1 Theoretical Implication

According to Eisenberger et al. (1986), POS signifies the employee's belief in his organization about how much
the authority values his contribution for the company and considers his well-being. POS is driven by different
aspects which include organization strategies job enrichment, pay scale, rewards and approval by the management.
Therefore, it cannot be denied that POS is directly related to HRP; rather, POS is a consequence and by product
of HRP. If an organization supports human resource activities, the employees are bound to be encouraged, inspired
and work harder for the organization. This supportive approach enhances an employee’s trust and faith in the
131
organization he is working in. It has been observed that if the authorities are interested in talking about the
employees' contributions to the organization, they give maximum efforts to achieve those rewards and
appreciation. Some detailed studies have established the relationship between HRP and POS. For instance, the
news of promotions has always worked as a positive influence in POS. Any development in the period of any
individual is directly related to HRP of the organization.
5.2 Managerial Implication

The authorities of Malaysian universities are responsible and concerned in building of positive POS within the
organization. The yearly performance of the university completely depends on the authority's efforts to encourage
the employees. Effective HRP are proportionate to the performances of the staffs. The key HRP like approval of
performances, recommending for promotions and effective training have been observed to influence POS
positively and in a significant manner. As opined by Eisenberger et al. (2016), good HRP include advising the
staffs about career options and provide the information on the ways one can develop his career path. The
organization offers training and career to the employees will leads to improve the trust in management in the
workplace as well. These kinds of interactions signal the employees that the organization is interested about his
well-being and promotions. It ensures the employees that all of them would be given equal chances to make a
prosperous career. This would automatically drive them to provide greater commitment for the organization. A
university which empowers their employees to deliver their opinion openly is perfect for generating positive POS.
Acknowledgement
Special thanks to Marvin Yeap Ke Ding, Thye Mei Teng, Au Weng Chee, Tan Jia Wen, and Chong Chun Hui
who assisted in data collection.
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Paper ID: 076-068
THE IMPACT OF LEARNING ORGANIZATION ON THE EMPLOYEE PERFORMANCE AMONG

MALAYSIAN CIVIL SERVANTS
Zuraida binti Hassan1, Darwina binti Arshad1, and Fadzli Shah Abd. Aziz1
School of Business Management, College of Business, Universiti Utara Malaysia, Malaysia1.
1.0 Introduction
Learning Organization is an important element of organizational development that aims to blend the past experiences
and the current knowledge obtained into future processes, for the purposes of improving the organization
performance. Learning Organization is essential to building better government in the public service sector. Learning
Organization can help the government organization develop a competent, well-trained, and professional human
capital, enhance organizational leadership, adopt cutting-edge management practices and fostering innovation and
continual performance improvement. This will ultimately lead to a more efficient and effective service for the
community. The tremendous change in the government sector has resulted from advance technologies in the
workplace due to IR4.0 demand. For the Malaysian government organizations, that most the time being considered
as a bureaucratic nature entity, this dramatic change necessitates more effective methods through continuous learning,
managers' and workers' development of new skills and practices, and increased innovation and creativity. To deal
with these changes, Malaysian government organizations must form their decisions on the generation and
amalgamation of new knowledge, and hence embrace the learning organization model in their operation. The aim of
the paper is to investigate the link between Learning Organization and employee performance among civil servants
in Malaysia.
2.0 Methods
This is a correlational study that was used to determine the relationship between the investigated variables. A
quantitative method was used to collect valuable data to meet the research's goals. Data was gathered using a
structured questionnaire. The convenience sampling technique aids the researchers in collecting the data. This
decision made due to hindrances arose throughout the data gathering process, including movement control order
(MCO) caused by pandemic. The Dimensions of the Learning Organization Questionnaire (DLOQ)1,2,3 were used to
assess Learning Organization. The Individual Work Performance Questionnaire (IWPQ) 4,5 with a scale of 18 items
was used to measure employee performance. The present study was conducted in three state government organization
situated in Penang, Kedah, and Perlis. A total of 500 questionnaires were distributed to the targeted population via
various method including self-administered data collection, email, and WhatsApp.
The current investigation was conducted in three state government organization situated in Penang, Kedah, and Perlis.
From 500 distributed questionnaires, 386 responses were returned. The response rate achieved was 77.2%. Only 384
complete questionnaires were used in the data analysis. The hypothesis testing indicated that all organization learning
dimensions were significantly associated with job performance among respondents. Based on the result, the
continuous learning factor has a stronger relationship with employee performance compared to another dimension 6,
this revealed that learning organization aspects to be important predictors of employee productivity and
1
Yang, B. 2003. Identifying valid and reliable measures for dimensions of a learning culture. Advances in Developing Human Resources, 5(2):152-
162.
2
Marsick V. J. and Watkins K.E. 2003. Demonstrating the value of an organization's learning culture: The dimensions of the learning organization
questionnaire. Advances in Developing Human resources, 5(2):132–51.
3
Leufvén, M., Vitrakoti, R., Bergström, A., Ashish, K. C., and Målqvist, M. 2015. Dimensions of learning organizations questionnaire (DLOQ)
in a low-resource health care setting in Nepal. Health Research Policy and Systems, 13(1):1-8.
4
Koopmans, L., Bernaards, C. M., Hildebrandt, V. H., De Vet, H. C. W., and van der Beek, A. J. 2013. Measuring individual work performance:
Identifying and selecting indicators. Work, 48(2):229-238.
5
Ramos-Villagrasa, P. J., Barrada, J. R., Fernández-del-Río, E. and Koopmans, L. 2019. Assessing job performance using brief self-report scales:
The case of the individual work performance questionnaire (No. ART-2019-121928). Journal of Work and Organizational Psychology
35(3):195-205.
6
Camps, J. and Luna‐Arocas, R. 2012. A matter of learning: How human resources affect organizational performance. British Journal of
Management, 23(1):1-21.
133
effectiveness7,8,9. Furthermore, this finding emphasizes the critical importance of staff continuous learning and
development for employee performance improvement10,11.
Keywords: Learning Organization, Employee Performance, Civil Servants, Government Organization.
7
Dekoulou, P. and Trivellas, P. 2015. Measuring the impact of learning organization on job satisfaction and individual performance in Greek
advertising sector. Procedia-Social and Behavioral Sciences, 175:367-375.
8
Hatane, S. E. 2015. Employee satisfaction and performance as intervening variables of learning organization on financial performance. Procedia-
Social and Behavioral Sciences, 211:619-628.
9
Njuguna, M. and Orwa, B. H. 2019. Learning Organization and Employee Performance of Equity Bank in Kiambu County, Kenya. International
Journal of Education and Research, 7(12):1-14.
10
Lau, P. Y. Y., McLean, G. N., Hsu, Y. C., and Lien, B. Y. H. (2017). Learning organization, organizational culture, and affective commitment
in Malaysia: A person–organization fit theory. Human Resource Development International, 20(2):159-179.
11
Watkins, K. E. and Kim, K. 2018. Current status and promising directions for research on the learning organization. Human Resource
Development Quarterly, 29(1):15-29.
134

Paper ID: 079-075
DIMENSIONS OF OPERATIONAL EXCELLENCE IN BUILDING CORPORATE IMAGE: A STUDY

OF MALAYSIAN SHIPPING COMPANIES
Ervina Alfan1, Anna Azriati Che Azmi1, Mohd Zulkhairi Mustapha1, and Zarina Zakaria1
Faculty of Business and Accountancy, University of Malaya, Malaysia1.
1.0 Introduction
Faced with a very stiff and intense competition, sustaining in the business in the long run thus becomes a crucial
issue for the shipping industries world-wide. In the course of enhancing the shipping companies’ competitiveness,
the concept of Operational Excellence which focuses on reviewing and assessing the operation-specific enablers
in an attempt to identify an organizations’ excellent traits thus becomes relevant. In formulating the strategies, it
is imperative that the resources in the corporation are directed towards building a good corporation image in the
eyes of the public and society. This study employs the resource-based view (RBV) theory in explaining how the
resources are exploited in building corporate image. The literature demonstrates that there are vast of discussions
surrounding quality service and operational excellence. However, there is a dearth of literature that links
operational excellence and leadership in building corporate image especially in the shipping context. Considering
that the shipping industry is very segmented and fragmented, there is even limited research that examines how
size of the shipping companies influences their perceptions on operational excellence constructs and the
corresponding corporate image building. Hence, this paper addresses the gap in the literature by identifying the
dimensions that are perceived as important in building corporate image and whether the different segments in the
shipping industry perceive operational differences differently.
2.0 Methods
This study is undertaken by randomly distributing questionnaires to 214 shipping companies. 95 companies
responded. Out of these 95, 9 were discarded as the companies were the shipping agents and not the shipowners.
Partial least squares structural equation modelling (PLS-SEM) was used to perform exploratory factor analysis in
the first step of the analysis. The second step involved the use of two-step cluster method in order to classify the
clusters in the shipping industry – which is set to address the research question in this research.
The results of the study reveal that what defines as “corporate image” is in fact very much dependent on the
shipping companies’ effort in improving its technical advancement, customer focus, alongside the effort in
improving its business outcomes through various strategies. The study also finds that leadership is a profound
factor in moderating the relationship between the organizational traits and corporate image. Accordingly, this
study suggests that whilst it is important to review the organizational traits that may enhance the corporate image
and therefore contribute towards operational excellence, it is crucial to note that the variability in shipping
segments does not contribute towards significant difference in terms of operational excellence scores. Our results
also show that larger companies appear to emphasize more importance in all aspects of operational excellence as
opposed to companies that are much smaller in size.
Keywords: Shipping Industry, Malaysia, Operational Excellence, Corporate Image
135
Track: Operations Management

Paper ID: 085-081
DATA INFORMATION VIA BLOCKCHAIN TRANSPARENCY IN POULTRY SUPPLY CHAIN:

EMPIRICAL EVIDENCE USING FUZZY DELPHI METHOD
Asma-Qamaliah Abdul-Hamid1, Mohd Helmi Ali1,2, Lokhman Hakim Osman1, and Ming-Lang Tseng1,3,4
Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia 1, UKM-Graduate School of
Business, Universiti Kebangsaan Malaysia, Malaysia2, Institute of Innovation and Circular Economy, Asia
University, Taiwan3, Department of Medical Research, China Medical University Hospital, China Medical
University, Taiwan4.
1.0 Introduction
The demand for transparency in Agro-Food Supply Chain (AFSC) is increasing due to declining confidence
towards the current traceability system. For instance, a series of food scandals and accidents over the past decade
has ruinous consumers trust and firm’s integrity1. Additionally, complex supply chains of AFSC that involve
multiple regions around the world have made it worst to find the root of the issue. The transparency of food
formulation and processing is crucially required to restore consumer trust2. The consumer wants better access to
product data that can help them in making a better purchasing decision 3. Traceability and transparency system
(TTS) in AFSC is improved by blockchain technology (BCT) 4. According to Kamble et al. (2020)3 the data
generated by blockchain enable to fulfil the consumer’s demand of transparent, quality and authentic supply chains.
Moreover, transparent and unchangeable information can ensure food safety 5 and prevent food scandal and food
fraud6. Considering the importance of transparency in data information, it is important to connect the gap in extend
literature and provide an insight into the potential future benefits for the use of transparency in data information
via blockchain technology.
The Malaysian economy is not exempted from the demand and change in food intake patterns, especially
for poultry products. The poultry industry is considered a vital component in the Malaysian food industry based
on its production and consumption. For the past twenty years, poultry consumption is increasing and poultry
consumption by Malaysian was approximate 50 kg of chicken meat and 370 eggs a year. This number is projected
to skyrocket and surpass 50 kg in 20257. With the advent of new technologies, methods and strategies in the poultry
industry, the data has grown enormous for greater production in terms of both quality and quantity. Embracing the
changes, mitigation of food scandal and food fraud is important to safeguard the consumer trust 1. Following this
line of argument, the traceability and transparency AFSC system requires a revisit. Important questions to ask are:
(1) does transparency data information are needed by the consumer? and (2) what type of information is important
to be shared? Following this, further exploration is needed especially to restore consumer trust and the firm’s
integrity. In this sense, this study aims to explore the most influential data information needed to be shared through
blockchain technology.
2.0 Research Design and Method

The Fuzzy-Delphi method (FDM) can capture the vagueness and uncertainty associated with the data which has
been used widely in different applications. Additionally, FDM utilizes consensus among experts in the related field
to support decision-making. This approach is based on an interval-value judgement: the minimum possible value
(l1, l’1), the mean possible value (m2), and the maximum possible value (u’3, u3). The criteria values depend on
linguistic preferences. Based on this, a large number of criteria are reduced to a limited number of more important
ones that are hierarchically related to each other. The FDM is used to obtain a final decision through only one
survey round. The use of FDM is becoming popular and has been tested as a way of helping managers solve real-
life problems.
1
Stranieri, S., Riccardi, F., Meuwissen, M. P. M., and Soregaroli, C. 2021. Exploring the impact of blockchain on the performance of agri-
food supply chains. Food Control, 119:107495.
2
Knorr, D. and Augustin, M. A. 2021. Food processing needs, advantages and misconceptions. Trends in Food Science and Technology,
108:103–110.
3
Kamble, S. S., Gunasekaran, A., and Gawankar, S. A. 2020. Achieving sustainable performance in a data-driven agriculture supply chain: A
review for research and applications. Production Planning & Control, 219:179–194.
4
Kouhizadeh, M., Saberi, S., and Sarkis, J. 2021. Blockchain technology and the sustainable supply chain: Theoretically exploring adoption
barriers. International Journal of Production Economics, 231:107831.
5
Xu, Y., Li, X., Zeng, X., Cao, J., and Jiang, W. 2020. Application of blockchain technology in food safety control: Current trends and future
prospects. Critical Reviews in Food Science and Nutrition, 6:1–20.
6
Perera, S., Nanayakkara, S., Rodrigo, M. N. N., Senaratne, S. and Weinand, R. 2020. Blockchain Technology: Is it hype or real in the
construction industry? Journal of Industrial Information Integration, 17:100125.
7
Department of Veterinary Service. 2021. http://www.dvs.gov.my/.
136
2.1 Analytical steps

This study proposes to identify the most important data information in transparency blockchain technology from
the literature following Knorr and Augustin (2021) 2. This study focuses on articles mentioning ‘data information’
and ‘transparency’ in title, abstract and keywords. The search was limited to a specific timespan from 2017-2021
and using the English language only. The detailed FDM steps are described below:
Step 1: A set of proposed data information specifically in the poultry supply chain is collected from extended
literature and tabulated in the form of aspect and criteria (please refer to Table 1).
Step 2: These aspect and criteria are provided to the experts in the form of a questionnaire. In total, 25 experts
included 8 experts from academia, 12 experts from the poultry industry players and 5 experts from the government
sector.
Step 3: In this last step, the mean method is used to calculate the defuzzification value.
Table 1: Proposed Aspect-criteria of Data Information in Poultry Supply Chain

Aspect Criteria
(A1) C1 Producer background C2 Legal requirement C3 Bedding information
Producer C4 Feeding information C5 Drinking information C6 Farm housing
Information C7 Pesticides information C8 Feed additives information C9 Disease and treatment information
C10 Animal certificate C11 Time/ Date Transportation to C12 Hygiene procedure information
the processor
(A2) C13 Processor background C14 Slaughter information C15 Food additives information
Processor C16 Processing packaging C17 Processing storage C18 Processing method information
Information information information
C19 Transportation information C20 Processing equipment used C21 Processing date/ batch
from farm information
C22 Processing expiry date C23 Processing label certificate C24 Processing preservation method
(A3) C25 Distributor background C26 Special requirement C27 Distributor storage information
Distributor information
Information C28 Distributor container C29 Distributor packaging C30 Distributor date in and out
information information
C31 Distributor shipping C32 Distributor brand C33 Distributor quality label and guarantee
information
(A4) C34 Retailer background C35 Product specification C36 Instruction of use information
Retailer information
Information C37 Nutrition-related information C38 Labelling information C39 Retail packaging information
C40 Retail storage information C41 Retail price C42 Retail refrigerator information
C43 Retail weight C44 Retail best before
The results show three aspect, and 21 data information criteria have value above the mentioned threshold.
Particularly, the important aspect is processor information (A2), distributor information (A3) and retailer
information (A4). On the other hand, the important criteria are as followed; C1, C11, C12, C13, C14, C22, C23,
C24, C26, C33, C34, C35, C36, C37, C38, C39, C40, C41, C42, C43 and C44. These criteria are considered
important because food safety and quality mainly depend on it 5. This finding is consistent with Lin et al. (2021)8
which highlight that supply chain temperature, production date, physical address of transportation stops, country
of origin, production conditions, production batch and responsible person are among the most important data
information required by the consumer.

This study provides theoretical understanding by identifying the most important aspect and criteria needed by the
consumer in the poultry supply chain. The contribution of this study is threefold: (1) collecting, verifying and
developing a valid set of transparency data information, (2) providing empirical evidence that verifies the most
important data information especially in the poultry supply chain and (3) enriching the body knowledge regarding
transparency blockchain technology. The current study is supposed to mitigate the gap that exists in current
knowledge and postulate an insight into the potential benefits for the future directions. In practice, the finding
helps the firm to devote a clear picture with regards to the most important data information needed by the consumer.
The poultry industry can gain a congruent solution to induce a supersedes firm’s integrity and consumer trust.
Moreover, the finding also provides an ample understanding of transparency blockchain in data information as it
is a relatively new field. Poultry supply chain players must think carefully and proposed a wise decision in
implementing blockchain technology to increase traceability and transparency system which finally increase
consumer trust and confidence; establish firm’s integrity. In conclusion, this study theorizes that when blockchain
8
Lin, X., Chang, S.C., Chou, T.H., Chen, S.C., and Ruangkanjanases, A. 2021. Consumers’ intention to adopt blockchain food traceability
technology towards organic food products. International Journal of Environmental Research and Public Health 18(3):1–19.
137
technology increases the transparency of the poultry supply chain through the traceability and transparency system,
consumer confidence may likely increase in return increase the firm’s integrity.
138
Track: Governance and Leadership

Paper ID: 024-017
PYRAMIDAL AND INDIRECT CONTROLLING SHAREHOLDERS AND CONFLICT-RELATED

PARTY TRANSACTIONS
Siti Hajar Asmah Ali1 and Mohd Mohid Rahmat1,2
Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia 1, Center for Governance
Resilience and Accountability (GRACE), Faculty of Economics and Management, Universiti Kebangsaan
Malaysia, Malaysia1,2.
1.0 Introduction
RPTs were revealed as a red flag to accounting scandals across the globe, and such transactions served as vehicles
for financial misreporting and fraud (Bae et al., 20021; Rahmat et al., 20202). The controlling shareholders often
utilize RPT abusively to maximize personal benefit (Ariff & Hashim, 20133; Kang et al., 20144). This shows how
the controlling shareholder may use RPT to transfer companies’ wealth to other controlling shareholders’
companies (Amzaleg & Barak, 20135; Juliarto et al., 20136; Maigoshi et al., 20167). Therefore, RPT among
companies controlled by the same controlling shareholder serves may increase the harmfulness of the minority
shareholders’ interests (Ying & Wang, 20138; Nekhili & Cherif, 20139).
Overall, a market provides a negative reaction towards RPT among companies controlled by the
controlling shareholder (Rahmat et al, 2020; Nekhili & Cheriff, 2013). The market perceived the controlling
shareholders are taking advantage of their position to take away companies' profit and legitimate the transaction
through RPT (Rahmat et al., 201810). Thus, we concern that the poor valuation may encourage the controlling
shareholder to hide or conceal their interest or involvement in RPT. It is supported by the statistics that show a
reducing trend of conflicting RPTs. Since most of the past literature focuses on the association of direct
shareholding and RPT, we argue that the controlling shareholders may exploit the complex ownership structure
either indirect or pyramidal to design RPT among their controlled companies (Nekhili & Cherif, 2013; Mindzak
& Zeng, 201811). The complex ownership structure offers an advantage to controlling shareholders to design and
manipulate RPTs.
To date, however, there is either limited or no systematic evidence discussed on detailed the ability of
controlling shareholders to manipulate the indirect and pyramidal ownership structure to engage in RPTs. Through
indirect ownership and pyramidal ownerships, the controlling shareholders may be seen holding insignificant
shareholding but still having substantial control over related companies. Therefore, through indirect and pyramidal
ownership, the controlling shareholder may be able to conceal their ownership subsequently hide their conflict of
interest in RPTs (Riyanto & Toolsema, 200812; Mindzak & Zeng, 2018). It is not surprising that the auditors may
fail due to having difficulty detecting the existence of related parties (Rahmat & Ali, 201613). This concern
motivates our study to incorporate indirect and pyramidal ownership in understanding controlling shareholders’
involvement towards RPT. Specifically, the main objective is to examine the association between the indirect
1
Bae, K. H., Kang, J. K., and Kim, J. M. 2002. Tunneling or value added? Evidence from mergers by Korean business groups. The Journal
of Finance, 57(6):2695-2740.
2
Rahmat, M. M., Muniandy, B., and Ahmed, K. 2020. Do related party transactions affect earnings quality? Evidence from East Asia.
International Journal of Accounting & Information Management, 28(1):147-166.
3
Ariff, A. M. and Hashim, H. A. 2013. The breadth and depth of related party transactions disclosures. International Journal of Trade,
Economics and Finance, 4(6):388-392.
4
Kang, M., Lee, H., Lee, M., and Chool, J. 2014. The association between related-party transactions and control – ownership wedge: Evidence
from Korea. Pacific-Basin Finance Journal, 29:272–296.
5
Amzaleg, Y. and Barak, R. 2013. Ownership concentration and the value effect of related party transactions (RPTs). Journal of Modern
Accounting and Auditing, 9(2):239–255.
6
Juliarto, A., Tower, G., Zahn, M. Van Der, and Rusmin, R. 2013. Managerial ownership influencing tunnelling behaviour. Australian
Accounting, Business and Finance Journal, 7(2):1–22.
7
Maigoshi, Z. S., Latif, R. A., and Kamardin, H. 2016. Earnings management: A case of related party transactions. International Journal of
Economics and Financial Issues, 6(S7):51–55.
8
Ying, Q. and Wang, L. 2013. Propping by controlling shareholders, wealth transfer, and firm performance: Evidence from Chinese listed
companies. China Journal of Accounting Research, 6(2):133–147.
9
Nekhili, M. and Cherif, M. 2013. Related parties transactions and the firm’s market value: The French case. Review of Accounting and
Finance, 10(3):291–315.
10
Rahmat, M. M., Mohd Amin, H. A., and Mohd Saleh, N. 2018. Controlling shareholders’ network and related party transactions: Moderating
role of director remuneration in Malaysia. Jurnal Pengurusan, 53:107–117.
11
Mindzak, J. and Zeng, T. 2018. The Impact of pyramid ownership on earning management. Asian Review of Accounting, 6(2):208–224.
12
Riyanto, Y. E. and Toolsema, L. A. 2008. Tunneling and propping: A justification for pyramidal ownership. Journal of Banking and Finance,
32:2178–2187.
13
Rahmat, M. M. and Ali, S. H. A. 2016. Do managers reappoint auditor for related party transactions? Evidence from selected East Asian
countries. Jurnal Pengurusan, 48:1–21.
139
(INDCS) and pyramidal (PYRCS) controlling shareholders and RPT conflict in Malaysia. This study also expands
the investigation at three percentage of controlling shareholder’s ownership either 23%, 33%, or 51% that referring
to the power of control which becomes more apparent.
2.0 Methods
This study uses 580 companies listed in Bursa Malaysia from 2014 to 2017 which consists of 2,900 observations.
This study chooses Malaysia as a subject understudy for a few reasons. First, governance enforcement and legal
protection over minority shareholders in Malaysia are still weak (Al-Hiyari, 201714; Htay et al., 201315; Peng &
Jiang, 201016). Second, unique culture in Malaysia where the people do not like to challenge those in power gives
the controlling shareholder an advantage to manipulate company transactions for their own good. Furthermore,
the controlling shareholders who usually participate in management make designing and conceal RPT easier.
Hence, Malaysia is a proper sample to be used in this study. The hypotheses are tested by using a panel data
analysis, i.e., the Fixed Effect Model (FEM).
The findings of this study show that controlling shareholders with INDCS and PYRCS engaged in more RPTs
purposely to gain personal benefit. The incentives of INDCS and PYRCS to engage in RPTs are apparent at 23%
and 33% of the shareholding but maintain the magnitude of RPT engagement if the percentage of shareholding is
equal or more than 51%. The findings can be interpreted that there is a linear relationship between INDCS and
PYRCS ownership level however the relationship becomes stagnant when the ownership increase equal or more
than 51%.

Overall, the findings indicate the controlling shareholders may use the complexity ownership structure to fleece
their influence in RPT-conflict engagement. This implication requires regulators to oversee and reconsider the
impact of the current ownership structure practice whereby certain restrictions should be applied specifically for
any engagement may involve the indirect controlling shareholders.
Keywords: Related party transaction, concentrated ownership, indirect ownership, controlling shareholder,
pyramidal ownership, conflict of interest
14
Al-Hiyari, A. 2017. A critical review of corporate governance reforms in Malaysia. Journal of Governance and Regulation, (6, Iss. 1):38-
44.
15
Htay, S. N. N., Salman, S. A., and Shaugee, I. 2013. Invisible hands behind the corporate governance practices in Malaysia. World Journal
of Social Sciences 3(1):119–135.
16
Peng, M. W. and Jiang, Y. 2010. Institutions behind family ownership and control in large firms. Journal of management Studies, 47(2):253-
273.
140

Paper ID: 037-031
EXPLORING THRESHOLD EFFECT OF BOARD SIZE ON FIRM VALUE: EVIDENCE FROM

MALAYSIA
Yee-Ee Chia1 and Ping-Xin Liew2
Labuan Faculty of International Finance, Universiti Malaysia Sabah, F.T. Labuan, Malaysia 1, Faculty of
Accountancy and Management, Universiti Tunku Abdul Rahman, Kajang, Selangor2.
1.0 Introduction
The Malaysian Code of Corporate Governance (MCCG) was introduced in 2000 and revised in 2007, 2012, 2017,
and 2021 to strengthen the effectiveness of the corporate governance. While the MCCG is silent on the ideal board
size, empirical evidences do not help either with Mak and Kusnadi (2005)1, Guest (2009)2 and Nguyen et al.
(2016)3 finding negative relationship between board size and firm value in Malaysia, UK and Australia,
respectively, whereas Coles et al. (2008)4, Singh et al. (2018)5, and Pucheta-Martínez and Gallego-Álvarez
(2020)6 report otherwise. The contradicting effect of board size on firm value has led us to conjecture that there
may be a nonlinear relationship between board size and firm value, as suggested by the work of Yeung (2018)7.
This paper thus aims to fill this gap in the corporate finance literature by exploring the threshold effect of board
size on firm value using a large sample of Malaysian public listed firms. Our findings show a U-shaped curve,
implying that at levels of board size before the threshold point, larger boards are associated with lower firm value,
consistent with the agency theory which postulates higher agency costs. Beyond the threshold point, the negative
effect of board size on firm value is diminishing. This can be explained by the resource dependence theory which
states that firms with bigger boards of diverse backgrounds are related with higher firm value.
2.0 Data and Model Specification

Our initial sample contains 1,357 stocks, including all listed and delisted stocks on Bursa Malaysia over a 19-year
sample period from 2000 to 2018. The latter is included to avoid survivorship bias. After excluding all financial
firms due to differences in regulatory requirements, our final sample contains 1,282 stocks. Data on firm-specific
characteristics, board characteristics and corporate ownership are collected from Datastream, annual reports
uploaded on Bursa Malaysia’s website and ownership data which we purchased from Bursa Malaysia.
Our baseline pooled ordinary least squares (OLS) regression model is written as follows:
Qit = β0 + β1lnBSIZEit + β2lnBSIZE2it + β3LIQit + β4lnSIZEit + β5lnAGEit + β6LEVit + β7CAPEXit + β8VOLit + β9KLCIit
+ β10BINDEPit + β11DUALit + β12CHAIRit + β13FINSTit + β14 LINSTit + YEARt + INDUSTRYj + εit. (1)
3.0 Empirical Results

Table 1 presents the estimation results of board size on firm value. We first estimate pooled OLS regression in
Columns (1)-(2) with corrected standard errors clustered by firm and year to account for within-cluster correlation.
The coefficient of lnBSIZE is not significant in the first column, suggesting that there is no linear relationship
between board size and firm value. Moving to the second column, lnBSIZE and lnBSIZE2 are both statistically
significant. The key variables for our analysis remain robust to a battery of tests in Columns (3)-(8), including
alternative estimation methods and endogeneity tests. Our control variables are significant in the expected sign
and are consistent with Chia et al. (2020)8. In Table 2, we perform a U-test estimation result proposed by Lind
1
Mak, Y. T. and Kusnadi, Y. 2005. Size really matters: Further evidence on the negative relationship between board size and firm
value. Pacific-Basin Finance Journal, 13(3):301-318.
2
Guest, P. M. 2009. The impact of board size on firm performance: Evidence from the UK. European Journal of Finance, 15(4):385-404.
3
Nguyen, P., Rahman, N., Tong, A., and Zhao, R. 2016. Board size and firm value: Evidence from Australia. Journal of Management &
Governance, 20(4):851-873.
4
Coles, J. L., Daniel, N. D., and Naveen, L. 2008. Boards: Does one size fit all? Journal of Financial Economics, 87(2):329-356.
5
Singh, S., Tabassum, N., Darwish, T. K., and Batsakis, G. 2018. Corporate governance and Tobin's Q as a measure of organizational
performance. British Journal of Management, 29(1):171-190.
6
Pucheta-Martínez, M. C. and Gallego-Álvarez, I. 2020. Do board characteristics drive firm performance? An international
perspective. Review of Managerial Science, 14(6):1251-1297.
7
Yeung, J. C. 2018. Nonlinear effect of board size on corporate performance: Impact of the cultural backgrounds of directors in Hong
Kong. Asia‐Pacific Journal of Financial Studies, 47(1):107-131.
8
Chia, Y. E., Lim, K. P., and Goh, K. L. 2020. Liquidity and firm value in an emerging market: Nonlinearity, political connections and
corporate ownership. North American Journal of Economics and Finance, 52:101169.
141
and Mehlum (2010)9. The estimated threshold point is 1.9131. The result shows that the slope at the lower bound
of lnBSIZE is negative, but the sign changes to positive at the upper bound slope. The finding of a U-shaped curve
suggests that before the threshold point, having more directors on the board is associated with lower firm value.
Beyond the threshold point, however, the positive effect dominates, and larger board size is associated with
increase in firm value. Therefore, our finding provides evidence that board size has two opposing effects, showing
that the relationship between board size and firm value is nonlinear in the Malaysian stock market.
Table 1: Board Size and Firm Value

OLS Fama- Quantile Regression Firm Fixed
2SLS
Linear Nonlinear MacBeth 25th 50th 75th Effects
lnBSIZE 0.0427 -1.0759** -1.0638*** -0.7256*** -0.6968*** -0.9480*** -1.0454***
(0.0651) (0.5424) (0.3351) (0.1078) (0.2042) (0.2859) (0.2850)
lnBSIZE2 0.2812** 0.2851*** 0.1940*** 0.1874*** 0.2469*** 0.2729***
(0.1344) (0.0791) (0.0259) (0.0513) (0.0706) (0.0713)
lnBSIZE (predicted) -2.3812***
(0.4331)
lnBSIZE2 (predicted) 0.6054***
(0.1084)
LIQ 0.0154*** 0.0155*** 0.0195*** 0.0056*** 0.0079*** 0.0115*** 0.0148*** 0.0128***
(0.0036) (0.0036) (0.0048) (0.0005) (0.0007) (0.0008) (0.0013) (0.0013)
lnSIZE -0.1290*** -0.1289*** -0.1475*** -0.0295*** -0.0320*** -0.0655*** -0.1268*** -0.1082***
(0.0265) (0.0264) (0.0195) (0.0036) (0.0035) (0.0054) (0.0066) (0.0072)
lnAGE -0.0136 -0.0147 -0.0092 -0.0314*** -0.0387*** -0.0421*** -0.0129 0.0087
(0.0287) (0.0285) (0.0169) (0.0040) (0.0042) (0.0088) (0.0089) (0.0103)
LEV 0.5727*** 0.5676*** 0.3701*** 0.4600*** 0.3493*** 0.3609*** 0.5594*** 0.4812***
(0.1364) (0.1360) (0.0960) (0.0148) (0.0281) (0.0379) (0.0326) (0.0361)
CAPEX 0.9710*** 0.9717*** 0.9151*** 0.4194*** 0.6218*** 1.1138*** 0.9438*** 1.0240***
(0.3331) (0.3346) (0.2596) (0.0651) (0.1010) (0.1895) (0.1311) (0.1455)
VOL -0.0097 -0.0100 -0.0174 -0.0062*** 0.0005 0.0014 -0.0115** -0.0091*
(0.0086) (0.0086) (0.0102) (0.0021) (0.0028) (0.0046) (0.0045) (0.0047)
KLCI 0.5832*** 0.5738*** 0.7894*** 0.1232*** 0.2215*** 0.5155*** 0.5773*** 0.6011***
(0.1092) (0.1108) (0.0724) (0.0155) (0.0178) (0.0371) (0.0270) (0.0293)
BINDEP 0.0445 0.0227 0.0704* -0.0410* -0.0136 0.0850 0.0406 -0.0282
(0.1062) (0.1051) (0.0346) (0.0244) (0.0344) (0.0618) (0.0578) (0.0628)
DUAL -0.0582 -0.0599 -0.0517 -0.0095 0.0029 0.0099 -0.0608** -0.0842***
(0.0521) (0.0512) (0.0320) (0.0164) (0.0146) (0.0327) (0.0293) (0.0315)
CHAIR 0.0708** 0.0731** 0.0721*** 0.0123*** 0.0222*** 0.0545*** 0.0821*** 0.0768***
(0.0348) (0.0346) (0.0183) (0.0047) (0.0069) (0.0144) (0.0134) (0.0142)
FINST 0.0095*** 0.0094*** 0.0083*** 0.0018*** 0.0034*** 0.0080*** 0.0092*** 0.0100***
(0.0026) (0.0026) (0.0008) (0.0002) (0.0004) (0.0019) (0.0006) (0.0006)
LINST 0.0020*** 0.0020*** 0.0018*** 0.0008*** 0.0010*** 0.0019*** 0.0019*** 0.0017***
(0.0006) (0.0006) (0.0002) (0.0001) (0.0002) (0.0003) (0.0003) (0.0003)
CONSTANT 2.4411*** 3.5523*** 3.4879*** 1.8328*** 1.9387*** 2.8028*** 3.2844*** 4.6867***
(0.3736) (0.7080) (0.5047) (0.1562) (0.2132) (0.2928) (0.7385) (0.5361)
Observations 12,678 12,678 12,678 12,678 12,678 12,678 12,678 10,533
Adj. R2 0.1490 0.1500 0.2271 0.1024 0.0774 0.0942 0.1555 0.1463
Sargan test [p-value] 0.9019
[0.3423]
Notes: Columns (1) and (2) present the pooled OLS estimation results for the baseline nonlinear Tobin’s Q model specified in Equation (1).
Column (3) estimates Fama-MacBeth regression to address the presence of time effect. Columns (4)-(6) show the quantile regression at the
25th, 50th, and 75th quantiles of the firm value conditional distribution. Columns (7) and (8) report firm fixed effects and two-stage least squares
(2SLS) regression results which address endogeneity concerns. The dependent variable is Tobin’s Q, measured as the market value of assets
scaled by the book value of assets. BSIZE is the natural logarithm of the number of directors who sit on the board; LIQ, the ratio of the
difference of closing ask and bid prices to the mid-point of these prices multiplied by -1; SIZE, the natural logarithm of total assets; AGE, the
natural logarithm of the number of years since the firm’s incorporation; LEV, the ratio of total debts to total assets; CAPEX, the ratio of capital
expenditures to total assets; VOL, a standard deviation of daily stock returns over the year; KLCI, a dummy variable which takes the value 1
if a stock is listed in the main index on the Bursa Malaysia, and 0 otherwise; BINDEP, the ratio of the independent non-executive directors to
board size; DUAL, a dummy variable which takes the value 1 if the chief executive officer is also the chairman, and 0 otherwise; CHAIR, a
dummy variable which takes the value 1 if the chairman is an independent non-executive director, and 0 otherwise; and FINST (LINST), the
total shares held by foreign institutional ownership (local institutional ownership) scaled by the total shares outstanding. For brevity, the
coefficient estimates on year and industry dummies are not reported. To remove the possible effect of outliers, all explanatory variables are
winsorized at the top and bottom 1st percentile values. Standard errors are reported in parentheses and p-values in square brackets. ***, **, and
*
denote significance at the 1%, 5%, and 10% levels, respectively.
9
Lind, J. T. and Mehlum, H. 2010. With or without U? The appropriate test for a U‐shaped relationship. Oxford Bulletin of Economics and
Statistics, 72(1):109-118.
142
Table 2: Robustness Checks with Formal Statistical Test for U-Shape

-0.2963***
Slope at Lower Bound (lnBSIZE)
(0.0026)
0.3665***
Slope at Upper Bound (lnBSIZE2)
(0.0001)
2.80
Lind and Mehlum (2010) Test for U-Shape
(0.0026)
Threshold Point 1.9131
Fieller 95% Confidence Interval [1.7255, 2.0093]
Notes: This table presents a formal statistical test for a U-shaped relationship on the baseline nonlinear Tobin’s Q model specified in Equation
(1). P-values are reported in parentheses. ***, **, and * denote significance at the 1%, 5%, and 10% levels, respectively.
143

Paper ID: 051-045
DETERMINANTS OF WHISTLE-BLOWING INTENTION AMONG STAFFS IN PUBLIC HIGHER

LEARNING INSTITUTIONS IN MALAYSIA
Zakiyah Sharif1, Ifa Rizad Mustapa1, Akilah Abdullah1, and Jamaliah Abdul Majid1
Tunku Puteri Intan Safinaz School of Accountancy (TISSA-UUM), College of Business, Universiti Utara
1.0 Introduction
Continuous white-collar crimes involving fraud, abusive of power, mismanagement and so forth, from all around
the world are rooted from either the shortcomings of individual’s ethical principles or the malfunction of
institutions administrative system and/or the weaknesses of the legal and regulatory systems of a country.
Knowing the facts that integrity of a country is determined by the integrity of its citizens, societies and institutions,
therefore investigating factors that play significant roles on the individual ethical principles should not be taken
lightly. In addition, various efforts to uplift the integrity of individuals in particular and subsequently the integrity
of institutions and countries, in overall, should always be intensified.
In the latest Transparency Index report, Malaysia position in the 2020 Transparency International’s (TI)
Corruption Perception Index has drop six points and it is not a good news for Malaysia. The Malaysia government
should work together with regulators, institutions and many other parties in seriously thinking of ways to improve
the position in the near future. A good position in the index portrays a good image of Malaysia and gives endless
benefits to the Malaysia’s economies in particular.
The above mention index is related with white-collar crimes occurring in the country. These unethical
practices are always been cunningly planned, executed in teams and hard to be detected in the earlier stage.
Although white-collar crimes have no particular facet, it usually involves people who hold prominent occupational
statues such as executives, managers, professional and semi-professionals. They easily misuse their position and
reputation to get them involved in fraudulent activities at a corporate level. One of the ways to curb the
wrongdoings that occur in any organizations either in public or private sector is via whistle-blowing. In brief,
whistle-blowing refers to an action of people who knows about any wrongdoings that happened in their workplace
to speak out or report it to the parties that can take a remedial action. The reporting is very important as one way
of preventing the unethical practices from escalates. However, until today, the whistle-blowing practice has not
really received a good response as it comes with many conflicts and retaliations on the whistle-blowers.
In 2010, Malaysia introduced the Whistle-blowing Protection Act (hereinafter referred to as WPA 2010
or Act) as an effort to inculcate whistle-blowing culture among Malaysian. The introduction of the Act is regarded
as one of the serious efforts initiated by the government in curbing wrongdoings, in particular the white-collar
crimes, in both private and public sectors by encouraging staffs to come forward and make a report in regards to
any unethical practices occurring in their workplace. The introduction of the Act is expected able to provide
enormous advantages such as encouraging a more positive and integrity working culture in Malaysia, thus, able
to gain trust from both local and international investors and eventually brings benefit to the Malaysia economy
progress.
Therefore, this study is conducted with an objective to determine factors that significantly influence a
person to blow a whistle when he/she has knowledge about wrongdoings that occurring in their workplace. In
particular, this research is conducted in three public universities in northern Malaysia to get some snapshot of the
staffs responses on the whistle-blowing practices in their workplace. This research is conducted with the
followings research questions and objectives:
Research Question (RQ) Research Objective (RO)

1 How do staff’s personal characteristics influence their intention To examine the influence of staffs' personal characteristics on
to report wrongdoings which they encounter in their their intention to report wrongdoings.
workplace?
2 How do institutional isomorphisms influence staffs' intention To examine the influence of institution isomorphisms on staffs'
to report wrongdoings which they encounter in their intention to report wrongdoings.
workplace?
3 How do institutional isomorphisms influence staffs' intention To examine the influence of staff’s awareness of
to report wrongdoings which they encounter in their Whistleblowing Protection Act 2010 on the staffs' intention to
workplace? report wrongdoings
4 How does the trust on the enforcement agencies influence To examine the influence of trust on enforcement agencies on
staffs’ intention to report wrongdoings which they encounter in their intention to blow the whistle.
their workplace?
144

This study applies quantitative research design where questionnaires are distributed to HLIs staff through online
survey. This study employs purposive sampling in selecting the sample respondents and the multiple regression
analysis in analysing the obtained data. Unit of analysis in this study comprises of academic and non-academic
staff of three main HLIs in geographical areas based on states, USM (Penang), UUM (Kedah) and UniMAP
(Perlis). Pilot test data from 36 respondents were run for analysis and the results is presented in this paper.

The correlation analysis result showed that there was no significant correlation between the dependent variable
(intention) and the independent variables: individual characteristics, regulatory and normative isomorphism, trust
on enforcement agencies and awareness on WPA 2010. However, a positive and significant correlation at p<0.1
was found between intention and mimetic isomorphism. The correlation results also showed that a positive
relationship exist between the intention and almost all of the independent variables except gender and years of
experience.
The model R2 value implies that 36.2% of the variation in whistle-blowing intention is explained by the
independent variables. The multiple regression analysis showed that only the mimetic isomorphism has a
significant influence on the whistle-blowing intention with a coefficient Beta value is 0.340 and p=0.060.

The findings of this research contribute to the literature on whistle-blowing. Also, it contributes knowledge to the
government, policy makers, Malaysia Anti-Corruption Agency and related parties and assisting them in
developing new whistle-blowing mechanism in both public and private sectors organizations.
145

Paper ID: 053-050
DIRECTOR’S MULTIPLE IDENTITIES, IDENTIFICATIONS AND OVERSIGHT BOARD TASKS:

A SCOPING REVIEW ON THE ANTECEDENTS
Sharifah Azlina Syed Anuar1, Puan Yatim1, and Mohd Mohid Rahmat2
Graduate School of Business, Universiti Kebangsaan Malaysia, Malaysia 1, Faculty of Economics and
1.0 Introduction
The board of directors (hereafter refers as director) is an essential corporate governance mechanism; they play an
important role such as monitoring and resource provider. From the Identity Theory and Social Identity Theory
perspectives, the director’s likelihood to monitor and provide resources is influenced by the multifaceted social
role identities and identifications to various social groups. The role identities represent the director’s engagement
in a specific role (e.g. an industrial expert, a family-owned company director) and the need to fulfil those role
expectations. In contrast, identifications deal with the sense of belonging of the directors into social groups (e.g.,
belonging to the corporate elite or similar surname directors) and acknowledging the social groups’ values and
norms1. However, both role identities and identifications could pose positive and negative outcomes. For instance,
multiple role identities demonstrate flexibility and superior social status and privileges, alongside create confusion
and conflicts between the roles. Multiple identifications to social groups usually contribute positively to the social
groups, such as strong commitment and continuous effort for the betterment of the organization. However, at the
same time, identifications also create conflicts: to what extent identification to the organization is more important
than the others. Hence, understanding how alignment between contextually role identities and identifications
influences the director’s behaviour and their execution is essential.
The conceptual framework integrating director’s behaviour and their oversight board roles from the
perspectives of Identity Theory and Social Identity Theory is introduced to fill the gap in examining individual
director’s behaviour and their effectiveness in oversight board roles 2 . Theoretically, the director’s identification
with a contextually relevant role identity may exist in competing, or co-existing settings, and the contextual
relevance determine the strength of identification. Mainly, there are five identities and identifications that are
relevant to the board of directors: (1) identification with the organization, (2) identification with being a director,
(3) identification with being a CEO, (4) identification with the shareholders and (5) identification with customer
or suppliers2. Given that the interest in directors’ socio-psychological behaviour and their effect on the oversight
board tasks are nascent, this scoping review aims to identify the core antecedents of multiple identities and
identifications among the board of directors that are influencing their oversight board tasks.
2.0 Methods
This scoping review follows the JBI Scoping Review protocol and applies the Preferred Reporting Items for
Systematic Reviews and Meta-Analyses extension for Scoping Reviews (PRISMA-ScR) for reporting purposes.
Notably, the JBI is in line with PRISMA-ScR and establishes an improved framework to analyze the evidence
and reveal the results 3. The search for relevant articles involves two major databases, the Web of Science (WoS)
and SCOPUS and the search strings are as Table 1. By identifying, screening, and eligibility, the final number of
articles relevant to this scoping review is 17.
Table 1: Search Strings for the Scoping Review

Search Strings
=(("board of director*" OR "director*" OR "board member*") AND ("social identity theory" OR "identity theory*" OR "identit*" OR
"identification*" OR "organizational identification" OR "role identit*") AND ("corporate governance") AND ("monitor*" OR "control*"
OR "resource provide*" OR "resource provision" OR "advice*" OR "counsel*" OR "oversight role*" OR "board task*" OR "board role*"
OR "board service*"))
1
Hogg, M. A., Terry, D. J., and White, K. M. 1995. A tale of two theories: A critical comparison of identity theory with social identity theory.
Social Psychology Quarterly, 58(4):255-269.
2
Hillman, A. J., Nicholson, G., and Shropshire, C. 2008. Directors' multiple identities, identification, and board monitoring and resource
provision. Organization Science, 19(3): 441-456.
3
Peters, M. D. J., Marnie, C., Tricco, A. C., Pollock, D., Munn, Z., Alexander, L., and Khalil, H. 2020. Updated methodological guidance for
the conduct of scoping reviews. JBI Evidence Synthesis, 18(10):2119-2126.
146
3.0 Results
Three interrelated antecedents determine the strength of the director’s multiple identities and identifications; (1)
self-categorization, (2) self-enhancement and (3) out-group salience. Notably, most studies were quantitatively
conducted in the United States, China, and the United Kingdom.
147

Paper ID: 081-084
EXAMINING INSTITUTIONAL OWNERSHIP DYNAMICS IN MALAYSIA FROM THE

FINANCIAL REPORTING QUALITY PERSPECTIVE
Nor Irdawati Mahyuddin1 and Hairul Suhaimi Nahar2
School of Social Sciences, Heriot-Watt University, Malaysia1, College of Economics & Political Science, Sultan
Qaboos University, Muscat, Sultanate of Oman2.
1.0 Introduction
The financial reporting impacts of institutional ownership (IO) have long been documented in the accounting
literature repertoire. Its importance lies on the fact that both financial accounting information and institutional
investors are vital to the capital market as well as for economic development, more so in the context of a
developing economy like Malaysia which relies heavily on foreign direct investment. As investors’ confidence
has been identified to have linked directly with firm’s transparency necessary for informed economic and
investment decision making, sophisticated investors particularly those with “deep pocket” such as institutional
investors have strategic roles in influencing firm’s financial reporting quality (FRQ). Theoretically, the firm’s
FRQ in terms of reliability and transparency could be undermined if the underlying figures are being manipulated
opportunistically, commonly using earnings management (EM) strategies covering both the accruals (AEM) and
real (REM) accounting manipulations. Institutional investors strategically control these opportunistic reporting
behaviours through its influence over the demand and supply of the investee firm’s FRQ by virtue of their
ownership size and sophistication in monitoring. The available IO theories offer competing views and prior
empirical studies across geographical boundaries have subsequently provided inconclusive results confirming the
prevailing opposing theoretical arguments and hence, evidencing its dynamism.
In the context of Malaysia, its developing status is commonly known to have high ownership
concentration1 with high managerial ownership and family ownership 2. However, while agency theory seems to
suggest that an increase in ownership may create an alignment effect, the conflict may arise between minority and
majority shareholders. In other advanced markets, prior studies have shown that shareholder activism works better
if they act in a collective basis, primarily through institutional means 3. This is in view that institutional investors
have the necessary resources and expertise to promote shareholders activism 4. The most notable Malaysian
institutional governance reform is the establishment of the Minority Shareholders Watchdog Group (MSWG)
which aims at encouraging shareholder activism among minority shareholders through a more structured and
organized manner. Nevertheless, prior studies have provided inconclusive findings on MSWG effectiveness in
mitigating managerial myopic behaviour and hence, poor firm's FRQ. This practically reinforces the imperative
of examining the dynamism of IO-firm's FRQ relationship as it would certainly provide empirical evidence in
guiding the firm's ownership strategy particularly those owned by the MSWG.
Based on the foregoing, this paper sets the stage for the examination of IO’s dynamics in an emerging
country of Malaysia by empirically examining IO’s bifurcation point from the firm’s FRQ perspective as proxied
by the firm’s EM covering both the AEM and REM metrics.
2.0 Methods
With the aim of exploring the IO’s dynamics in an emerging country of Malaysia by empirically examine the IO’s
bifurcation point over firm’s FRQ, present study utilizes panel data analysis on 218 survived listed firms on Bursa
Malaysia for 16 years period (2001 to 2016). As the direction of association for IO could be dual which could
well be informed by relevant and applicable competing theories, the non-linearity in regression is checked by
introducing a squared term of the IO variable (e.g., Firth et al., 2007; Wang, 2006). Accordingly, the basic model
is fitted with squared term of IO. In reflecting the local Malaysian context, only IO from among the members of
MSWG is considered in calculating the IO. The dependent variable is the EM measures DA and REM 5:
1
Fan, J. P. H. and Wong, T. J. 2002. Corporate ownership structure and the informativeness of accounting earnings in East Asia. Journal of
Accounting and Economics, 33(3):401-425.
2
Hashim, H. A. and Devi, S. 2008. Board characteristics, ownership structure and earnings quality: Malaysian evidence. Research in
Accounting in Emerging Economies, 8:97-123; Mahyuddin, N. I., Mohd-Nor, M. N., Hashim, H. A., and Nahar, H. S. 2020. Earnings
management behavior in Malaysia: The role of ownership structure and external auditing. Management & Accounting Review (MAR),
19(3).
3
Cornett, M. M., Marcus, A. J., Saunders, A., and Tehranian, H. 2007. The impact of institutional ownership on corporate operating
performance. Journal of Banking & Finance, 31(6):1771-1794.
4
Shleifer, A. and Vishny, R. 1997. A survey of corporate governance. The Journal of Finance, 52:737-783.
5
Zang, A. Y. 2012. Evidence on the trade-off between real activities manipulation and accrual-based earnings management. The Accounting
Review, 87(2):675-703.
148
𝐸𝑀 = 𝛼 + 𝛼1,𝑗 𝐼𝑂 + 𝛼2,𝑗 𝐼𝑂2 + 𝛼3,𝑗 𝐴𝑢𝑑𝑖𝑡𝑄 + 𝛼4,𝑗 𝑁𝑂𝐴 + 𝛼5,𝑗 𝑀𝑂 + 𝛼6,𝑗 𝐹𝑂 + 𝛼7,𝑗 𝑙𝑔𝑇𝐴
+ 𝛼8,𝑗 𝐿𝐸𝑉 + 𝛼9,𝑗 𝑅𝑂𝐴 + 𝜀𝑖𝑡 (1)
where:
DA = absolute value of abnormal discretionary accruals
= sum of sales manipulation (PCFO) + overproduction (PROD) + discretionary
RM expenses manipulation (DISX)
IO = percentage of shares owned by the Minority Shareholders Watchdog Group (MSWG)
MO = percentage of shares owned by the directors with managerial capacity above 5%
FO = percentage of shares owned by the family
AuditQ = dummy equals 1 if firm is audited by big 4; 0 otherwise
NOA = net operating asset/total assett-1
lgOC = natural log of firm’s operating cycle
ROA = return on assets
lgTA = natural log of total assets
LEV = leverage measured by total debts/total assets
To calculate the bifurcation point, the formula applied is [h = –a ÷ 2b] where:

h = the bifurcation point;
a = the variable coefficient without squared term; and
b = the variable coefficient with squared term.
Utilizing the available data for 218 survived listed firms on Bursa Malaysia for 16 years period (2001 to 2016),
the analysis using AEM results detects a vertex of inflection point with an initial interest alignment effect up to
38% ownership and as the IO size is sufficiently large enough, the entrenchment effect is however observed. The
results based on REM is however statistically insignificant but with the opposite directional effect. The results
possibly indicate that while IOs are able to put AEM under control, firms however opted for the substitution EM
strategy by continuing to manage earnings via REM.

The results generally support the theoretical argumentation of a non-linear relationship between IO and FRQ as
supported by the presence of opposing theories in the existing IO literature. As such, there is a need to reflect on
IO’s size particularly those owned by the MSWG to ensure effective monitoring over firm’s FRQ. Furthermore,
the insignificant result for REM suggests possible indication of a substitution effect to camouflage the EM
practices and hence misrepresenting the firm’s FRQ to the investing public. Therefore, from the practical lens, it
is imperative for the MSWG to enhance their oversight roles in protecting minority shareholders’ interests.
Overall, this study adds to the growing IO literature investigating the IO dynamics from the FRQ perspective in
an emerging country of Malaysia.
149

Paper ID: 082-078
A COMPARATIVE STUDY OF THE GOVERNANCE PRACTICES BETWEEN THE HIGH-AND-

LOW PERFORMING FARMERS’ ORGANISATIONS
Ooi Sue Chern1
Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia, Malaysia1.
1.0 Introduction
In Malaysia, the farmers’ organisations, known as Pertubuhan Peladang Kawasan (PPKs), play a vital role in
representing the farmers’ voices and rights. They are established under the Akta Pertubuhan Peladang 1973 to
serve and represent the interests of the local farmers. As there are many farmers around the locality areas, the
farmers’ voice often goes unnoticed. To obtain farmers’ voices and engage farmers in a sensible dialogue with
other key stakeholders, farmers need a representative organisation to represent them 1. Thus, PPKs are established
so that the voices of the farmers could be gathered, and their rights could be represented at the national and
international levels.
PPKs are owned by and run on behalf of the farmers cum members who are the financial contributors
and beneficiaries of the organisations. PPKs are incorporated to create social values for its farmers such as to
improve the farmer-members socio-economic conditions, enhance their skills and knowledge, and ultimately to
be transformed into independent, united, and progressive farmers’ organisations. The primary sources of revenue
of PPKs are deriving from the businesses and they engage in agrobusiness and providing loans to their farmers to
help them with their paddy cultivation and farming2. PPKs are being managed by managers that are elected by the
registrars. The registrars such as Lembaga Kemajuan Pertanian Muda (MADA), Kemubu Agricultural
Development Authority, (KADA), and Integrated Agricultural Development Area (IADA) serves as the
supervisory and advisory bodies that supervise the commercial and non-commercial activities of the respective
PPKs and provide guidance and advice to the PPKs’ managers3.
In 2016, Malaysia produced a total of 2.7 million metric tonnes of paddy. Out of this, the PPKs within
MADA granary areas (located in Northern Malaysia) supplied around 1.063 million metric tonnes of the nation’s
rice in 2016, with the amount of RM1.2 billion4. These PPKs are known as the ‘rice bowl’ producers of the nation
due to the vast amount of rice produced by over 57,000 farmers every year. Despite the economic and social
importance of the PPKs in the rice industry, far little attention has been directed towards studying governance
matters in such an entity. For instance, there is inadequate information available about the roles and
responsibilities of the individual board of directors, the background and credentials of the board, and the
interaction and engagement levels between the board of directors, management, and farmers 5. In consequence,
there have been calls for researchers to provide insights into the governance practices within a farmers’
association6. Taking into consideration the literature gap, the objective of this study is to examine and evaluate
the extent of the governance practices between two types of PPKs under MADA granary areas-the high-and-low
performing PPKs.
2.0 Research Methods

To achieve the research objective, this research conducted a qualitative case study on two PPKs, HP-PPK and LP-
PPK. The case study is the most appropriate research method for an exploratory study seeking to understand and
evaluate the governance practices of an organisation7. Three qualitative research methods, such as semi-structured
interviews, non-participatory observation, and documentary analysis are mobilised to collect and analyse the data.
The combination of these three methods gives a rich and in-depth picture of the matters under study8 .
1
Rutten, L. 2003. Farmers and farmers’ associations in developing countries and their use of modern financial instruments, University Library
of Munich, Germany. 37p.
2
Birchall, J. 2011. People-centred businesses: co-operatives, mutuals and the idea of membership. Palgrave Macmillan, London, 236p.
3
MADA. 2018. Peranan MADA dalam pembangunan Pertubuhan Peladang Kawasan (PPK). Alor Setar, MADA
4
Omar, S. C., Shaharudin, A., and Tumin, S. A. 2019. The status of the paddy and rice industry in Malaysia. Khazanah Research Institute
Teachnical Report, Kuala Lumpur, 220p.
5
Cornforth, C. and Brown, W. A. 2013. Nonprofit governance: Innovative perspectives and approaches. Routledge, Oxon, 312p.; Cornforth,
C. 2012. Nonprofit governance research: Limitations of the focus on boards and suggestions for new directions. Nonprofit voluntary sector
quarterly, 41:1116-1135.
6
Gray, R., Adams, C. A., and Owen, D. 2014. Accountability, social responsibility and sustainability: Accounting for society and the
environment. Pearson, Harlow, 360p.; Vakkuri, J., Johanson, J.-E., Feng, N. C., and Giordano, F. 2021. Governance and accountability in
hybrid organizations–past, present and future. Journal of Public Budgeting, Accounting & Financial Management, 33:245-260.
7
Yin, R. K. 2017. Case study research and application: Design and methods. Sage Publications, USA, 352p.
8
Patton, M. Q. 2014. Qualitative research & evaluation methods: Integrating theory and practice. SAGE Publications, USA, 1245p.
150
2.1 Semi-structured Interview

The semi-structured interview is selected as the primary data collection method because the issues revolve around
interviewees’ views and opinions. Semi-structured interviews through the identification of predefined questions
provide an avenue to seek in-depth views of interviewees in an open-ended manner9. In total, fifteen interviews
were conducted with the managers, board of directors, employees, and farmer-members in the premises of both
PPKs: seven interviews in the high-performing PPK (HP-PPK) and eight interviews in the low-performing PPK
(LP-PPK). The interviewees were selected based on their key positions in the PPKs and through the
recommendation of the interviewees. The interviews range from thirty to ninety minutes and were guided by
predefined questions revolving around the governance matters in both PPKs.
2.2 Non-participatory Observation

During interviews, the interviewees may not provide in-depth explanations on the issues that the researcher is
interested in. This may be due to the sensitivity of the issues asked and the time constraints in covering all matters.
In this regard, non-participatory observation enables the researcher to obtain information that may escape her
knowledge during the interview, to validate the interviewees’ accounts, and to allow the researcher to seek further
clarification from interviewees on the matters under observation10. In total, two annual general meetings (AGMs)
convened by the PPKs were attended by the researcher to observe and understand how meetings are conducted,
what were the issues discussed, and to identify issues to be discussed with the interviewees. Notes were taken
during the observation of the meetings and any issues that required further clarification were posited to the
interviewees during the semi-structured interviews.
2.3 Documentary Analysis

At the same time, newspaper articles, industry reports, PPKs’ annual reports, related governmental policies,
information leaflets, and web-based information were also referred to and analysed. These documents provide an
important source of information for the researcher to understand the PPKs and to develop the interview questions.
The evidence from the analysis of the documents is also used to support and corroborate with the interview and
non-participatory observation data as a means of triangulation, to seek corroboration with different sources of data
and methods of collection11.
The main findings of the governance practices between the PPKs are presented based on the democratic, internal,
and external governance structures in the HP-PPK and LP-PPK. HP-PPK refers to PPK that has strong financial
performance and position and is graded with ‘A’ or ‘Excellent’ by the registrar. Meanwhile, LP-PPK refers to a
PPK that is financially unsound and was graded with ‘B and below’ or ‘below moderate’ by the registrar. These
two PPKs were selected as the case organisations because they operate under the same territory, MADA greenery
areas, and they are governed by the same governance structures, regulations, and legislation. Yet, the question
that remains unanswered is why one PPK is being regarded as an excellent PPK, while the other PPK is viewed
as below average.
3.1 Democratic Governance Structure

A democratic governance structure is a structure to facilitate farmer-owner-members’ participation in the
governance system. Farmers’ organisations by their nature are created and owned by their members, in whom the
paid-up capital is contributed by the members12. To ensure that the elected board of directors can be accountable
to the members, and understand the needs of members, as well as provide members the opportunity to be involved
in the governance matters of the organisation, the purpose of democratic governance structure is to promote
democracy, to ensure that members can exercise their control rights over the business, and to foster member
engagement in the business13.
In the HP-PPK, the board members frequently engaged with the farmer-members and listened to what
they said to serve their best interests. Members felt at ease to consult the chairman when they encountered
problems and other directors were also reachable should the members require assistance or advice from them.
Members were satisfied with how information was communicated to them via unit heads or the board of directors.
They had no problem approaching the board members and they were confident that the board members, including
9
Rubin, H. J. and Rubin, I. S. 2011. Qualitative interviewing: The art of hearing data. Sage Publications, USA, 287p.
10
Alvesson, M. 2010. Interpreting interviews. Sage Publications, USA, 177p.; Silverman, D. 2018. Doing qualitative research. Sage
Publications, USA, 592p.
11
Patton, M. Q. 2014. Qualitative research & evaluation methods: Integrating theory and practice. SAGE Publications, USA, 1245p.
12
Ketilson, L. H. and Brown, K. 2011. Models for effective credit union governance: Maintaining community connections following a merger,
University of Saskatchewan. Centre for the Study of Co-operatives Report. 83p.
13
Cornforth, C. 2004. The governance of cooperatives and mutual associations: A paradox perspective. Annals of Public and Cooperative
Economics, 75:11–32.
151
all the key personnel and staff of the HP-PPK, would address their concerns, and they felt comfortable approaching
them.
On the other hand, in the LP-PPK, the board did not properly discharge its accountabilities or carrying
out its duties. Board members had limited contact with members, and members identified the relationship between
the board and members as distant. Members did not receive certain information in a timely manner and had little
contact with the board members, despite the variety of communication mechanisms used by LP-PPK. Members
usually obtained and relayed information via unit heads rather than board members, and thus, board members
were urged to have more contact with members to understand their problems and better represent the membership.
3.2 Internal Governance Structure

Internal governance structure refers to the governance mechanisms that help the board of directors to achieve its
objectives and fulfil its responsibilities. It also enables the board of directors to monitor management in the
interests of owners and other stakeholders. The internal governance structure includes the roles and
responsibilities of the board of directors and the board dynamics 14.
The board of directors of HP-PPK perceived that their roles were to engage and disseminate information
to the farmers and members, to engage and liaise with government officials, to attract more farmers to join the
PPK, and to form and approve policies at HP-PPK. The management team was responsible for managing and
steering the PPK in achieving the organizations’ objectives and was supported by the board of directors. The board
members clearly understood that management’s functions were to manage HP-PPK, and they should not interfere
with management duties. The board also collectively took responsibility in the decision-making process and had
no problems working together.
In the LP-PPK, the board of directors of LP-PPK perceived that their role was to improve the farmers’
and members’ economic conditions and the performance of the PPK. The management team was responsible for
managing and steering the PPK in achieving the objectives of the organisations. Nonetheless, there was a division
between the ‘new’ and ‘old’ directors in the LP-PPK. The new directors perceived that they were accountable for
monitoring the LP-PPK on behalf of the ruling government, rather than the farmer-members. Due to the conflicts
between the new and old directors, these two groups of directors were not able to work together and discuss the
issues in the PPK.
3.3 External Governance Structure

External governance structure sets the external parameters within which farmers’ organisations operate, such as
the industry-specific legislation or national and international regulations, and auditors’ roles. At this level,
governance is executed through ministries or departments with responsibilities on agriculture activities and
policies, such as irrigation and water resources management, food, local government, and rural development.
An in-depth review of the PPK legislation and regulations is beyond the scope of this study. However, it
is important to emphasize that the regulations and rules help in shaping the PPK’s governance structures practices.
The farmers-member interviewed in both PPKs agreed that there had limited power in changing the rules and
regulations at the national levels, but the issues that were highlighted to the respective board members is to ensure
that the board members could voice the members’ concerns at the State Farmers’ Organisations (PPN), Farmers
Organisation Authority (NAFAS) and ultimately to the Ministry of Agriculture and Agrobased Industry. In
general, both PPKs had no problem abiding by the regulations and perceived that the registrar, MADA helps in
guiding the PPKs to comply with the regulations.
3.4 Theoretical and Practical Contributions

This study adds to the literature on non-profit organisation governance, especially in the context of emerging
economies. It will be of great value to researchers and practitioners seeking to gain a better understanding of
organisational governance frameworks in different settings such as the farmers’ organisations. Furthermore, the
governance framework adopted in the study gives a wider understanding of the governance structures in the PPKs:
the internal, democratic, and external structures. In terms of practical contribution, this study sought the views of
multiple stakeholders about the governance practices in the farmers’ organisations. The findings of this research
are relevant to the policymakers, registrar, managers, and board of directors in understanding the current
governance practices in the PPKs and seeking measures to improve the weaknesses.
14
Cheng, Q., Lee, J., and Shevlin, T. 2016. Internal governance and real earnings management. The Accounting Review, 91:1051-1085.
152

Paper ID: 098-097
LEADERSHIP COMPETENCIES IMPORTANT FOR POST-COVID ERA: INSIGHTS FROM

MALAYSIA USING RASCH ANALYSIS
Mansoor Soomro1 and Mohd Helmi Ali1,2
Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia 1, UKM-Graduate School of
Business, Universiti Kebangsaan Malaysia, Malaysia2.
1.0 Introduction
The unprecedented Covid-19 pandemic has impacted a serious health crisis and unintentionally spotlighting the
leaders’ quality and competencies1. The pandemic has taught us multiple lessons, leaving it to pass without
seriously taking it into account for a more sustainable future is unwise 2. From the context of leadership, the Covid-
19 pandemics has further expanded the fundamental competencies knowledge. In particular, the hierarchical
leadership competencies require a revisit especially in the effort of resilience through the pandemic. In fact, the
leadership competencies are argued in the literature as critical components for the firms to achieve sustainability
and maintaining trust among stakeholders to combat, conquer and triumph over life-changing events like Covid3.
Malaysia as a country has their own way of combating the Covid-19 pandemics. A variety of movement
restrictions and lockdown were introduced and implemented whilst controlling the number of cases and keeping
the healthcare system to be up and running at the optimum capacity. The latest movement control order or widely
known as PKP2.0 has been elongated for more than 18 months now since March 2020. The decision of imposing
the PKP2.0 is never easy, especially whilst juggling between health and economy. However, one thing that has
been a point of concern in the context of Malaysia is the sense of urgency. The questions such as ‘why do we need
to do this?’ is evident and stemmed among Malaysian citizens, in particular when the situation does not provide
the results what the leaders promised and the society hoped for.4. Ideally, whenever leaders want to make a change,
the ‘why’ questions should be precisely answered and disseminated unto the grassroots, and such justification
should be grounded and deeply felt. As was wisely expressed by Friedrich Nietzsche, ‘He who has a why to live
for can bear almost anyhow. Like other countries in the world, effective leadership has brought people together,
provided a clear perspective on what is happening and what response is needed 1,2.
An abundance of leadership competencies literature is available, however, still, a lack of studies has
covered crisis management. This paper analyses the main competencies observed and practised globally during
the Covid-19 era and ranks them in the order to prepare for the Post-Covid era. In a nutshell, there are three main
research questions of this paper: (1) What are the most important leadership competencies needed to lead in the
Post-Covid era? (2) What leadership competencies are relatively easy to nurture in the Post-Covid era? (3) What
leadership competencies are relatively difficult to nurture in the Post-Covid era?
2.0 Research Design and Method

Rasch measurement model is a psychometric measurement technique that represents the structure that data should
exhibit in order to obtain measurements from the data i.e. it provides a criterion for successful measurement 5. In
this paper, Rasch measurement analysis will be used to rank the difficulty of different leadership competencies.
For this purpose, 60 Directors and C-level executives from different industries were surveyed in Malaysia from
the beginning of 2021. The Rasch Rating Scale Model (RSM; sometimes also called the Polytomous Rasch model)
was developed by Andrich for polytomous data (data with >= 2 ordinal categories). It provides estimates of (a)
Person locations, (b) Item difficulties and (c) An overall set of thresholds (fixed across items). The survey was
conducted in the English language, as the understanding of the English language is common in private
organizations across Malaysia and the respondents represented senior management profiles. The use of the Rasch
technique for data analysis is increasingly getting popular in social sciences, and this paper takes advantage of
that.
1
Stefan, T. and Nazarov, A. D. 2020. Challenges and competencies of leadership in Covid-19 Pandemic. Advances in Social Sciences
486(Rtcov):518–524.
2
Starr, J. P. 2020. On leadership: Responding to COVID-19: Short- and long-term challenges. Phi Delta Kappan Publishing 101(8):60–61.
3
Forster, B. B., Patlas, M. N., and Lexa, F. J. 2020. Crisis leadership during and following COVID-19. Sage Publications 71(4):421–422.
4
Dirani, K. M., Abadi, M., Alizadeh, A., Barhate, B., Garza, R. C., Gunasekara, N., Ibrahim, G., and Majzun, Z. 2020. Leadership
competencies and the essential role of human resource development in times of crisis: A response to Covid-19 pandemic. Human Resource
Development International 23(4):380–394.
5
Linacre, J. M. 2004. Rasch Model Estimation: Further Topics. Journal of Applied Measurement, 5(1):95-110.
153
The results show seven critical leadership competencies for the Post-Covid era and their order of difficulty in
terms of practice and implementation. These competencies are considered important as they address three angles:
(a) the self, (b) the others, and (c) the organization 6. A top-down approach fits well to explain the impact of these
competencies. The findings of this paper are consistent with the studies by Maak, Pless & Wohlgezogen (2021)6,
Ahlsson (2020)7 and Stefan & Nazarov (2020)1 which highlight that there are multiple lessons of leadership that
can be drawn from the current leadership acumen during the Covid-19, for similar future and uncertain events.
An initial outlay of leadership competencies for the Post-Covid era is presented in Figure 1.
Figure 1: Leadership Competencies Grid for Post-Covid Era
Displaying drive
and purpose
Demonstrating
Increasing your
ethics and
capacity to learn
integrity
Post-Covid Leadership
Competencies
Managing politics
Developing
and influencing
adaptability
others
Developing Communicating
others effectively
4.0 Theoretical and Practical Contributions

This study provides its own theoretical and practical contributions. In terms of theory, this study: (1) extends the
literature on Crisis Management by ranking the leadership competencies for Post-Covid era4,8, (2) provides
empirical evidence that verifies the most important leadership competencies in a volatile and uncertain
environment like Covid-19, especially drawing Malaysia as an emerging economy2,9. In practice, this study: (1)
showcases the leadership development areas in the face of enormous challenges faced by leaders during the
pandemic, (2) provides insights for government agencies for policymaking on leading Post-Covid projects and
initiatives, (3) assists companies, training firms and consultancy houses in re-aligning their leadership frameworks
and training & development assessments.
5.0 Conclusion
Overall, there is no one-size-fits-all approach to mastering leadership competencies needed for crises like Covid-
19. Also, not all crises are the same, and different situations require different sets of responses 2,8. However, this
research study identified and confirmed the most common leadership competencies that can be nurtured as guiding
principles to deal with unprecedented and uncertain events like Covid. Furthermore, the ranking of the
competencies highlights which leadership areas can be tackled first and others later based on the relative level of
difficulty for Post-Covid preparation.
6
Maak, T., Pless, N. M., and Wohlgezogen, F. 2021. The fault lines of leadership: Lessons from the global Covid-19 crisis. Journal of Change
Management 21(1):66–86.
7
Ahlsson, A. 2020. Why change? Lessons in leadership from the COVID-19 pandemic. Oxford University Press 58(3):411–413.
8
Lagowska, U., Sobral, F., and Furtado, L. M. G. P. 2020. Leadership under crises: A research agenda for the post-covid-19 era. BAR -
Brazilian Administration Review 17(2):1–5.
9
Sobral, F., Carvalho, J., Łagowska, U., Furtado, L. M. G. P., and Grobman, M. 2020. Better safe than sorry: Leadership sensemaking in the
time of covid-19. Revista de Administracao Publica 54(4):758–781.
154

Paper ID: 122-125
INTERNAL AND EXTERNAL CORPORATE GOVERNANCE MECHANISMS: ARE THEIR

EFFECTS COMPLEMENTARY OR SUBSTITUTIVE ON NON-FINANCIAL RISK DISCLOSURE?
Adibah Jamil1, Mohamat Sabri Hassan1, Norman Mohd Salleh1, and Rubayah Yaakob1
1.0 Introduction
The nature of the relationship between internal and external control mechanisms and corporate risk disclosure was
heavily debated based on agency problem mitigation. Several studies have indicated that effective internal and
external monitoring has a beneficial impact on risk disclosure 1, whereas others have found that effective
monitoring by both types of corporate governance mechanisms has a negative impact. Some researchers suggest
that the inconsistent results are due to previous studies concentrating on the independent effects of each corporate
governance mechanism. Some researchers2 contemplate that a company's performance is primarily determined by
the efficiency of a "bundle of corporate governance mechanisms". This notion refers to a collection of corporate
governance practices that interact and, as a result, complement or substitute for one another. Despite these reasons,
researchers still have a limited understanding of how corporate governance collectively works to reassure risk
disclosure that is most beneficial to stakeholders. A more integrated theoretical framework is required to
understand better the relationship between corporate governance mechanisms and risk disclosure, as previous
research gave inconclusive findings.
Hence, the purpose of this study is to examine how multiple internal and external corporate governance
mechanisms operate interactively in encouraging the disclosure of non-financial risk information. Specifically,
this study explores whether internal and external monitoring mechanisms complement or substitute each other
when disclosing non-financial risk information by utilising a complementary versus substitute approach. This
study utilises the concept of marginal effect to explain the combination of corporate governance mechanisms that
act as a complement or substitute to achieve this goal3. According to previous research4, one corporate governance
mechanism may improve the marginal effects of another mechanism on an organisational outcome if it is based
on a complementary viewpoint. Multiple governance measures are thus harmonised in enhancing non-financial
risk disclosure if governance mechanisms act as complements. On the other hand, the substitutive view 5 believes
that one governance mechanism can reduce the marginal effect on any organisational outcome. As a result, when
corporate governance mechanisms substitute, optimal outcomes do not necessitate using as many governance
mechanisms as possible.
2.0 Methods
The study examines annual reports of a panel sample of Malaysian listed firms for 2016 to 2018 to determine the
level of non-financial risk disclosure. This study developed a non-financial risk disclosure index using the Delphi
technique6. This index was then utilised to identify items of non-financial risk that were visible in the annual
reports through content analysis. The risk management committee (RMC) and audit committee independence
(ACInd) are used as internal monitoring proxies in this research and institutional ownership (INSTOWN),
pressure-resistance institutional ownership (RESISTANT), and pressure-sensitive institutional ownership
(SENSITIVE) as external monitoring proxies7,8.
1
Jia, J., Li, S. and Munro, L. 2019. Risk management committee and risk management disclosure: Evidence from Australia. Pacific Accounting
Review, 31(3):438-461.
2
Rediker, K. J. and Seth, A. 1995. Boards of directors and substitution effects of alternative governance mechanism. Strategic Management
Journal, 16:85-99.
3
Oh, W. Y., Chang, Y. K., and Kim, T. 2018. Complementary or substitutive effects? Corporate governance mechanisms and corporate social
responsibility. Journal of Management, 44(7):2716-2739.
4
Hoskisson, R. E., Castleton, M. W., and Withers, M. C. 2009. Complementary in monitoring and bonding: More intense monitoring leads to
higher executive compensation. Academy of Management Perspectives, 23:57-74.
5
Ward, A. J., Brown, J. A., and Rodriguez, D. 2009. Governance bundles, firm performance, and the substitutability and complementaruty of
governance mechanism. Corporate Governance: An International Review. 17(5):646-660.
6
Jamil, A., Hassan, M. S., Mohd Salleh, N., and Yaakob, R. 2020. Non-financial risk disclosure: From narratives to an index based on Delphi
technique. Asian Journal of Accounting and Governance, 14:123-139.
7
Ferreira, M. A. and Matos, P. 2008. The colors of investors’ money: The role of institutional investors around the world. Journal of Finance
Economics, 88:499-533.
8
Hutchinson, M., Seamer, M., and Chapple, L. 2015. Institutional investors, risk/performance and corporate governance. The International
Journal of Accounting, 50(1):31-52.
155
3.0 Results
The study's findings led to several conclusions. Overall, this study supports the complement and substitution
effects hypotheses. Internal corporate governance mechanisms, which are the RMC and the ACInd, serve as
substitutes for encouraging the disclosure of non-financial risk information. This indicates that if a company
already has a standalone risk management committee, adding more independent directors to the audit committee
will not necessarily increase the level of non-financial risk. Moreover, past studies found that the audit committee
has overwhelming responsibilities and might not have sufficient time and skills to assess the firm's overall risk.
There was also a finding of substitutive effects between two external monitoring mechanisms that were
RESISTANT and SENSITIVE. Pressure-sensitive institutional investors, as opposed to pressure-resistant
institutional investors, are less inclined to be cautious since they have a business relationship with the company
in which they make their investments. Because of this, they are more loyal and supportive of management's
policies, increasing the cost of agency. In contrast, pressure-resistant institutions have a greater awareness of and
control over the management of their respective companies's operations. In order to improve corporate
management's judgments on reporting on the firm's risk information, they can apply pressure to the corporation.
This suggests that pressure-resistant investors have the ability to reduce conflicts of interest amongst pressure-
sensitive investors and, as a result, improve non-financial risk disclosure to stakeholders. As a result, this finding
supports the substitutive hypothesis.
The study's findings also revealed that the external corporate governance mechanism, INSTOWN and
SENSITIVE, have a complementary effect relationship. This suggests that institutional ownership and pressure-
sensitive institutions work together to enhance the extent of voluntary non-financial risk disclosure, which
supports the complementary view. This could be since both have a mutually beneficial effect. The efficacy of
monitoring the company's management is achieved when both institution shareholdings grow, ensuring that
agency problems are decreased and, as a result, stakeholders' risk information demands are met. These findings
could also be related to the fact that institutional investors with a significant investment in a firm have a direct
incentive to learn more about the risk management tools of their portfolio companies and respond by quitting or
engaging. On the other hand, as pressure-sensitive institutions incur higher monitoring costs, they may wish to
ensure that their investment is worthwhile.
However, there were no interactions between any internal and external corporate governance
mechanisms in this study, indicating that each type of monitoring mechanism works independently, without
complementing or substituting for one another in improving non-financial risk information among Malaysian
firms.
This research adds to both the theory and practice of corporate governance and risk disclosure. Our
research investigates how numerous governance mechanisms interact to influence non-financial risk disclosure
from a theoretical standpoint. Furthermore, most previous research has focused on how each corporate governance
mechanism affects voluntary risk disclosure on its own; however, this research extends the theoretical boundary
by looking at how multiple governance mechanisms interact to enhance a company's risk disclosure. From a
practical standpoint, this research provides more detailed explanations of how firms can design their corporate
governance mechanisms to improve non-financial risk disclosure relevant to stakeholders' knowledge. As a result,
the findings of this study demonstrate how a company can improve by effectively designing a better monitoring
mechanism.
156
Track: Governance and Sustainable Investment

Paper ID: 072-065
HYDROPOWER PROJECT FINANCE IN NEPAL: ROLE OF DOMESTIC FINANCIAL

INSTITUTIONS
Achyut Nepal1, Vishnu Khanal2, and Ruhanita Maelah3
Centre for Post Graduate Studies and Research, Infrastructure University Kuala Lumpur, Malaysia 1, Faculty
of Management, Tribhuvan University, Nepal2, Centre for Governance Resilience and Accountability Studies,
Faculty of Economics and Management, Universiti Kebangsaan Malaysia 3.
1.0 Introduction
Development of energy infrastructure paves the way for overall economic development. Government Projects,
Private Projects and Public-Private Partnership (PPP) are the three basic model of infrastructure project
governance. Since the government policy of private participation in hydropower sector launched, Independent
Power Producers (IPPs) have gained significant presence under PPP model of infrastructure development.
Consequently, government finance, corporate finance and project finance respectively are the financing modalities
in infrastructure sectors.
Electricity is sine qua non for development1 and hydropower is crucial for fulfilling the demand of
electricity in Nepal. Hydropower is a renewable energy source and is the preferred alternative for replacing carbon
emission energy sources. Participation of private sector in building hydropower infrastructure in Nepal can only
be under PPP model2. PPP could utilize project finance whereby financing is based on the projected cash flow
and loan with limited or non-recourse basis is given to Special Purpose Vehicle (SPV) companies to develop a
specific project.
Project finance for renewable energy projects are often ‘debt overhang’3 as these projects use less equity
and higher debt amount which are sourced from international and domestic financial institutions. Similar to
infrastructure sector of other countries globally, domestic institutional investors are anchor investors of project
finance in hydropower projects in Nepal. Because by virtue of their relationship with host government along with
wider range of stakeholders, domestic institutional investors have greater potential to assess the risks and
opportunities and access to the local currency fund4. Therefore, they are in better position to achieve early and
successful negotiation. As the arranger for project finance, they can be proved to be superior over the foreign
banks due to their ability to assess the projects assets and their underlying network of contracts leading to ability
to credibly communicate the true value of the project and ensuring more effective monitoring of the SPV 5.
Domestic financial institutions also play important role in project finance arrangement involving Foreign Direct
Investment (FDI).
Many studies showed full utilization of the hydropower potential in Nepal can be a good alternative for
meeting growing energy need of the country and the South Asian region. Previous studies emphasized on PPP-
Project Finance model in hydropower sector. However, study on the role of domestic banking and financial
Institutions (BFIs) in this setting is scarce. This study examined the factors affecting the role of domestic BFIs in
project finance of hydropower plants in Nepal.
2.0 Methods
In this study cross-sectional survey utilizing questionnaires was conducted among respondents representing the
IPPs and BFIs in Nepal. The instrument has been verified and validated with opinion of industry experts, and a
pilot study. The reliability of the data has been accepted with Cronbach’s Alpha of 0.721. SPSS and MS-Excel
were used to analyse and describe the data for the purpose of the study. Total responses received from IPPs are
35 and from domestic BFIs are 19. Thus, this analysis relates to 54 samples out of the 121 selected populations,
representing 44.63 percent response rate. Also, secondary data from the government domain was obtained with
respect to the cost of the projects of energy sector and investment from domestic BFIs. Multiple regression
1
Briscoe, J. 1999. The financing of hydropower, irrigation and water supply infrastructure in developing countries. International Journal of
Water Resources Development, 15(4):459–491.
2
Bhetuwal, M. 2017. Financing model in PPP projects. Investment board of Nepal-Financing Model in PPP projects.
https://www.fncci.org/public-private-partnership-in-nepal-188.html
3
Steffen, B. 2018. The importance of project finance for renewable energy projects. Energy Economics, 69:280–294.
4
Danso, H. and Samuels, B. 2017. Sovereign wealth and pension funds investment in Africa’s infrastructure, African Investor. Available at:
http://aiswpff.com/wp-content/uploads/2017/07/Unlocking-Actions-to-Mobilize-Institutional-Investment.Focus-Africa.GlobalDF-Ai.-
2017-FINAL.pdf.
5
Ahiabor, F. S. and James, G. A. 2019. Domestic lead arranger certification and the pricing of project finance loans. International Journal of
Finance and Economics, 24(1):150–167.
157
analysis has been applied to assess impact of the factors affecting project finance in hydropower by the domestic
BFIs.

Primary data analysis indicates predictor variables economic environment, central bank guidelines and low default
rate have statistically significant effect in investment of BFIs in hydropower projects. Final model of the regression
has been resulted as follows:
PF=.611+.302EE+.317NRB+.274LD
where, PF denotes Project Finance; EE denotes economic environment; NRB denotes central bank
guideline on BFIs operation; and LD denotes low default in repaying the loan by hydropower companies.
The model is significant at p=.000 which is within the acceptable value 0.05 of α (Alpha). The model
explains that for every change in predictor variables which are economic environment, central bank’s guidelines
and low default rate will result respectively 30.2 per cent, 31.7 per cent and 27.4 per cent change in dependent
variable which is project finance. Similarly, results of secondary data with regression analysis indicates that
energy project investment (total project cost) analysed as independent variable and domestic BFIs investment as
predictor variable showed statistically significant relationship. The resulted model showed that for every increase
in BFIs investment, more than 100 per cent changes can occur in hydropower project investment.
Analysis of qualitative information collected along with the collection of the primary data indicated that
hydropower sector seems to be in the middle of the portfolio of BFIs investment. BFIs are mandatorily required
to invest up to a minimum of 15 per cent of their total investment in this sector. Analysis showed BFIs have
implemented the central bank’s policy cautiously through syndicate financing. About fifty percent of the
respondents opined suitability of project finance in hydropower projects. The respondent not preferring project
finance in hydropower mostly indicated availability of comparatively more bankable projects in other sectors as
the main reason.
Sponsors credibility and possibility of misuse of fund is the most critical factor being considered by the
BFIs. Personal guarantee has been imposed by the BFIs to the project sponsors as the means of security for
unforeseen events which may jeopardise the project success and repayment of the loan. Personal guarantee in the
form of reputational guarantee of any stakeholders including the project sponsors does not provide any right to
the investors over and above the project assets. As such, if the investor is satisfied with simple undertaking by any
of the stakeholders ensuring the repayment of the loan to the project, then it can be taken as sufficient to meet
lenders requirement and not diluting the core project finance criteria. As Nevitt & Fabozzi6 mentioned there can
be guarantee from the third party directly or indirectly having stake in the project. Therefore, if any guarantee
from the third party is acceptable then guarantee by the project sponsor on the basis of reputation to the lender
without giving any further mortgages should not be taken as diluting the core criteria of project finance.
The results of regression analysis of this study clearly indicate the role of domestic BFIs as highly
important in the hydropower project finance in Nepal. The predictor variables discussed above are significant in
affecting the role played by domestic BFIs in hydropower project finance.

Nepal can fully utilize its high potential of water resources not only to fulfil the internal energy demand but to
trade hydropower as a market commodity. Attracting private participation in hydropower sector is almost seen as
unanimous phenomena in Nepal’s economic development. This study provides empirical evidences on
hydropower project finance in Nepal and role of domestic financial institutions as the anchor investors based upon
the opinion of the respondents from IPPs and BFIs. Findings from this study provide insights to policy makers,
financial institutions, and hydropower operators in understanding the role of domestic financial institutions in
infrastructure projects.
6
Nevitt, P. K. and Fabozzi, F. J. 2000. Project Financing (Seventh). Euromoney Books.
158
Track: Governance and Sustainable Investment

Paper ID: 089-087
THE IMPACT OF CORPORATE GOVERNANCE ON AGENCY COST AND FIRM

PERFORMANCE: EVIDENCE FROM INDONESIA
Arnold Sanda Layuk1 and Eko Rizkianto, M.E.1
Faculty of Economics and Business, University of Indonesia, Indonesia1.
1.0 Introduction
Fraud in the disclosure of financial statements by management shows that agency conflict is an important issue in
the company. The conflict has consequences for the agency costs that must be borne and has an impact on the
firm's performance. This study intends to examine the effect of agency costs on financial performance and whether
corporate governance, dividend policy, and financial leverage can moderate the agency cost and firm performance
relationship.
There are several empirical studies regarding agency cost and firm performance in emerging market
countries. Khan et. al. (2020)1 studied the relationship of agency cost and firm performance of 2248 listed firms
in Chinese, Nguyen et. al. (2020)2 in Vietnam, Pandey et. al. (2019)3 in India, Hoang et. al. (2019)4 in Vietnam,
Rashid (2016)5 in Bangladesh, and Khidmat et. al. (2014) in Pakistan. Hadiprajitno (2012) also studied the effect
of corporate governance mechanism and ownership structure to agency cost in 402 firm in Indonesia Stock
Exchange. In addition, this study also examines the impact of corporate governance mechanisms in reducing the
negative effects of agency costs on the firm financial performance. Several studies related to the influence of
corporate governance on agency costs conducted by Nguyen et. al. (2020)2 found a negative relationship between
board size and board independence with agency costs. Research by Singh et. al. (2003), Mustapha (2010), Rashid
(2016)5, Khan et. al. (2020)1 states that concentration of ownership can reduce agency costs. However, the
opposite result was found from research by Florackis (2008) in the UK and Hadiprajitno (2012) in Indonesia.
The other methods to reduce the agency cost are dividend policy and financial leverage. Rozeff (1982)
and Mahadwartha (2004) found that dividend policies had a positive relationship with agency costs. In contrast,
Mahadwartha (2005) found an insignificant impact of dividend policy on reducing agency costs, especially in
Indonesia. Previous research conducted by Bathala (1994), Agrawal et. al. (1996), McKnight et. al. (2009) in the
United Kingdom, Pandey et. al. (2019)4 in India, Hoang et. al (2019)3 and Nguyen et. al. (2020)2 in Vietnam,
found that financial leverage could reduce agency costs. It supports the findings of Jensen & Meckling (1976) that
debt financing can be a monitoring tool to reduce agency costs.
This study aims to examine the negative relationship between agency costs and firm performance in
Indonesia, an emerging country. Manufacturing companies listed on the Indonesia Stock Exchange during the
2015-2019 period are the focus of research because the Indonesian economic report from the BPS in 2020 shows
that the manufacturing or processing industry sector is still the largest contributor to Indonesia's GDP, about
19.98%. In addition, the implementation of good corporate governance in manufacturing companies has not been
maximized, such as the examples of cases of manipulation that occurred years ago.
The implications of this research are to provide additional evidence to the previous research especially
in the emerging market. This research also provides the evidence to support that corporate governance, dividend
policy, and financial leverage can help the firm to reduce the agency cost and its impact on the performance as
well. In addition, it suggests information to shareholders and bondholders in order to control opportunistic
management decisions that affect their investments and operational expenses.
2.0 Methods
The research is applied to 668 firms listed in Indonesia Stock Exchange in January 2020. The data collection is
started by purposive sampling that classified the firm based on criteria as follows: (i) the manufacturing firms
listed in Indonesia Stock Exchange (ii) the financial statements during 2015-2019 is available to be accessed (iii)
the firms have been listed before 2015 and not delisted during the period or financially distressed. The total that
become samples after the adjustment is 132 firms. The data was extracted from the official website of the firms
and Indonesia Stock Exchange database such as financial statements and annual reports.
1
Khan, R., Khidmat, W. B., Hares, O. A., Muhammad, N., and Saleem, K. 2020. Corporate governance quality, ownership structure, agency
costs and firm performance. Evidence from an emerging economy. Journal of Risk and Financial Management, 13(7):154.
2
Huu Nguyen, A., Thuy Doan, D., and Ha Nguyen, L. 2020. Corporate governance and agency cost: Empirical evidence from Vietnam.
Journal of Risk and Financial Management, 13(5):103.
3
Pandey, K. D. and Sahu, T. N. 2019. Debt financing, agency cost and firm performance: Evidence from India. Vision, 23(3):267-274.
4
Tuan, T. M., Nha, P. V. T., and Phuong, T. T. 2019. Impact of agency costs on firm performance: evidence from Vietnam. Organizations
and Markets in Emerging Economies, 10(2):294-309.
5
Rashid, A. 2016. Managerial ownership and agency cost: Evidence from Bangladesh. Journal of Business Ethics, 137(3):609-621.
159
This study aims to test empirically related to the effect of agency costs on company performance. Agency
cost, represented by the Asset Turnover Ratio (ATR) and Selling, General & Administration (SG&A) to sales
ratio, are included as independent variables and financial performance as the dependent variable. Return on Equity
(ROE) will be used as an indicator of financial performance. Meanwhile, corporate governance, financial leverage
and dividend policy will be moderating variables. The control variables are firm size, firm age, and financial
leverage.
The test method was carried out with the STATA 16.0 software. The purpose of the test method is to
analyse the effect of the independent variables on the dependent variable carried out in this study, including several
tests such as: Descriptive Statistics, Regression Analysis Method Selection (Chow test, Hausman test, Lagrange
Multiplier test), Classic Assumption Testing (normality test, heteroscedasticity test, multicollinearity test, and
autocorrelation test), Panel Corrected Standard Error (PCSE). Hypothesis testing uses the simultaneous effect
testing model (F-test), partial test (T-test), multiple regression analysis, and the coefficient of determination. There
are four hypotheses developed as follows: (1) agency cost has a negative effect on the firm performance, (2)
corporate governance has a moderating effect on the relationship between agency cost and the firm performance,
(3) dividend policy has a moderating effect on the relationship between agency cost and the firm performance; (4)
financial leverage has a moderating effect on the relationship between agency cost and the firm performance.
Based on the results, it can be concluded that agency costs with the asset turnover ratio proxy have a significant
negative effect on company performance. These findings support the initial hypothesis developed in this study
and mostly evidence from previous researches. It also shows that the level of management effectiveness in the
company's investment decisions and the ability to manage assets for the most productive use can represent low
agency costs that have an impact on improving the performance of manufacturing companies in Indonesia.
The findings from testing the moderating effect of the corporate governance mechanism, financial leverage and
dividend policy on the relationship between agency costs and company performance, obtained the corporate
governance mechanism, namely board size and concentration of ownership as well as dividend policy which has
a significant effect on reducing agency costs. While the other variables have no significant effect on the
relationship between agency costs and company performance. From these results, only some support the other
hypotheses in this study.
In addition, the findings from testing the moderating effect of the corporate governance mechanism on
the relationship between agency costs and company performance, show that the corporate governance mechanism
is board size and ownership concentration, while board independence and director ownership are not significant.
It indicates that manufacturing companies whose ownership is mostly concentrated among majority shareholders
and have relatively large board sizes, tend to be able to carry out their role in monitoring management performance
through opportunistic actions or decisions.
On the other hand, the insignificant ownership of management can be caused by the more shares owned
by management, the greater the power it has and tends to use its authority to direct the company in a direction that
is beneficial to them. For example, the practice of selecting suppliers or project contractors from relatives who
turned out to be incompetent, so that it had a bad impact on the company, plus a commission request by the
management behind the agreement. Such practices are still common. Meanwhile, the role of the independent
commissioner in providing objectivity in management supervision is also invisible and tends to only fulfil the
provisions or is also not strong enough to voice his opinion due to the influence of other commissioners. Likewise,
dividend policy variables were found to have a significant effect on agency costs. This finding supports empirical
evidence of the effect of dividend policy on reducing agency costs so that it has an impact on increasing company
performance.
From these results, it can be indicated that most manufacturing companies tend not to distribute dividends
because they are also affected by fluctuations in sales and company profits. However, others continue to distribute
dividends to shareholders from their free cash flow, thereby reducing the potential for management irregularities
or opportunistic actions. While the financial leverage variable has no significant effect on the relationship between
agency costs and company performance, From these results, only some support the other hypotheses in this study.
Management tends not to be affected by debt levels that even increase every year for some companies and acts in
its own interest in managing the company. Monitoring from external parties such as creditors is less effective as
long as the loan interest can be met by the company even though it uses other cash flows. From the results of this
study, several things that can be recommended for management and shareholders, are the importance of increasing
the implementation of corporate governance, especially in reducing agency costs which have an impact on better
company performance. The implications of this research are to provide additional evidence to the previous
research especially in the emerging market. This research also provides the evidence to support that corporate
governance and dividend policy can help the firm to reduce the agency cost and its impact on the performance as
well. In addition, it suggests information to shareholders and bondholders in order to control opportunistic
management decisions.
160
Track: Growth and Development Strategies

Paper ID: 041-037
FISCAL DEFICIT AND ECONOMIC GROWTH NEXUS IN NIGERIA
Busayo Victor Osuntuyi1 and Abimbola Tracy Akinwande1
Economic Program, Social of Social Sciences, Universiti Sains Malaysia, Malaysia1.
1.0 Introduction
The goal of policymakers in both developing and developed countries is to achieve inclusive and sustainable
growth. The policymakers in these countries see the Gross Domestic Product (GDP) as the leading growth
indicator. However, evidence from developing countries has proved that the growth in GDP in most of these
countries is non-inclusive. To curtail the risk of non-inclusive growth in these countries, governments adopted an
expansionary fiscal policy, which left their fiscal regimes with a persistent deficit balance (Umaru & Gatawa,
2014)1.
Nigeria has historically adopted an expansionary monetary policy to boost economic growth and
development. This resulted in the escalation of Nigeria's annual government deficits. Nigeria's fiscal deficit began
in 1957 and became recurrent in the 1970s, prior to the 1967–1970 civil war, and continues to this day. The
country had a budget surplus for just seven years, i.e., 1970, 1971, 1973, 1974, 1979, 1980, and 1996. While
persistent deficits were considered to be detrimental to Nigeria's economic growth, successive governments
assumed that the deficits needed to be maintained to improve the economy. However, this expansionary monetary
policy impacts macroeconomic variables such as inflation, which acts as a medium for the effect of the fiscal
deficit on economic growth.
The relationship that exists between inflation and economic growth is one of the most critical debates.
Although the inflation growth linkage is a part of the liberal consensus in modern economics, there are some
controversies. Some consensus suggests that moderate and stable inflation rates foster a country's development
process, helping overall economic growth. However, not everyone shares the same degree of confidence in the
consensus. The major concern is whether inflation is necessary or detrimental for economic growth. The sustained
fiscal deficit, combined with the high inflation rate and cyclical non-inclusive growth in Nigeria, suggests an inter-
relationship among fiscal deficit, inflation, and economic growth unless it is empirically proven otherwise. Thus,
one might not be mistaken in believing that Nigeria's rising fiscal deficit and inflation, as well as its dwindling
economic growth, are not coincidental. As a result, it is necessary to analyse their interrelationships. Therefore,
this paper will conduct an empirical investigation of the relationship between fiscal deficit, inflation, and
economic growth in Nigeria.
While numerous studies have been conducted on the relationship between fiscal deficit and economic
growth (Abdrahman, 20122; Edame & Okoi3, 2015; Ogebe, 20154;) or between inflation and economic growth
(Vikesh & Subrina, 20045; Min, 20066), the evidence of studies that examine the relationship between fiscal
deficit, inflation, and economic growth within the same frame is barely sufficient in Nigeria. Additionally, these
studies do not agree on the exact relationships between these variables. As such, the absence of consensus in the
literature indicated a pressing need for further examination of the relationship between inflation, fiscal deficit, and
economic growth in Nigeria.
2..0 Methodology
The study employed the augmented model of Toda and Yamamoto (1995) to examine the causal link among the
variables.
1
Umaru, A. D. and Gatawa, A. U. 2014. Fiscal deficit and economic growth in Nigeria (1970-2011): A disaggregated approach. Journal of
Research in National Development, 12(1):01-09.
2
Abd Rahman, N. H. 2012, January. the relationship between budget deficit and economic growth from Malaysia’s perspective: An ARDL
approach. In 2012 International Conference on Economics, Business Innovation (38:54-58).
3
Edame, G. E. and Okoi, O. B. 2015. Fiscal deficits and economic growth in Nigeria: A chow test approach. International Journal of Economics
and Financial Issues, 5(3):748-754.
4
Ogebe, R. 2015. Government fiscal deficit & economic performance in Nigeria. Journal of Economics and International Finance, 4(7):25-
33.
5
Gokal, V. and Hanif, S., 2004. Relationship between inflation and economic growth. Economics Department. Reserve Bank of Fiji (p. 51).
Fiji. Working Paper: 2004/04.
6
Li, M., 2006. Inflation and economic growth: Threshold effects and transmission mechanisms. Department of Economics, University of
Alberta, 2(5):8-14.
161

The result shows a bidirectional relationship between economic performance and fiscal deficit. This means that
both variables are causing each other. Similarly, the result shows bidirectional causality between fiscal deficit and
gross fixed capital formation. The result also reveals a unidirectional causality between fiscal deficit and exchange
rate, with causality running from the exchange rate to fiscal deficit, without feedback. Similarly, the result reveals
a unidirectional causality between fiscal deficit and domestic credit, without causality running from domestic
credit to fiscal deficit without feedback. The result also establishes a bidirectional relationship between gross fixed
capital formation and domestic credit. Additionally, the result establishes a unidirectional causality between
inflation and interest rates and a unidirectional causality between economic output and domestic credit. . However,
there is no causal relationship between economic performance and inflation and fiscal deficit and inflation.
The results demonstrate bidirectional causation, indicating that Nigeria's fiscal deficit and economic
output take precedence over one another in time. This means that historical and current fiscal deficit values provide
critical details for forecasting future spending levels and vice versa. It implies that increased economic growth
results in a larger fiscal deficit, resulting in increased economic growth. The findings strongly support the
traditional Keynesian belief that increased government spending will assist in achieving expansionary fiscal policy
by increasing domestic output, encouraging private investors to become more optimistic about the economy's
future. This will lead to more investment in the country, resulting in increased capital accumulation through the
multiplier effect.
162

Paper ID: 049-048
GROWTH AND STRATEGIES OF FRANCHISING BUSINESSES IN MALAYSIA: A

PROPOSITIONS
Mohd Faizal Abdul Ghani1, Mohd Hizam-Hanafiah1, Rosmah Mat Isa1, and Hamizah Abd. Hamid1
1.0 Introduction
Franchising is decision to a business model that based on strategy and growth of a businesses. There has been a
significant amount of theoretical and empirical analysis done to understand why companies chose to circulate
their products or services across franchise networks. The franchising industry necessitated a high degree of
confidence and dedication. The essence to the franchising approach is the formation of entrepreneurial value. The
stages of a firm’s businesses also give an impact towards the decision of an entrepreneurs. The theory of
franchising helps to identify the strategies and growth of franchising businesses. The franchisor needs to decide
either they want to replicate or adapt during the growth phase.
A franchise system is a collaborative network between partners in the industry towards mutually
enhanced competitiveness and endeavours to reduce interest conflicts. In other words, franchisor-franchisee
performance is interdependence between one another. Based on the review, the contract design is one factor that
influences the franchising relationship’s journey. A strong partnership between individuals will last a long term
in the business relationship.
The theories on franchising pulling the reasons on why franchise firms involved in franchising. This
paper provides a review of the two most significant franchising theories and a model in explaining growth and
strategies of franchising namely Transaction Cost Theory, Theory in Growth and Porter’s Generic Strategies.
The basic of transaction cost theory is to examine a transaction either business will make products from
their resources or purchase it else. Coase (1937)1 founded the theory where the idea is from expenses of preparing
goods or services within the market instead of offering them from internal the organisation. The term and concepts
of “transaction costs” frequently used by Coase (1937), to establish a theoretical basis for forecasting when firms
would conduct such economic activities and when they would be carried out on the market and continued the
study of this theory with “costs of market transaction” (Coase 1960)2. As discussed by seminal authors, transaction
cost theory is focused on “make it and “buy it”. It becomes widely through Williamson’s study (Williamson
1998)3 that used to clarify different behaviours.
2.0 Methods
This paper review past studies in franchise and identify theory and model that are regularly used in explaining
growth and strategies of franchising businesses, namely Transaction Cost Theory, Theory in Growth and Porter’s
Generic Strategies.
Moreover, this study also extracting the previous empirical findings on the use of franchises as a tool of growth
and strategies of franchising business, namely costs transaction management, skilled and experienced
management and differences value. Therefore, this study featured new propositions based on mentioned theories
on growth and strategies of franchising.
4.0 Conclusion
Transaction Costs Theory is concentrated to minimizing the costs, exchanging resources in the environment and
managing the internal of organization. Simply put, the franchisor cuts transaction costs as low as possible and
earns from the expense efficiency of the transaction. Whereas, Theory in Growth considering the business needs
and limitless desires promote ever-increasing production and the firm's growth. Moreover, the Generic Strategies
used by businesses to achieve and maintain competitive advantage. The theory and model highlighted occupies a
significant gap in the literature on franchising and entrepreneurship.
1
Coase, R. H. 1937. The Nature of the Firm. Economica 4(16):386.
2
Coase, R. H. 1960. The Problem of Social Cost. The Journal of Law and Economics 3:1–44.
3
Williamson, O. E. 1998. Transaction cost economics: How it works; where it is headed. Economist 146(1):23–58.
163

Paper ID: 050-044
FRANCHISING AS A MODE OF INTERNATIONAL EXPANSION: SOME PROPOSITIONS
Nurul Ashykin Abd Aziz1 and Mohd Hizam Hanafiah2
Faculty of Entrepreneurship and Business, Universiti Malaysia Kelantan, Malaysia1, Faculty of Economics and
1.0 Introduction
Franchisor’s rapid internationalisation process is supported by trust, relationships, and network building, all of
which influence the franchisor's entry and governance mode selection in foreign countries. The choice of
governance mode is affected by partnerships established with local players. This can help with international
franchising decision-making by demonstrating the importance of confidence, local relationships, and business
networks in the internationalisation of franchise chains, taking into account the uniqueness of each foreign market.
Franchising lately is perceived as a business distribution method that has undergone significant changes in recent
years and has witnessed worldwide-growth over the last four decades. Additionally, Frazer et al. (2008) described
that the majority of the franchise system contributes a large portion of GDP. Based on the statistics reported by
IFA (2018) for the year 2017, franchised businesses offered nearly 7.6 million jobs and contributed US $674.3
billion of output and US$404.6 billion of GDP. Further, six million jobs were created, with 13.3 million jobs being
supported by franchises in the United States.
2.0 Methods
This paper reviews past franchise research studies and identifies the theory and models that scholars frequently
use in explaining studies related to the expansion of franchises into international markets, namely: (i) Resource-
Based View Theory; (ii) Uppsala Model; and (iii) POM (Product, Operation and Market) Model.
Also, the researchers draw together the factors of past empirical findings regarding the study of the use of
franchises as a medium for business expansion into international markets, namely: (i) access to capital resources;
(ii) systematic business operation; (iii) franchising failure versus survival; and (iv) brand equity of franchising.
Therefore, the researchers offer new propositions grounded based on widely mentioned theories for franchise
expansion.
4.0 Conclusion
In brief, even though franchising is a popular and successful way for foreign market entry, there are several other
factors that must be considered to determine why most entrepreneurs use franchise platforms as a mode of
exploring and expanding their businesses into international markets. This is to ensure that franchise companies
that adopt this mode of entry can survive in the competitive market while being able to expand their businesses
more widely, in the international market. In essence, franchising is a contractual entry mode that many businesses
use to rapidly penetrate a foreign market with minimal risk and resource commitment. To test the propositions
proposed by this study, an empirical study is needed as to whether the proposal is accurate or requires revision.
Furthermore, when a franchise business wants to expand into the international market, several matters should be
scrutinized like the policies, governance, financing of goods, and comprehensive franchise initiatives – where
these will help them expand well. Nevertheless, proper operations and compliance with the Franchise Act and
Laws should be taken into account in order to produce a positive picture of the sector, economic growth and
increasing the level of development of franchise enterprises in the international market. Finally, franchisors and
franchisees should choose high-potential countries or places to maximize their long-term survival factors in the
international market.
164

Paper ID: 115-124
STRATEGIC MANAGEMENT CRITICAL SUCCESS FACTORS OF SMALL AND MEDIUM

SIZED ENTERPRISES (SMES): A SYSTEMATIC LITERATURE REVIEW
Siti Syuhada Abd Rahman1,2, Zizah Che Senik3, Suhaila Nadzri2, Salmy Edawati Yaacob4, Zamzuri
Zakaria4, and Wan Zulkifli Wan Hassan5
Institute of Islamic Civilization (HADHARI), Universiti Kebangsaan Malaysia, Malaysia 1, Faculty of

Management and Muamalah, Selangor International Islamic University College (KUIS), Malaysia2, Faculty of
Economics and Management, Universiti Kebangsaan Malaysia, Malaysia 3, Faculty of Islamic Studies, Universiti
Kebangsaan Malaysia, Malaysia4, School of Liberal Studies (Citra UKM), Universiti Kebangsaan Malaysia,
Malaysia5.
1.0 Introduction
Small and Medium Sized Enterprises (SMEs) have been increasingly recognised for their roles in economic
development of a country. Evidently, SMEs have contributed to providing employment opportunity, increasing
innovation and productivity, and contributing to Gross Domestic Product (GDP) 1. Thus, SMEs are considered as
the backbone of socio-economic growth in many countries. However, despite the fundamental roles, SMEs are
facing high failure rates especially in the first three to five years of operations2. Some have argued that the failure
may be due to deficiency in management and planning particularly in strategic management 3. In facing rapid and
uncertain changes in business environments, strategic management practice is seen as one of the success formulas
for SMEs4. However, the past studies have shown lack of empirical data on the critical success factors (CSFs) of
the SMEs in regard to strategic management perspective. Hence, it is a need to conduct a comprehensive literature
search so that the CSFs of the SMEs related to the strategic management can be identified. Therefore, this study
attempts to fill in this gap by systematically review relevant literatures based on the research objective that is to
explore the critical factors that influence the success of strategic management process in SMEs.
2.0 Methods
The systematic review process was guided by ROSES (Reporting Standards for Systematic Evidence Syntheses)
consisting of three stages, identification, screening, and eligibility5 (Figure 1). Four electronic databases were
used including Web of Science (WoS), Scopus, Science Direct, and Google Scholar. To ensure the quality of
selected articles, quality appraisal stage was performed using the Mixed-Method Appraisal Tool (MMAT)6. In
short only 13 articles were identified related to the CSFs of the SMEs and strategic management. In determining
relevant themes and sub-themes, qualitative analysis, Atlas.ti was used to synthesise data into data coding
employing Braun and Clarke’s six-stage framework of thematic analysis7.
In the review process of the 13 related articles, six CSFs were identified including leader’s role, organizational
structure, organizational culture, managerial system, strategy process characteristics, and extra-organizational
factors, producing 20 sub-themes (Table 1). Overall, the six identified CSFs are related to firm’s internal factors
implying the importance of SMEs to strategise their firms’ ability in achieving competitive advantages. Leader’s
role that constitutes of three sub-themes (Leadership, Entrepreneur’s attitude and Entrepreneur’s behaviour) was
the most imperative CSF as highlighted in six of the 13 articles. Previous studies have shown that the ability of
1
Begum, S., Xia, E., Mehmood, K., Iftikhar, Y., and Li, Y., 2020. The impact of CEOs’ transformational leadership on sustainable
organizational innovation in SMEs: A three-wave mediating role of organizational learning and psychological empowerment. Sustainability,
12(20):8620.
2
Wahab, A., Idris, A., and Abdul Wahab, D. 2020. Peranan pengurusan strategik dalam pertumbuhan perusahaan kecil dan sederhana (PKS)
di Malaysia. Journal of Social Sciences and Humanities, 17(1):108–124.
3
Auka, D. O. and Langat, J. C. 2016. Effects of strategic planning on performance of medium sized enterprises in Nakuru town. International
Review of Management and Business Research, 5(1):188-203.
4
David, F. and David, F.R. 2017. Strategic management: A competitive advantage approach, concepts and cases (16th ed.). Pearson.
5
Haddaway, N. R., Macura, B., Whaley, P., and Pullin, A. S. 2018. ROSES RepOrting standards for Systematic Evidence Syntheses: pro
forma, flow-diagram and descriptive summary of the plan and conduct of environmental systematic reviews and systematic maps.
Environmental Evidence, 7(1):1-8.
6
Hong, Q. N., Fàbregues, S., Bartlett, G., Boardman, F., Cargo, M., Dagenais, P., Gagnon, M. P., Griffiths, F., Nicolau, B., O’Cathain, A.,
and Rousseau, M. C. 2018. The mixed methods appraisal tool (MMAT) version 2018 for information professionals and researchers. Education
for Information, 34(4):285-291.
7
Braun, V. and Clarke, V. 2006. Using thematic analysis in psychology. Qualitative Research in Psychology, 3(2):77–101.
165
the SME’s leaders in practising strategic management has resulted in successful operations8,9. In fact, since SMEs
are characteristically small in size, the leaders’ influence on the entire organizations is more prominent 10.
Hence, this explains SMEs leaders’ vital roles in shaping the organisational business direction such as
initiating and facilitating changes in organization’s structure, culture, systems, and all the other activities in effort
towards strategic management implementation success in SMEs11. In theory, the discovery of firm’s related six
CSFs has shown that Resource-based Theory (RBT) is the fit theory in identifying the CSFs of strategic
management implementation in SMEs. The finding of this systematic literature review suggests that to ensure
effective implementation of strategic management, SMEs should focus on the internal factors, while at the same
time need to be alert and adapt to changing environmental conditions by focusing on the extra-organizational
factors. This implies that SMEs need to consistently upgrade their capabilities such as knowledge and skills as
well as ability to understand the external factors by being more market oriented and stakeholder oriented.
Figure 1: Flow Diagram of the Searching Process
Table 1: Results of the Review Analysis
8
Jabbar, A. A. and Hussein, A. M. 2017. The role of leadership in strategic management. International Journal of Research -
GRANTHAALAYAH, 5(5):99–106.
9
Radzi, K. M., Nor, M. N. M., and Ali, S. M. 2017. The impact of internal factors on small business success: A case of small enterprises under
the FELDA scheme. Asian Academy of Management Journal, 22(1):27-55.
10
Löfving, M., Säfsten, K., and Winroth, M. 2016. Manufacturing strategy formulation, leadership style and organisational culture in small
and medium-sized enterprises. International Journal of Manufacturing Technology and Management, 30(5):306–325.
11
Sołoducho-Pelc, L. 2017. The importance of trust in the implementation of the strategic management process. International Journal of
Contemporary Management, 16(4):237–261.
166

Paper ID: 124-128
MARKET STRUCTURE AND BUSINESS STRATEGY OF MUSLIM’S FAST FASHION

ENTREPRENEURS
Ahmad Raflis Che Omar1 and Siti Nurashikin Mohd Noor1
1.0 Introduction
Fast fashion industry is the rapid growing international apparels business worth about USD1.3 trillion a year and
supported 300 million personnel globally1. The industry were dynamics and operated according to the
development of e-commerce, changes of market demand, design development and socio-economics uncertainty.
It refers to the low-cost clothing, mass-producing, trending and always gained highest desires among youngsters2.
The industry players are ranging from small to large scales manufacturers, retailers and entrepreneurs with
different types of products, target market and price. In Malaysia, fast fashion is the most popular segment since
early 2000s with the increased of imported apparel brands from China, Vietnam, Japan and South Korea such as
Uniqlo, Googles, LOL, Nichii and Brands Outlet 3. At the same time, Muslim fast fashion brands like Naelofar,
Inhanna, Imanboutique and others are also competing within the local market. Muslim’s fast fashion entrepreneurs
built their business models based on inexpensive clothing from the efficient production lines, to create more
seasonal and trendy designs that aggressively marketed to fashion-conscious consumers.
The fashion retailers and entrepreneurs are also revolutionize according to the modern muslimin (male) and
muslimah (female) apparel phenomenon4. Syariah-compliant fast fashion design and products are mostly welcome
by young and middle-aged consumers’ market segment. However, fast growing of Muslim’s fashion players since
2010, the pandemic of Covid-19 and the Movement Control Order measures, there are highly competitive market
structure of fast fashion business. Market structure is determined by market power by certain brand or their
monopoly position in industry. Inside the fast fashion industry, it has created the low entry barriers, contestable
market and risk of shakeout while the small and medium size players are relying more on internet marketing5.
Muslim’s fast fashion entrepreneurs are amongst the struggling players that was trying to cope with high operating
cost, market competition and business sustainability. Therefore, there are need for researchers to investigate
current market structure and business strategy, to provide a basis business strategies direction for its sustainability.
This article reports the analysis of market structure and business strategy of Muslim’s fast fashion entrepreneurs
in Malaysia as well as highlights some recommendations for the industry players.
2.0 Methods
This study applies the qualitative method and the Theory of Planned Behaviour (TPB) in its investigation.
Telephone interview has been conducted with four [4] Muslim entrepreneurs who owned the fast fashion business
in Klang Valley and Kota Bharu, Kelantan. Both location is among the popular Muslim’s fashion hub in Malaysia.
Telephone interview is a flexible way of gaining inputs from respondents and it allows greater spontaneity and
adaptation of the interaction between the researcher and them. Further, qualitative methods allow researcher to
ask “open-ended” questions that will build personal interaction between researcher and the participants.
Participants have the opportunity to respond and elaborately their answer in detail. It is often less formal than
quantitative research. Four respondents have been identified and selected based on the SMEs fashion retailer’s
directory. All respondents are owner (entrepreneur) of the company. Series of question that have been ask
regarding respondents’ personal and business background (8 questions), perception on market structure (3
questions) and business strategy (2 questions). The interview was recorded with respondent’s permission that is
lasted between 40 to 45 minutes. Thematic analysis is performed on the recorded data and response.
1
Gazzola, P., Pavione, E, Pezetti, R. and Grechi, D. 2021. Trends in the Fashion Industry. The Perception of Sustainability and Circular
Economy: A Gender/Generation Quantitative Approach. Sustainability, 12, 2809.
2
Remy, N., Eveline, S. and Steven, S. 2016. Styles that Sustainable: A New Fast Fashion Formula. McKinsey & Company. October, 1-6.
3
Ong, D.L.T. and Lee, W.S. 2018. A Study of Purchase Intention of International Fast-Fashion Brands of Malaysian Gen Y Consumers. In:
Academy for Global Business Advancement (AGBA). 15th Annual World Congress, 2-4 July 2018, National Institute of Development
Administration, Bangkok Thailand.
4
Rosita, M.T., Amer, S.Z. and Sharifah, A.S.S. 2014. An Evaluation of Malaysian Female Consumer’s Attitude Scale towards Buying Fashion
Branded Goods. Procedia - Social and Behavioral Sciences, 130, 340 – 346.
5
Sun, B., Wenjun, J, Xuankai, Z. and Yi, H. 2017. Research on Market Power and Market Structure, a Direct Measure of Market Power of
Internet Platform Enterprises. International Journal of Crowd Science, 1(3), 210-222.
167
Table 1 represents the demographic factor of entrepreneurs and their business entity. All respondents are female
graduate with a bachelor degree in non-fashion related discipline. Their business experience is ranging between 7
to 13 years. All respondents are selling female Muslim’s clothes as the fast fashion retailers. Their annual turnover
is between RM150,000 to RM360,000.
Table 1: Entrepreneurs and Business Background

Respondent Gender Education Business Type of Business Paid-up Annual No. of
Experience Apparel Offers Location Capital Turnover Staffs
R1 Female B. in 13 years Scarf, Hijab & Kota 50, 000 360,000 5
Communications Traditional Damansara
Wear
R2 Female B. Business 8 years Maxi Dress & Kota Bharu 50, 000 150,000 4
Administration Casual Wear
R3 Female B. in Business 10 years Traditional & Kuala 50,000 150,000 4
Modern Outfit Lumpur
R4 Female B. in Public 7 years Casual Wear Shah Alam 100, 000 360,000 12
Administration
3.1 Market Structure

Most respondents (R1, R3 and R4) revealed that the market structure of Muslims fast fashion was relatively
identical (perfect competition) with firms are selling almost similar or homogeneous products such as scarf, maxi
dress (jubah) and casual Muslim’s outfit. Almost all firms sell an identical product and having a position of price
takers, i.e. they cannot fully influence the market price by their products offering (R1 and R3). Therefore, market
share has no influence on prices in the long-run where majority of Muslim’s fast fashion entrepreneurs are
focusing on the same target market and willing to offer discount for out of season apparels or for the purpose of
attracting high number of potential customers. The situation was highly competitive while there are rapid increase
of internet marketing and the deployment of social media influencer as their promotion agent (R2, R3 and R4).
3.2 Business Strategy

The study has identify five business strategies that have implemented by all respondents to enhance their market
share and protected their business survival as shown in Table 2.
Table 2: Business Strategy

No. Theme of Business Strategy Findings
1. Locations Choose strategic location nearby to market demand such as University, residential area and
government and corporate office. By choosing the strategic location, products will be more
accessible to reach the target market (R2 and R3).
2. Capital Invest high capital to gain lowest manufacturing cost some of product imported from neighbor
country such as Indonesia and Thailand (R3 and R4).
3. Product Attractiveness Always improve product quality, design and availability of product. The product choose by
customer because of it can make the customer look more presentable and attractive (R1 and R4)
4. Competitor Creative marketing strategy- such as create other channel to promote the product, agents,
products influencer (R1, R2 and R3)
5. Technology & Innovations Focusing on Online Marketing and create e-platform channel. 70% market place can be reach
via online and 30% via physical shop as point of experience (R1,R3 and R4).
4.0 Conclusion
Muslims fast fashion is a concept that will continue to affect apparel industry over the next decade and will have
a direct effect on the way consumers purchase and react to trends. Entrepreneurs should react to the market
structure with appropriate business strategies related to knowledge, capital investment and technology driven
marketing approach. These are evidences that support the role of past behaviour in determining future behaviour
as suggested under the expectancy-value based model of TPB.
(Special acknowledgement to YCSB-UKM Research Funding EP-2019-055)
168
Track: Strategic Partnership

Paper ID: 012-046
PUBLIC PRIVATE HEALTHCARE PARTNESHIPS FOR A BETTER STABILITY DURING THE

PANDEMIC: A CASE STUDY OF INDIA
Shamini Kandasamy1, Angelina Anne Fernandez1, Kho Guan Khai1, and Rozitaayu Zulkifli1
Faculty of Accountancy and Management, Universiti Tunku Abdul Rahman, Malaysia1.
1.0 Introduction
In the light of the Pandemic, the rising number of patients due to the Covid 19 has been increasing. Much is due
to the non-concern of the public not following the Standard Operating Procedures (SOP) which has increased the
number of cases having Covid 19 leaving the Government in the dire straits to look to means to the possibility of
partnering the private sector to help improve the healthcare system during the pandemic.
2.0 Methods
The research looks towards India which the vast country of 1.38 billion and how it faced the partnership in terms
of infrastructure, human resource, the medical framework and the information technology framework to improve
the healthcare services. The main intention of this research is to satisfy all stakeholders to attaining the sustainable
goals of the healthcare system.
The drawback as also the advantages will be highlighted so that the Malaysian healthcare system could
emulate this and the hiccups could be made known and also reduced. To have a faster roll out of this public
private partnership, this case study taken to highlight the issues and improve the areas of concern for a sustainable
healthcare system in Malaysia.
The research is a comparative of India as the healthcare system is wide and has started with the public
private healthcare partnership to try to minimize the high number of Covid case. The key areas will be discussed
to find out whether there will be issues when the comparative key factors such as:
i. Infrastructure,
ii. Human resource,
iii. The medical framework and
iv. The information technology framework to improve the healthcare services.
Source: https://www.statista.com/statistics/283221/per-capita-health-expenditure-by-country/
From the above diagram above, it shows that the government spending for medical services in India is lesser that
the Malaysian public healthcare system. The patients heavily rely on the private healthcare system, in India
compared to Malaysia. With the budget allocation in Malaysia, I 2021, RM31.9 billion compared to USD 400,000
for India. Malaysia is spending a lot on healthcare. It is also noticed that the developed countries rely heavily on
the Government spending.
The comparative study will help Malaysia towards a better healthcare public private partnership 1,2.
1
https://www.statista.com/statistics/283221/per-capita-ealth-expenditure-by-country/
2
https://www.theedgemarkets.com/article/budget-2021-healthcare-measures-welcomed-fall-shor
169
Track: Sustainability and Social Issues

Paper ID: 010-005
THE IMPACT OF COVID-19 PANDEMIC ON UNEMPLOYMENT RATES IN MALAYSIA:

COMPARATIVE APPROACH WITH GLOBAL FINANCIAL CRISIS 2007/2008
Nur Uzma Mat Yusoff1, Siti Raihana Hamzah1, Norizarina Ishak1, and Ahmad Fadly Nurullah Rasedee2
Fakulti Sains dan Teknologi, Universiti Sains Islam Malaysia, Malaysia1, Fakulti Ekonomi dan Muamalat,
Universiti Sains Islam Malaysia, Malaysia2.
1.0 Introduction
The unemployment rate is an important economic indicator that is actively discussed during any economic events.
The hike of a country's unemployment rate has caused panic among the government and its government. Due to
its importance, researchers, economists, and regulators often analyzed the factors that may cause the
unemployment rate's upsurge. This research is unique than the previous as this research compares the factors that
contribute to the unemployment rate between two economic events: Global Financial Crisis 2007/2008 and
pandemic COVID-19. Besides, this research also examines the short-term and long-term relationship between
variables and forecast the unemployment rate’s value during these two events.
2.0 Methods
This paper uses the unemployment rate as the dependent variable while gross domestic product growth, inflation
rate, and population growth as the independent variables. Unlike previous research, this research will comprehend
the impact of gross domestic product, inflation rate, and population growth on Malaysia's unemployment rate
during two economic events. One is the impact of the Global Financial Crisis (GFC) and another event during the
current COVID-19 pandemic. In order to uphold the objectives, quarterly data from 2000-2010 and 2010-2020
are gathered whereby the former represents the Global Financial Crisis event while the latter represent COVID-
19 duration. The total observations are 44 and 45 respectively for each variable whereby the data were retrieved
from Thomson Reuters DataStream. In order to achieve the research objectives, this research employs five
methods which are multiple least square (MLS) regression model, Johansen cointegration test, Granger causality
test, vector autoregressive (VAR) model, and error forecasting.
Gross domestic product and inflation rate have a significant impact on unemployment rate during Global Financial
Crisis whereas only inflation rate has a significant relationship with unemployment rate during COVID-19. In
addition, there is no short-term relationship between the variables for both the economic events. During COVID-
19, there is a presence of a long-run relationship between the variables. This research also found that VAR model
can be used to forecast the unemployment rate post-COVID-19.
4.0 Practical Implications

Economist expressed the Covid 19 pandemic situation as an intense economic illness that contrasts with the
preceding financial crisis. Through the findings of this research, individuals and economists may compare the
factors that influence Malaysian unemployment rate during two economic events: Covid 19 pandemic and global
financial crisis 2007/2008. The factors can be further explored on its significance short-term or long-term effect
on the unemployment rate, hence providing excellent benchmark for the country to predict Malaysian
unemployment rate during pandemic Covid 19. The findings are important for an individuals or economists to
prepare for the forthcoming circumstances.
Keywords: Unemployment rate, COVID-19, Vector Autoregressive model, Granger causality, Johansen
cointegration
170

Paper ID: 046-047
DETERMINANT FACTORS OF GREEN PURCHASE BEHAVIOUR AMONG MILLENNIAL IN

MALAYSIA: DOES PEER INFLUENCE MATTER?
Noramal Amirah binti Mohd Zaid Koh1, Bamini KPD Balakrishnan2, Brahim Chekima3, and Oscar
Dousin4
Faculty of Business, Economics, and Accountancy, Universiti Malaysia Sabah, Malaysia1.
1.0 Introduction
The emergence of environmental protection among businesses and consumers has increased recently due to their
dashing awareness to save the atmosphere and natural resources since environmental degradation is alarming 1. As
a result, demand for green products in the global market has increased and major manufacturers are willing to
produce green. The people are more prepared to act on green issues than previously as such consumers attempt to
refrain from buying products that have detrimental effects on the environment portraying their increased
awareness and environmental-friendly action22. Despite the growth in interest and purchase for green products,
the market share and the economic value are relatively low compared to conventional products33. Chekima44 and
Yamoah and Acquaye55 portray this issue by concluding that it is due to the consistent finding which is an
inconsistency between what people claim and their actual behavior –the so-called “green gap”. Yet at the same
time, "green'' is currently in the standard of present-day organizations. Being socially responsible by offering
environmentally friendly products and services ought to be the act of any organization that desires to sustain a
competitive advantage in the present business world. Hence, this study aims to examine the determinant factors
of green purchase behavior among millennials in Malaysia. Millennials represent the biggest age group of
consumers and are formally described as those who were born between the year 1982 until 2000, embracing
adulthood person in the present modernized day. Not only that, but millennials have also been classified to be
dissimilar from the expanded population in terms of their high environmental knowledge awareness, stronger
desire for “green”, willingness to purchase environmentally friendly products66, better educated, and excellently
connected to information which makes them more likely concern and accountable towards surroundings 77. Thus,
millennials are more apparent to apprehend the significance of environmentally friendly purchases also their
impact on the environment and society 88. Consequently, this study is to investigate the determinant factors of
green purchase behavior among millennials which include environmental attitude, environmental concern, green
self-identity, green past environmental behavior towards green purchasing behavior based on peer-influence as a
moderator which may exert a significant role between the relationships. The research provides significant insight
and better understanding by furthering the knowledge on the predictors of green buying behavior of educated
millennials in Malaysia will assist green marketers in developing effective plans and strategies that provide them
with an opportunity to tap the huge potential that exists within this market segment.
2.0 Methods
The study focused on the educated millennial generation, which comprises an age range between 25 and 40 years
old. This due to educated millennials is prone to express concern and responsibility for the environment since
there is a rising number of consumers who are willing to pay for more sustainable products and services. Purposive
sampling was applied in this study because the researcher possesses to get information from a specific target
group, those who are familiar with green products and have made a purchase in the past. This is following Nabi9
recommendation not to combine responses to cases of actual behavior and assumed/intention cases in actual
1
Kumar, P. and Ghodeswar, B.M., 2015. Factors affecting consumers’ green product purchase decisions. Marketing Intelligence & Planning,
33(3):330-347.
2
Chen, Y. S. and Chang, C. H. 2012. Enhance green purchase intentions: The roles of green perceived value, green perceived risk, and green
trust. Management Decision, 50(3):502-520.
3
Chekima, B., Chekima, K., and Chekima, K. 2019. Understanding factors underlying actual consumption of organic food: The moderating
effect of future orientation. Food Quality and Preference, 74:49-58.
4
Chekima, B. and Chekima, K. 2019. The impact of human values and knowledge on green products purchase intention. In Exploring the
Dynamics of Consumerism in Developing Nations (266-283). IGI Global.
5
Yamoah, F.A. and Acquaye, A., 2019. Unravelling the attitude-behaviour gap paradox for sustainable food consumption: Insight from the
UK apple market. Journal of Cleaner Production, 217:172-184.
6
Rogers, G. 2013. The rise of generation Y in the sustainable marketplace. The Guardian, Avaiable at: www.guardian.co.uk/sustainable-
business/blog/risegeneration-ysustainable-marketplace (accessed 4 December 2020).
7
Morgan Stanley. 2017. Sustainable signals: New data from the individual investor.
8
Sliwka, A., Diedrich, M., and Hofer, M. 2006. Citizenship Education, Waxmann Verlag, Munster.
9
Nabi, R. L. 2002. Anger, fear, uncertainty, and attitudes: A test of the cognitive-functional model. Communication Monographs, 69:204-
216.
171
behavior studies as their pattern is very different. A total of 150 participants were included in the final sample
which fulfills the minimum required sample by G*Power10. A self-administrated questionnaire was used for data
collection. The questionnaire consists of respondent’s demography, green purchasing behavior frequency,
environmental attitude, environmental concern, green self-identity, and peer influence.
This study adopted the SEM-PLS approach using SmartPLS 3.2.8 software to evaluate the measurement and
structural model. At the measurement model, all the criterions’ requirements such as loadings, composite
reliability, average variance extracted, Fornell and Larcker as well as HTMT were met, and thus convergent and
discriminant validity is established. Except for the direct relationship between green self-identity and purchase
behavior, the findings support the TBP framework with environmental attitude, environmental concern, and green
self-identity have a significant relationship with millennial’s green purchase behavior. Peer influence moderated
the relationship of EA towards GPB meanwhile no interaction of peer influence was found between EC and GSI
and green purchase behavior among millennials in Malaysia. The result suggests that the influence of the
environment attitude is stronger and higher when peer influence is high.

The study enriched the existing literature on green consumption and generational studies by integrating the TPB
framework in the Malaysian context and promoting the understanding of the fundamental consumption
mechanisms of the relationship between the environmental attitude (EA), environmental concern (EC), and green
self-identity (GSI) on green purchase behavior (GPB). It questioned the role of peer-to-peer influence in
moderating the relationship between EA, EC and GSI, and GPB. This research extended an understanding of the
determinant factors that influence the green purchase behavior of millennials in Malaysia that will help to facilitate
the growing green marketing prospects predominantly relevant in this segment of consumers with specific
marketing programs and strategies to be executed by businesses.
Keywords: Marketing management, green-gap purchase behavior, millennials, Malaysia
10
Faul, F., Erdfelder, E., Buchner, A., and Lang, A. 2009. Statistical power analyses using G*Power 3.1: Tests for correlation and regression
analyses. Behavior Research Methods, 41(4):1149-1160.
172

Paper ID: 090-088
THE ROLE OF SOCIAL ENTREPRENEURSHIP APPROACH IN ENHANCING HOMEPRENEUR

BUSINESS OPPORTUNITIES: THE CONCEPTUAL MODEL
Nor Hidayu Rahim1, Lokhman Hakim Osman2, and Che Aniza Che Wel2
Graduate School of Business, Universiti Kebangsaan Malaysia, Malaysia 1, Faculty of Economics and
1.0 Introduction
The acute respiratory outbreak crisis or known as Novel Coronavirus (Covid-19) has brought unprecedented
challenges for both people and society globally. The covid-19 crisis is ongoing situation with an unknown period.
This makes it hard to anticipate and plan for the future (Weaver 2020). Since the pandemic started in December
2019 (Kuckertz et al. 2020), millions of people have been devastated by health, social, and economic implications
of COVID-19 pandemic. World Health Organization (WHO) (2020) stated that COVID-19 is a highly
transmittable from an infected person’s when they cough, sneeze, speak, sing or breathe and people may also
become infected by touching surfaces that have been contaminated by the virus when touching their eyes, nose or
mouth without cleaning their hands. Therefore, many governments have taken responsibility in an effort to limit
the virus spread by closing the ‘non-essential’ businesses and institutions for weeks or months (Gong et al. 2020;
Zraick & Garcia 2020; Liguori & Winkler 2020; Ratten 2020). It shows that, this pandemic impacts on and
transmission to health may worsen unemployment, poverty and inequality (Prasetyo & Kistanti 2020).
In Malaysia, the government has implemented movement control order (MCO) in their effort to flatten
the curve of Covid-19, as the number of daily cases are still high. However, the implications of this MCO have
caused many businesses to be severely affected and even some businesses had to close with a heavy debt in hand.
Most companies had to reduce their number of staff in order to reduce the cost of operation. This shows that
Malaysia’s unemployment rate could get worse until the end of MCO although the unemployment rate for April
2021 fell to 4.6% (Department of Statistics Malaysia), the lowest rate since October 2020. Indeed, these closures
hinder and eradicate the opportunities for many small business owners and institutional leaders to generate
revenue (Weaver 2020). The pandemic has placed Malaysians, the vulnerable and the pandemic poor in a
particularly precarious position (Simler 2020). Simler (2020) further stressed that those with little or no assets or
savings to fall back on, informal workers who are not covered by or have inadequate social safety nets, and those
who have lost their jobs, have been placed on unpaid leave, or experienced pay cuts because of movement control
orders (MCO).
Malaysia government has introduced several economic stimulus packages like PRIHATIN; PRIHATIN
Package for Small and Medium Enterprises (Additional Measures); National Economic Recovery Plan
(PENJANA); the Malaysian Economic and Rakyat's Protection Scheme (PERMAI); and the Strategic Programme
to Empower the People and Economy (PEMERKASA). Yet, mirroring the current situation, everyone in Malaysia
from B40 (income of less than RM4850), M20 (income of between RM4850 to RM10959) and T20 (income
higher than RM10959) has been affected and the worst category are B40 and those who were already vulnerable
and struggling to make ends meet prior to the pandemic and MCO. At a civic level, achieving societal impact
often requires multiple stakeholders with diverse backgrounds and motives to coalesce (Lumpkin & Bacq, 2019).
The government and civil society could work together to eradicate poverty, foster equity, and promote resilience
within the economy, by continuing to share their roles in enhancing the social protection system (Simler 2020). It
has been proven that social entrepreneurship may in fact be better equipped to handle social problems (Bacq &
Lumpkin 2020). Before the Covid-19 pandemic, social entrepreneurship is known as the best approach to handle
simultaneous pursuit of economic, social, and environmental values for social development (Nga &
Shamuganathan, 2010; Davari & Farokhmanesh, 2017). Moreover, community participation and local
involvement can have an impact on a business through social entrepreneurship approach (Ismail & Daud 2020).
This pandemic forced many people to start doing small business for their life survival. With little
financial support most of them prefer to do home-based business or we can refer them as ‘homepreneur’. In
Malaysia, literally the term ‘homepreneur’ is very rare to be used. Homepreneurs can be defined as business
entrepreneur who operates from his or her home (Swami & Naidu 2020). Becoming a homepreneur is an excellent
way to start small and gain entrepreneurial skills (Swami & Naidu 2020) and most important part is to having low
operation cost. However, in Malaysia, the existing and new homepreneurs is seen struggling to run and sustain
their business because of MCO restrictions and less consumer spending power. Abdul Hamid (2020) in his report
highlighted that COVID-19 has impacted consumer behaviour in many ways, especially in spending, e.g from
from shopping spree to itemising essentials. While these homepreneurs are in their own premises and in
173
challenging circumstances, a study related to enhance their business opportunities through social entrepreneurship
approach should be made viable soon.
At the time of this study, it is not possible to determine whether studies related to the development of
social enterprise sectors during the COVID-19 outbreak were conducted. On the other hand, studies on the
relevance of the involvement of social entrepreneurship and homepreneur growth are limited. Thus, the main
objective of this research is to explain the important role of social entrepreneurship approach in enhancing
homepreneur business opportunities which may then increase economic growth and prosperity. This research aims
to answer the question: Do social entrepreneurship played and important role in enhancing homepreneur business
opportunities? Therefore, this study will contribute to the literature. First, we will review the literatures and
suggest remedies that could direct future studies. Second, we present the conceptual model which provides a
framework for future research. Third, we deepen the discussion by proposing some suggestions regarding how
SE affect homepreneur business opportunities. We believe that the proposed research model could be adopted and
further developed in future empirical studies.
174

Paper ID: 097-096
SAFETY CULTURE AS DRIVERS TO SOCIAL SUSTAINABILITY: THE INSIGHTS FROM

MALAYSIA HEALTHCARE INDUSTRIES
Norzianis Rezali1,2 and Mohd Helmi Ali2
Politeknik Tuanku Syed Sirajuddin, Perlis, Malaysia1, Graduate School of Business, Universiti Kebangsaan
1.0 Introduction
The healthcare industries are facing more pressure in providing sustainable services. The need for social
sustainability (SS) in the healthcare supply chain is becoming equally important to the environmental concern 1.
Green healthcare supply chain (GHSC) has become more vocal and is practised globally in pursing for SS 2.
However, even in the specialist literature on the healthcare industry fails to provide a holistic perspective on
GHSC for SS due to the heterogenous and dynamic competing pressures. Using institutional theory lens, this
research aims to assess how to shape safety culture (SC) in healthcare industries that impact SS resulting from the
adoption of GHSC. The results provide in-depth insight and solid empirical evidence on SC from GHSC that
contributes to SS in healthcare industries. The findings of this research build a comprehensive picture of the SC
through initiatives of GHSC that contribute to the SS. Additionally, the research offers propositions on how to
shape SC by practices of GHSC initiatives that could be better achieved through a range of institution perspectives.
2.0 Methods
This research seeks to explore the shape of the phenomenon complexity and nature of SC in healthcare industries
using multiple case study method. Case study is helpful in theory development when dealing with complex
research fields3. This research focuses on the context of SC through practices of GHSC in the Malaysian healthcare
industries. Theoretical sampling was done by identifying the healthcare industries, which were characterised by
the service provided. As a general criterion, the healthcare industries must be registered under the Ministry of
Health (MOH), and six healthcare industries preferences have agreed to participate. The healthcare industries
were selected as a sample, and interviews were confined to key top management personnel as the informants. For
every sampled case, in-depth interviews with one key informant from the healthcare industry were conducted.
The interview questions were based on the institutional theory view and existing literature in SC by practices of
GHSC perspective.
Data analysis was done in two stages. Firstly, a within-case analysis was done to examine the SC by
practices of GHSC in a single context. Lastly, the across-case analysis was done for the replication for testing the
construct of interest in the other setting. Description consistency of each case was generated through within-case
analysis by capturing all relevant information on the healthcare industries related to the SC through the GHSC
initiative. To identify the collected data's core categories and patterns, this research applied coding processes and
used ATLAS.ti version 8.0 software (ATLAS.ti Scientific Software Development GmbH, Berlin, Germany and
Corvallis, OR, USA).
Table 1 - Case Overview

Case Company Category Informant Years in Post
Case Company 1 Private Director of Facility Support Services 5
Case Company 2 Private General Manager of Hospital Support Services Department 25
Case Company 3 Private Manager of Pharmacy Department 15
Case Company 4 Private Manager of Facility Department 11
Case Company 5 Private Manager of Facility Department 10
Case Company 6 Private Manager of Pharmacy Department 39
Informants were asked to provide perceptual information on current healthcare industries’ SC from the practices
of GHSC. The coding of the field data confirmed that healthcare industries have their initiatives for SC from the
view of institution groups. A thorough analysis of the in-depth interviews with the key informants was conducted
1
Rezali, N., Ali, M. H., Idris, F., Yunus, Y. M., and Yunan, Y. S. M. 2021. Exploration of institutional theory in green supply chain initiatives
for healthcare industries in Malaysia. International Journal Business Continuity and Risk Management, 11(2-3):126-141.
2
Maghsoudi, T., Pereira, R. C., and Lara, A. B. H. 2020. The role of collaborative healthcare in improving social sustainability: A conceptual
framework. Sustinability, 12:3195.
3
Dotoli, M., Epicoco, N., and Falagario, M. 2020. Multi-criteria decision making techniques for the management of public procurement
tenders: A case study. Applied Soft Computing Journal, 88:106064.
175
to know how the SC in healthcare industries resulted in common themes, as presented in Table 2. Five from six
cases (C1, C2, C3, C5, and C6) had indicated that SC by practices of GHSC positively impact SS. The informants
highlighted that SC protects staff, patients and communities of healthcare industries by setting standards of
conduct4. SC is a process in which safety is essential to the long-term success of private hospitals5. SC stemmed
from the awareness, involvement, and motivation of employees from practices of the GHSC initiative. In addition,
SC builds an image of the private hospitals that care for patients, communities, and employees 6. The initiatives of
the GHSC were argued to be affecting the development of SC in private hospitals depending on the size and type
of the hospital. For example, medium-size hospitals and chains or individual hospitals had strengthened the
awareness by the involvement of employees. The manager of Pharmacy Department of C3 has expressed her
views on an SC that is an output of GHSC initiative and its impact on SS. C3 stated that:
"(…) Recycling because of its part of our 5S. We do have 5S here. Therefore, we have activities where
the staffs also join as a team. It works very well because it is already like part of our culture. The
employees know every year we have 5S and accreditation…”.
(Case Company 3, Manager of Pharmacy Department)
This statement is supported by Case Company 1 by stating that:
"(…) The top management tries to get full involvement from the employees. Therefore, this thing does
not give additional workloads. ‘Go Green’ or without ‘Go Green’ there is not much difference in our
work routines. Besides, when we decided to “GoGreen’, the benefits get to the surroundings…”.
(Case Company 1, Director of Facility Support Services)
Therefore, in short, this research confirms that from the view of the institutional theory, SC plays a role
in the practice of the GHSC initiative in healthcare industries.
Table 2: The Summary of Organization Safety Culture

ORGANIZATION SAFETY CULTURE CASES / INFORMANTS
C1 C2 C3 C4 C5 C6
Employee awareness √
Employee involvement √ √ √ √
Employee motivation √
Furthermore, the findings suggest that a comprehensive analysis of institutions’ opinions regarding the
shape of SC that constitute GHSC initiatives would help healthcare industries, particularly hospitals, to balance
the expectations about the culture from the view of institutions isomorphic pressure (normative, coercive and
mimetic); in order to achieve the SS. The working proposition archetypes:
P1: To identify the shape of organization safety culture from green healthcare supply chain initiatives from the
view of the healthcare industries’ institutions.
Safety Culture
● Employee awareness
● Employee involvement Social Sustainability
● Employee motivation

Several research offerings are noteworthy. First, a significant contribution of this research to the SC and GHSC
literature is to employ the institutional theory to frame a conceptual model that links with SS. Second, the
synergetic mechanism identified in this research should assist institution groups in understanding the concept of
SC through the GHSC initiatives and their implementation for improving SS. Consequently, they could adjust
their firm policies and strategies to motivate healthcare top managers to adopt GHSC initiatives for SC. Moreover,
this understanding can help managers successfully to promote SC by implementing GHSC initiatives in their
companies. Moreover, from the results, a few research propositions were discussed and put forward. Thus, future
research could test the research proposition in a broader context.
4
Schulman, P. R. 2020. Organizational structure and safety culture: Conceptual and practical challenges. Safety Science, 126:104669.
5
Bendak, S., Shikhli, A. M. and Razek, R. H. A. 2020. How changing organizational culture can enhance innovation? Development of the
innovative culture enhancement framework. Cogent Business & Management, 7:1712125.
6
Quenon, J. L., Vacher, A., Faget, M., Levif-Lecourt, M., Roberts, T., Fucks, I., Promé-Visinoni, M., Cadot, C., Bousigue, J. Y., Quintard,
B. and Parneix, P. 2020. Exploring the role of managers in the development of a safety culture in seven French healthcare facilities: A
qualitative study. BMC Health Services Research, 20:1-11.
176
Track: Values, Risks and Opportunities

Paper ID: 021-015
IS THE PN17 BURSA MALAYSIA CLASSIFICATION EFFECTIVE IN MITIGATING SYSTEMATIC

RISK OF FINANCIALLY DISTRESSED MEMBER FIRMS?
Izdihar Baharin @ Md. Daud1
Faculty of Business and Management, UCSI University1.
1.0 Introduction
Financial distress is a situation when a firm is experiencing failure, insolvency, bankruptcy or default1.
Generally, financial distress issues are company specific but during economic turmoil, such as what the world is
experiencing at the moment due to the Covid-19 pandemic, it can be contagious and spread throughout
countries, creating domino effects among the businesses.
Prior to the Covid-19, the world economy had already experiencing stress due to the unresolved
Quantitative Easing exercises employed during the Global Financial Crisis 2008 which created severe
sovereign debt issues. After Covid-19 came into play, governments around the world have no other option but
to keep on flooding their economy with cheap credit in order to avoid them from crashing. Malaysia is no
different.
The Covid-19 pandemic which officially hit Malaysia on 18 March 2020 had cost the economy worst
than the 1998 Asian Financial crisis when the economy shrank by 5.6% in 2020, mostly due to the introduction
of several lockdowns exercises in order to curb the spread of Covid-192. To mitigate the ill effects of lockdowns
on economic sectors, Malaysia had allocated RM65 billion into the Covid Response Fund (CRF) as at May
2021, on top of other non-monetary assistance, to both the public and businesses3. Even then, it was estimated
that 580,000 of micro, small and medium businesses, representing 49% of the MSME industry, will be closing
down by October 20214.
This bring us back to the issue of financial distress. The statistics presented above clearly indicated that
Malaysian businesses are having difficult challenges due to this pandemic induced economic downturn. A study
on the impact of Covid-19 on the Malaysian stock market found the Bursa Malaysia “daily trading activities
reacted negatively with the daily growth in the domestic and global extend of the Covid-19 pandemic”5 which
indicated that Malaysian public companies were also severely affected by the Covid-19 effects6. However it
should be cautioned here that the negative performance of Bursa Malaysia during the pandemic years was not
solely due to the economic factors. The unstable political atmosphere for the past two years had also contributed
toward the declining interest of investors on the Malaysian capital market.
Be as it may, the focus of this paper is not on the economic performance of the country or financial
performance of listed entities on Bursa Malaysia. The focus is on the effectiveness of Bursa Malaysia PN17
classification, which identified financially distressed public companies of Bursa Malaysia apart from the
healthy entities of the bourse, in order to avoid systematic risk issues that may spread to the entire listed
companies population, which may arise from the effects of the Covid-19 pandemic on the economy.
3.0 Methodology
To answer the question whether Bursa Malaysia PN17 classification is effective enough to mitigate systematic
risk among the financially distressed listed firms, we will test whether there are relationship similarities between
the pre and post reorganization PN17 firms. Pre reorganization firms are firms that had been identified as
experiencing financial distress and is undergoing reorganization exercise. Post reorganization firms are firms
that have been successful in graduating from the PN17 classification.
1
Altman, E. I. and Hotchkiss, E. 2006. Corporate financial distress and bankruptcy (3rd. ed.). US: Wiley.
2
Anand, R. 2021. Malaysian economy shrinks faster than expected. The Straits Times.
(https://www.straitstimes.com/business/economy/malaysias-economy-shrinks-faster-than-expected-in-q4-on-tighter-covid-19-curbs Ram
Anand 11/2/21).
3
Zahiid, S. J. 2021. MOF announced additional RM200M for Covid-19 fight, The Malay Mail.
(https://www.malaymail.com/news/malaysia/2021/05/22/mof-announces-additional-rm200m-for-covid-19-fight/1976252 Syed Jaymal
Zahiid 22/5/21).
4
Suhaidi, N. 2021. Businesses faced closure by October, The Malaysian Reserve. (https://themalaysianreserve.com/2021/07/08/580000-
businesses-face-closure-by-october/ Nurul Suhaidi 8/7/21).
5
Gamal, A. A. M, Qadasi, A. A., Noor, M. A., Rambeli, N., and Viswanathan, K. 2021. The impact of COVID-19 on the Malaysian stock
market: Evidence from an autoregressive distributed lag bound testing approach. The Journal of Asian Finance, Economics and Business,
8(7):1-9.
6
Mung, T.S. 2021. Malaysian equity market continues struggle amid high Covid-19 cases and political uncertainty. The Edge Market.
(https://www.theedgemarkets.com/article/malaysian-equity-market-continues-struggle-amid-high-covid19-cases-and-political-uncertainty
Tan Siew Mung 28/7/21).
177
Following Randal7, this study employed the paired sample techniques to test the relationship between
the pre and post reorganization firms. 36 observations for pre and post reorganization firms were used in this
analysis to concur with the sample of post reorganization firms, which means that only 36 firms, with pre and
post observations, were selected for the analysis. The observation for both samples were limited to one year
prior to the admission into the PN17 classification and one year after graduation for the same classification. This
is to ensure proximities of the data (Year 1) to the PN17 core (Year 0) in order to avoid any “noise” due to the
distance between the origin and the core.
Capital structures of each firms were used to represent the pre and post reorganizations value. There are
three models that were used in this study as proxies to the capital structures, which are;
i. Total Loan
ii. Total Debt
iii. Total Capital
Total Loan is defined as Total Liability over Total Assets while Total Debt is defined as Total Debt over Total
Assets. Total Capital is represented by Total Debt over Total Capital. Debt is distinguished from liabilities as
it only consist of long term liabilities.
4.0 Result
The result of the T-test paired statistics are provided as below for the H0: No similarities between pre and post
reorganization capital structure.
4.1 The Total Loan Model
Table 1: Total Loan Model

Pre & Post
N 36
Correlation 0.559
Sig. 0.000
T 1.192
Df 35
Sig 0.241
Pre Post
N 36 36
Mean 0.9083 0.7121
Std. dev. 1.1821 0.5410
Std. error 0.1970 0.091
The result indicated that there are no significant similarities between the pre and post reorganization firms
capital structures as indicated by its p-values of 0.241.
4.2 The Total Debt Model
Table 2: Total Debt Model

Pre & Post
N 31
Correlation 0.064
Sig. 0.731
T -4.206
Df 30
Sig 0.000
Pre Post
N 31 31
Mean 0.085 28.114
Std. dev. 0.141 37.114
Std. error 0.0253 6.6655
The result indicated that there are similarities between the pre and post reorganization model thus rejecting the
hypothesis.
7
Heron, R. A., Lie, E., and Rodgers, K. J. 2009. Financial restructuring in fresh‐start Chapter 11 reorganizations. Financial Management,
38(4):727-745.
178
4.3 The Total Capital Model
Table 3: Total Capital Model

Pre & Post
N 31
Correlation 0.574
Sig. 0.001
T -2.906
df 30
Sig 0.007
Pre Post
N 31 31
Mean 0.1167 53.305
Std. dev. 0.1742 102.008
Std. error 0.0313 18.3231
The result indicated that there are no significant relationship between pre and post capital structures of the
reorganized firms.
From the findings above we can conclude that:
i. The p-values indicated, except for Total Debt Model, there are no similarities between the pre-
reorganization and post reorganization capital structures.
ii. The means for the pre-reorganization and post reorganization samples differ significantly for the Total Debt
and Total Capital models, suggesting the non-reliability of both models.
179
Track: Accounting
Paper ID: 026-020
THE INFLUENCE OF FAMILY FIRMS ON IMPRESSION MANAGEMENT AND THE MEDIATING

ROLE OF CORPORATE GOVERNANCE
Dian Indah Hayati1, Mohd Fairuz Md Salleh1, and Azlina Ahmad1
1.0 Introduction
Based on previous literature, this study proposes further research more specifically about family firms and
corporate governance practices in Indonesian companies to better understand the diversity of cross-national
governance and the meaning and consequences in countries with families as controlling shareholders. Therefore,
this study is interested in research whether the family firm and corporate governance affect the impression
management practice in the chairman’s statement of Indonesia public listed companies. Over the last decade, the
issue about accounting scandals that resulted in the collapse of large corporations and the stock market crash have
caused widespread insecurity and worries on world financial markets. One of the factors suspected of causing the
problem is the company's inaccurate disclosure practices and inadequate governance practices (Ntim &
Soobaroyen, 2013; Chang et al., 2015). The lack of rules for the narrative section in the annual report gives an
opportunity for managers in doing self-serving bias. Nègre, Verdier, Cho, & Patten, (2017) stated when the
company is faced with negativity the management will use Impression Management (IM) as a strategy to improve
market value. IM is an attempt by rational managers to control and influence the impression conveyed to the users
of accounting information in process decisions making (Clatworthy & Jones, 2006; Merkl-davies & Brennan,
2007; Merkl‐Davies et al., 2011). The problem regarding IM is strengthened by some previous studies which
found IM is associated with managers' response to economic incentives, which means the managers may exploit
company information (Merkl-davies & Brennan, 2007; Hadro, Klimczak, & Pauka, 2017; and Melloni, 2016).
From the agency theory perspective, Indonesia as one of the publicly listed companies in the emerging market
that have ownership structure (OS) highly concentrated, around 90% of companies are owned by families (Forbes;
Diyanti et al., 2015; Utama et al., 2017). However, some previous study found that CG in Indonesia are still poorer
and the corporate reporting has low transparency than others countries in Asia which created the conflict and
opportunities arise for the impression management (Bambang & Hermawan, 2012; Darmadi & Sodikin, 2013;
Utama et al., 2017; Dumitru et al., 2017).
2.0 Methods
This research uses the data panel design, where the type of this research design usually has more than one case
over time. The object population of this research is the family controlling company that listed on the Indonesian
Stock Exchange (BEI) exclude financial company because of the differences in regulation. The results obtained
from the selected companies were 158 with the total of samples was 474 companies during the year of research
2015-2017.
2.1 Measure of Family Firm

This study is more focused on the characteristic of the family business in Indonesia because almost 90 percent of
public companies in Indonesia are ultimately controlled by family (Forbes; Diyanti et al., 2015; Utama et al.,
2017). That is the way this study looking into the percentage of the total share held by the group/individual family.
2.2 Measure of Corporate Governance

This research uses the structure of the board of directors and its delegated committees as a proxy that has been
identified by Chen et al., (2006), García Osma & Guillamón-Saorín, (2011) & Darmadi & Sodikin, (2013). In
particular, this research considers with measurement:
IC = Percentage of the company commissioners held by an independent

IA = The year number, a dummy variable with the limit in 3 years
EA = A Dummy variable, whether the company is a public audit by one of the big 4 accounting firms
DUAL = CEO duality, if the commissioner and board director have a relationship
EDU = Board background of education, if the commissioner has a financial/ economic background education
This study calculates a composite score (TotGov) that aggregates five corporate governance indicators.
180
2.3 Measure of Impression Management

This research adapted measurement for IM practice from Brennan, Guillamon-Saorin, & Pierce, (2009); Merkl-
Davies & Brennan, (2014); and Hadro. et al., (2017) as follows:
Readability = Gunning fog

Thematic = Counting number of words, positive & negative keyword
Attribution = Manual coding of internal/ external causes
The impression management bias score is obtained through comprises the difference between the total
composite impression management scores for all positive keywords/ statements amounts minus the total
composite impression management score for all negative keywords/ statements/ quantitative amounts, divided by
the total composite impression management scores for all keywords/ statements/ quantitative amounts.
The result indicates that, on average, the impression management bias score in Indonesian companies is +0.55
(more than 50 percent of the maximum possible positive bias +1.0). In terms of the family firm in Indonesia,
companies mean there is still family in a public listed company that held majority share up to 99 percent, and it
shows that the average CG score of Indonesian listed companies is relatively poorer.
Statistics
IM CG FF SIZE ROA DAR
Valid 474 474 474 474 474 474
N
Missing 0 0 0 0 0 0
Mean .5535 .3946 .5485 28.5140 .0381 .4842
Median .5700 .4000 .5500 28.6250 .0400 .5100
Std. Deviation .20920 .17713 .20657 1.68753 .10467 .22250
Minimum .02 .07 .09 18.88 -.73 .01
Maximum 1.00 .90 .99 32.15 .49 1.73
The result indicates that the chairman’s statement is a potential place where impression management
strategies are implemented. This study also found that most Indonesian PLCs perform poor CG practices.
Indonesian companies have highly concentrated ownership and are largely controlled by the family. This study
found that family firm and impression management negatively related, it is different from the hypotheses where
it believes the family ownership would align with the management of the company in doing impression
management practice.

This research is the first to examine the effect of family ownership directly on impression management practice
in the chairman statement on the narrative section of the annual report. This type of research helps to guide and
enrich investor information about potential deception how companies use impression management in the
Indonesian company’s disclosure, and the extent of ownership structure and corporate governance involving in
that practice. The results of this study are also useful for regulatory agencies to formulate their policies.
Keyword: Chairman’s statement, corporate governance, family firm, impression management.
181
Track: Accounting
Paper ID: 027-021
THE ISSUES, CHALLENGES AND RECOMMENDATIONS IN THE PRACTICE OF

MUSHARAKAH MUTANAQISAH
Syaima' Adznan1
1.0 Introduction
Islamic finance continues to vigorous growth over the past decades, with the size of the global Islamic financial
assets expected to reach USD 3.4 trillion by the end of 2018. These stems are contributed by the growth of Islamic
Financial institutions and the strong demand for a variety of Shari’ah-compliant products from both Muslims and
non-Muslims around the globe. Despite its promising progress, Islamic finance faced several issues and challenges
range from the claimed that it is merely resembling the conventional practice to their contribution to society in
term of promoting equality, sustainability and growth. It is indeed not an easy task as the industry is still consider
nascent, hence needs to continuously carve its own branding at the same time compete in the current competitive
market.
Musharakah or partnership-based contract is among the mainstay of Islamic finance during the classical
times - hardly play any role in current Islamic banking despite the fact that Islamic finance is all about risk sharing
through profit and loss. It can be defined as an association between two or more parties whom agree to form a
joint partnership and share the profits and losses based on pre-determined ratio. It is based on the trust in human
morality where it truly reflects the Shari’ah values; at the same time, it promotes the risk sharing concepts by
ensuring all transactions need to be backed by real economy or a tangible asset. Deemed as a better alternative to
Bay Bithaman Ajil (BBA – sale of goods on a deferred payment basis), Musharakah Mutanaqisah (MM) is a
hybrid financing product which was innovatively introduced in the market during the late 19’s to match or even
offer better competitive package to Islamic banks’ customers.
The MM or Diminishing Musharakah financing facility is prominently offer for asset acquisitions or
refinancing completed landed or non-landed assets comprises three contracts which are Musharakah (partnership),
Ijarah (leasing) and Bay’(sales). It was well accepted as it is an equity-based financing with risk-sharing attributes
embedded which purely reflect the objectives of Shari’ah. While theoretically MM offer an excellent alternative
financing tool (Ng, 2009; Haneef et al., 2011; Asadov et al., 2018) but over the years, it was found that Islamic
banks still remain unwilling or not yet ready to take up the challenge to offer MM with its customers. Further,
there is considerable ambiguity in the nature and characteristics of MM in the actual practice of Islamic banks
including some uncertainties as to its operation (Sori, 2016; Baber, 2017; Kevin et al., 2017; Asadov et al. 2018)
and legal validity (Ng 2009; Haneef et al., 2011). The paper aims to examine the issues and challenges arising
from the current MM contract offered by Islamic banks, and to suggest a possible solution to the main issues,
which will also hopefully reduce other challenges faced. The following research objectives are formulated to
address these issues:
1. To provide an overview of MM and the current MM practice by Islamic banks in Malaysia.

2. To discuss several relevant issues and challenges related to MM practice by Islamic banks
3. To highlights relevant issues and challenges of MM in practice from accounting and disclosure perspectives
4. To propose a solution and offer some recommendations to the main issues.
The remaining sections discusses the basic features of MM financing, MM financing from the Shari’ah
perspective and actual practice of MM financing by Islamic banks in Malaysia. Next section highlights the relevant
issues and challenges faced in regard to the MM application by Islamic bank. Subsequently, several
recommendations are proposed to further enhance the MM practice and concludes with a summary.
2.0 Method
For the purpose of this study, data were collected based on 2016 annual reports and relevant MM financing
documents of Islamic banks in Malaysia. To date, there are limited number of Islamic banks in Malaysia that offer
MM financing. Some of MM financing that are available in the market such as, MM Term Financing-i by Affin
Islamic Bank, KFH MM Project Financing-i by Kuwait Finance House Malaysia and Maybank MM Term
Financing-i by Maybank Islamic bank. Hence the sample in this study includes these three banks namely Affin
Islamic Bank, KFH Islamic Bank Malaysia and Maybank Islamic Bank. To ensure completeness and consistency,
the data were arranged and organized according to issues in Islamic finance and subsequently, the issues were
calibrated to the theory and relevant opinion by the prominent Islamic finance scholars.
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3.0 Suggested Solution

Islamic banks are often criticised for being fixated on the relatively risk-free credit related modes of finance or
even they would offer a risk sharing mode, the risk is in actual fact is transfer to the customer. The pertinent
question is: Are Islamic banks unwilling or unable to get into Musharakah arrangement? With the nature of the
bank as the financial intermediary and its mandatory requirements to abide by Basel III, the answer is it is a
challenge for Islamic banks to offer pure Musharakah, what’s more the MM financing. Despite the fact that Islamic
finance is all about risk sharing through equity participation in joint ventures where the risks are shared and profits
are fairly distributed. However, it would be unfair to put the full blame on the Islamic bank given the need to
coexistence, at the same time compete with the dual banking system practiced in Malaysia. Taking into
consideration all these matters, the author would like to proposed for the Islamic banks to establish a platform that
able to facilitate and focus just on risk sharing Musharakah mode of financing including the MM.
This platform can be separately or wholly owned by an independent appointed subsidiary which can be
a consortium of several Islamic Banks in Malaysia. Modelling like an Investment Account Platform (IAP) , this
innovative platform can be name as Housing Partnership Network (HPN) where it enables channelling funds from
investors to finance viable home projects and related development ventures. This network can be new innovative
medium for Shari’ah-compliant investments and fund-raising initiatives related to housing and other development
projects. Expected to be backed by Bank Negara Malaysia and guaranteed by Malaysia Government through its
government-related housing projects (an example in Malaysia can be the Rumah Rakyat 1Malaysia) will act as a
strategic initiative of the Islamic finance industry to promote risk sharing to viable real economic activities.
Through this network platform, Islamic banks will facilitate matching of investments with the identified housing
projects and reputable development ventures. Potential investors would able to choose a broad range of economic
activity based on their own selection and diversify their investment portfolio with exposures to various types of
housing projects and industries that yield potential stable and higher returns. Several tax initiatives or appropriate
benefits should also be in place. to support this initiative. For Islamic banks, this will definitely provide advance
value-based intermediation by creating a new exclusive source of income and funding in which it opens up
opportunity for the business owners to get fund for their activities, with more competitive financing terms.
Diagram 1: Illustration on the Proposal for Housing Partnership Network (HPN), a Joint-initiative of
Selected Islamic Banks with Bank Negara Malaysia and the Government of Malaysia.
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Track: Accounting
Paper ID: 060-053
PROFIT AND INSTITUTIONALISATION IN CASH-RICH AND POLITICAL BUILDING

ORGANISATIONS
Hasri Mustafa1
Yunus Social Business Centre, School of Business and Economics, Universiti Putra Malaysia, Malaysia1.
1.0 Introduction
“KUMPULAN once had 14 listed companies. It was a huge group. Each listed company might have had 10 to 15
companies which were not listed, for e.g. highway, property, banking operations etc. In fact, KUMPULAN’s
activities start at the border with Singapore. When you cross the border (from Singapore) you’ll see ‘Link2’, a
gateway to Malaysia. When you have passed that, you’ll then see ‘north south-expressway’. After reaching
Seremban, you’ll see ‘Quality World’, and after that ‘Bukit Jalil Stadium’ at Kuala Lumpur, which was presented
by UNITED to the government. All of these belong to the UNITED and KUMPULAN group. Even if you don’t
follow the road, you still use us; the ‘1M train’ or the ‘1Coach’ and ‘1Liner’ buses go everywhere in Malaysia.
You can reach the top of the northern region using these infrastructures and of course you see us everywhere. We
are very huge group.”
These remarks were made by a Senior General Manager of RCARE, in his office in his capacity as a Head of
Corporate Finance Department. From the institutionalised form of a commercial organisation, the remarks are
referred normally in the formation of integrated social systems which “are like buildings that are at every moment
constantly being reconstructed by the very bricks that compose them” (Giddens, 1993, p. 12). UNITED and
KUMPULAN group such as 1M train, 1Coach, and 1Liner, as mentioned, exist as a group connected to each other
in the process of becoming incorporated within modern industrial states. His claims “we are very huge group” are
the expressions of class domination, reflecting the growth of their business, the accumulation of the capital and
the building up of the profit.
This sort of growth view would tempt one to expect that each company in the group, at least, through
integrated production lines, has reached the same form economic condition. However, in this view, the “huge
size” remark was not so for the department’s physical environment. Just three steps from the door to the right sat
the Senior General Manager’s Secretary. It was obviously, as the Secretary told, “small and crowded” with no
partition to shield her work. The others – the Senior Manager, Manager, Senior Executive, Executive, Supervisor
and Clerk – had the same type of divider, each differing in size and all very close to each other. Next to the front
door was a large wall cabinet used to keep files, mostly debit notes, credit notes and sales vouchers. The
department was cramped with 18 staff although according to the department chart provided by a Senior Executive
Human Resource in the Staff Development & Employee Relations Unit, the number was 22. Two of the staff,
both from the Procurement Unit, were placed in the Human Resource & Admin Department instead.
What is the relation between the “huge group” companies and the Senior General Manager’s company?
Why a single word of RCARE was not found in his above remarks? His thought certainly has triggered a number
of queries on the part of profit and profitability. Could it be an indication that RCARE may suggest possibilities
of answering the “why” question? Many clarify that profit is understood as a capacity for organisations to
introduce new product, new market and new strategy, and as such profit acts as an acceptable accounting measure
that is often theorised out with the expansion and restriction of capital and the organisations (Rajakal et al., 2021).
Since in general a size of the company is used as a proxy for the company’s expansion and recognition
environment (Ibhagui and Olokoyo, 2018; Yang et al., 2020), a study of RCARE is more than an aggregative
classification for grouping profit, but a substantive theoretical notion of profit in its own right. In other words,
RCARE helps to clarify profit as the complex of meanings that allow us to comprehend human actions. Although
UNITED and KUMPULAN group are the “languages” in which past events are evaluated, future circumstances
are anticipated, and plans of actions are formulated, RCARE, as a small firm, is very entrepreneurial and we do
not know much about what RCARE struggle with. The story of a small firm among a group of corporate “elitism”
have often not received much attention in the literature.
Accountants typically depict profit as a causal mechanism rather than as a means of understanding
meaningful institutionalisation between organisations. Profit usually appears in their model as facts that are strictly
dictated by the measurable discrepancy between cost and revenue (Lavoie, 2015). Profit in their interpretations is
built from a general theory of human action which is arrived at the maximizing idea on two levels in the end: “the
individual choice level, where what is maximised is called utility, and the market level, where what is maximised
is wealth” (ibid, p. 53). The study of profit in this paper, in order to explain the struggle, is from a background of
discursive practices, from the notion of cultural interpretation (see Geertz, 1973). The interpretation used in the
184
paper is based on the view that profit is not measured, but “read”. UNITED and KUMPULAN group in one side,
and RCARE in the other side, are seen as struggling with their territorial cultural characteristics and identities,
and are vary quite widely although the tendency to desire profit for one’s commitments seems practically
universal. The observation on the latter’s physical departmental and employee structures hence functions as a
fundamental point of departure in understanding the territorial profit building practices. RCARE, in this study, is
an arena to study a conflicting notion of profit practices, since the distinctive features of a culture are what are
interesting, not the generalities they have in common (Geertz, 1983, p. 43). Contradiction and inconsistency in
RCARE’s are used to develop an understanding to the study of profit that can clarify rather than obscure the
political processes involved in the normative regulation of institutionalisation.
As observed, in a context of political institutionalisation of the huge group of organisations, some found
key performance indicator like profit is read from the contributions earnings of individual products and processes
as a result of facing institutional pressures (Yazdifar et al., 2008; Aguilera and Crespi-Cladera, 2016). Although,
a “profit is a concept linked to the control of the efficiency and effectiveness of the firm both as a whole and as a
network of responsibilities centres” (Lukka, 1990, p. 248), the parent company’s rules and systems may not be
the contributor. Yazdifar et al. (2008), for example, evidence Omega’s systems had to meet the expectations and
stipulations of the parent company, even if this meant installing unsuitable systems. Aguilera and Crespi-Cladera
(2016), on the other hand, find the convergence of corporate governance systems has been in the agenda of
international regulatory organisations. Argued them, “soft regulation based on governance guidelines endorsed
by individual companies and monitored by other organisations are likely to be effective vis a vis hard regulation
where firms seek for loopholes” (Aguilera and Crespi-Cladera, 2016, p. 54). As a result, Sikka warns, “the very
concepts and categories of accounting which supposedly help businesses to control costs, promote competition,
profits and efficiency, also facilitate inequitable distribution of income and wealth” (2015, p. 47).
Hence, this paper focuses to understand the boundaries of profitability from a cultural dimension specific
to RCARE case with UNITED and KUMPULAN group. This paper agrees while individual organisation and
institutions are key participants in the accumulation of profit that took place in the sphere of the megacorporation
(Aguilera and Crespi-Cladera, 2016; Amernic, and Craig, 2017; Craig and Amernic, 2004), each has defined profit
as conflicts in shaping the current trajectories of the industrialist societies. Through historical accounts and
ethnographic presence of the author, the paper employs Geertz’s notion of cultural interpretation (1973) to discuss
the struggles of RCARE and its manager and non-manager staff to a social order in which divisions of profit are
allocated for the purpose of maintaining the industrial hegemony of UNITED and KUMPULAN group.
3.0 Conclusion
Profitability in general can be interpreted as motivations for the corporate sustainability. Profit may shape the
concrete design and implementation of sustainability management practices since according to contractual theory,
high-performing companies had a wide range of training and development programs for employees. High-
performing companies also are associated with technological advances and innovation. A study of Factors
Affecting Profitability in Malaysia by Alarussi and Alhaderi (2018) supports the resource-based theory claims
that as the size of the company gets bigger, it is easier for it to access more financial resources which leads to
lower cost of capital and higher profit.
The above findings are only half-truth on which the notion of profit rests. Profit defined with respect to
sustainability of an organisation from a context of political institutionalisation of the huge group of organisations
exposes the variation. Profit, in this paper, in the forms of “network of contract”, “debt financing”, “cash” and
“information systems”, does not foster a character that endorses possession and recognition. As illustrated, at
RCARE profit is defined as becoming property metaphorically caught as “contracts” and “debts” rather than
privilege. As such, the profit has produced a form of “cash” control imposed on employees, and also on employee
promotion and investment on “information systems”.
The reading of profit in the name of culture is frequently challenging. According to Geertz, “culture
analysis is intrinsically incomplete. And, worse than that, the more deeply it goes the less complete it is” (1973,
p. 29). Added Geertz (1973), “the nature of the distinction between culture and social system is brought out more
clearly when one considers the contrasting sorts of integration characteristics of each of them” (p. 145). This view
of contrast (in a special frame of mind) is a model of “reality” (ibid). It is what this paper intends to do. What is
stressed as “P” for profit is not to endorse, but to contrast the “cash” with “debts”, and “the network of contract”
with “information systems”. These contrast variables explain the institutions of RCARE in UNITED and
KUMPULAN group has real consequences both morally and strategically, and invites us to recognise that profit,
to a not insignificant degree, appears to be theoretically deceiving.
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Track: Enterprise Risk Management

Paper ID: 061-089
DOES THE USE OF HEDGING INSTRUMENTS REDUCE THE EXCHANGE RATE EXPOSURE OF
INDONESIAN COMPANIES?
Lidya Devina1 and Zuliani Dalimunthe1
Universitas Indonesia, Faculty of Economics and Business, Depok, 16424, Indonesia 1.
1.0 Introduction
The fluctuations in the exchange rate can cause market uncertainty, volatility in profits, increased risk, inflation
uncertainty, negative trade balance, and impact on production and transaction costs. 1 Exposure to exchange rates
is the uncertainty caused by unpredictable exchange rate movements between currencies in each country. For
multinational companies with subsidiaries in foreign countries, exchange rate movements can adversely affect
many contractual transactions.2
Emerging markets in Asia Pacific countries have a higher exposure to foreign exchange risks than
developed markets. Specifically, the Indonesian stock market is highly exposed to the rupiah/dollar exchange rate.
Thorbecke (2020)3 stated that a 1% depreciation of the rupiah would lead to a 0.91% decline in Indonesian stock
market yields. Therefore, managers need to understand risk management techniques that can reduce the variability
of a company's cash flows from overseas operations due to fluctuations in foreign exchange rates. Foreign
exchange hedging is an effort to minimize the risk of exposure to foreign exchange.
This study investigates empirical evidence of the effect of using derivative instruments for non-financial
companies listed on the Indonesia Stock Exchange. In previous studies, foreign exchange exposure usually is
estimated by the slope coefficient resulting from the regression of stock returns on exchange rate changes. This
study contributes novelty in the form of a new measurement of exchange rate exposure, which uses changes in
the value of cash flows due to changes in foreign exchange rates. According to Bartram (2008) 4, there are
advantages to using cash flow as a proxy for exposure to exchange rate risk because the estimation of the effect
of exchange rate risk on the company's cash flows does not depend on the perceptions and market participants, as
well as the understanding of market participants on the relationship of exchange rate risk for companies. The value
of changes in cash flows combines cash inflows and cash outflows. With cash inflows and outflows, exposure to
exchange rate risk can cancel each other out (cancel out).
2.0 Method
The model used in this study is as follows:
FX Cash Flowi = α0 + α1DHedgei + α2Leveragei + α3BMi + α4CRi + α5ATOi + α6Sizei
The main independent variable in this study is the use of foreign exchange derivatives. In this study, the
use of foreign currency derivatives is a dummy variable which is assigned a value of 1 if the company uses
derivatives as an instrument to hedge against foreign currency and 0 if the company does not use derivatives as
hedging. Others independent variables are firm’s leverage (debt to equity ratio), book to market ratio, company’s
liquidity (current ratio) and asset turnover ratio. We also use company’s size as the control variable.
This study uses data from 178 non-financial companies listed on the Indonesian stock exchange, using
data from 2017-2019. This data was obtained from Thomson Reuters Datastream. Data processing is carried out
using multiple regression method.
3.0 Result
The following analysis is a regression test. After testing the classical assumptions, we found that the research
model had heteroscedasticity problems. Therefore, we use a robust standard error modified to overcome
heteroscedasticity according to the recommendations The following are the results of the regression test using
OLS standard error robust:
1
Juhro, S. M. and Phan, D. H. B. 2018. Can economic policy uncertainty predict exchange rate and its volatility? Evidence from ASEAN
countries. Buletin Ekonomi Moneter Dan Perbankan, 21(2):251-268.
2
Prasad, K. and Suprabha, K. R. 2015. Measurement of exchange rate exposure: Capital market approach versus cash flow approach. Procedia
Economics and Finance, 25:394-399.
3
Thorbecke, W. 2020. The weak rupiah: Catching the tailwinds and avoiding the shoals. Journal of Social and Economic Development, 1-19.
4
Bartram, S. M. 2008. What lies beneath: Foreign exchange rate exposure, hedging and cash flows. Journal of Banking & Finance, 32(8):1508-
1521.
186
Table 1: Regression Results

Variables Coef. Std. Err. P-value
Hedge 0,2042775 0,2808258 0,468
LNTA 1,233596 0,1094144 0,000***
Lev 2,386385 0,9352547 0,012**
BM -0,0742556 0,0981662 0,450
CR 0,4160051 0,0879054 0,000**
ATO 0,9470589 0,2868234 0,001***
Number of Obs. 178
R-Square 0,5119
Prob > chi2 0
Explanation: * p<0.1, ** p<0.05, and ***
p<0.01
The most important finding of this research is that there is no evidence that hedging instruments reduce
the company's exposure to exchange rate fluctuations. There is no difference in firms' cash flows due to changes
in exchange rates for companies that use hedging and those that do not. On the other side, the regression testing
shows that most independent variables significantly impact the company's cash flow to foreign exchange
fluctuation. The regression test results show an R-square value of 51.19%, which means that the variation in the
model can explain the dependent variable of 51.19%.

The implication of this study is that managers may avoid to implement a hedging strategy or to use a natural hedge
against foreign exchange exposure. Muiru et al. (2018)5 defines natural hedging as a strategy used by companies
to minimize exchange rate risk by using different financial instruments that tend to cancel each other out. Natural
hedging techniques consist of several types, such as currency diversification, matching cost and revenue, currency
invoicing and price adjustment (invoice currency and price adjustment), netting currency cash flows, and leading
and lagging. Companies can transfer, share, or diversify their foreign exchange risk by selecting a currency of
invoice. Hedging with foreign debt (foreign currency debt hedge) and operational hedge (operational hedge) are
also included in natural hedging. The existence of a hedging effect of cash inflows and outflows is called a natural
hedge. Effective corporate hedges are consistent with total cash flows that are largely unaffected by foreign
currency movements.
5
Muiru, M., Kisaka, S. and Kalui, F., 2018. Effect of foreign exchange risk hedging techniques on financial performance of listed firms in
Kenya. International Journal of Accounting and Financial Reporting, 8(3), pp.156-173.
187
Track: Accounting
Paper ID: 079-074
FIRM AND BOARD SPECIFIC VARIABLES IMPACT ON FINANCIAL PERFORMANCE: A

COMPARISON BETWEEN GLCs AND NON-GLCs
Poornachandran Velayudhan1, Ervina Alfan1, and Azlina Abdul Jalil1
Faculty of Business and Accountancy, University of Malaya, Malaysia1.
1.0 Introduction
The Government-Linked Companies (GLCs) played a significant role in Malaysian economic landscape.
Previously established as State-Owned Enterprises (SOEs), the enterprises are set up with the socio-economic
objectives propagated through the implementation of the New Economic Policy (NEP). As the country was badly
hit by the recession in the mid-1980s, the SOEs were then privatized and turned into entities that are subjected
under the control and/or ownership of the government; hence these entities are more commonly known as the
GLCs. Since the GLCs were formed, a number of studies had been conducted to ascertain the GLCs performance,
and the results are mixed. Due to the importance of the GLCs in the Malaysian economy, it is imperative to
explore the financial performance of the entities and comparing this against the non-GLCs companies. In this
regard, it is expected that the governance mechanisms propagated by the Agency Theory would theoretically
improve the performance of the entities, GLCs or non-GLCs alike. This aspect is further explored in this study.
2.0 Methods
This study is undertaken by taking the sample of 17 GLC companies identified in the GLC Transformation
Programme report. These GLCs are then matched with the Non-GLCs which operates in the same industry with
relatively similar size of Total Assets. Accordingly, the data for the GLCs and Non-GLCs were collected for a
period of 10 years, i.e., from 2006 to 2015. The financial performance of the GLCs and the Non-GLCs are
measured using both book Return on Asset (ROA) and Return on Equity (ROE) and market performance
measurement i.e., Tobin’s q. In this study, a multiple regression is conducted to analyse the which of the variables
are significant in predicting the financial performance.
The findings of this study demonstrate that the in terms of financial performance, the Non-GLCs generally fare
better with better financial ratios, as well as better financial and market performances in compars. Meanwhile,
the GLCs apparently reported much larger Total Assets and slightly larger board size. The results also reveal that
the GLCs had a better mix of board members. The multiple regression shows that the firm specific variables;
namely the Total Asset, Total Debt Ratio and Liquidity Ratio were mostly significant across the sample. The
results also show that the Board Size and the Ratio of Female Directors are significant in predicting the financial
performance. In the light of these findings, the paper makes some suggestions for the GLCs to improve their
financial and market performance.
Keywords: Financial Performance, Malaysia, GLCs, Non-GLCs, Corporate Governance
188

Paper ID: 086-082
DIGITAL FINANCIAL LITERACY AMONG SME ENTREPRENEURS IN A DEVELOPING

ECONOMY
Shayuti binti Mohamed Adnan1 and Hasniyati binti Hamzah2
Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, Malaysia1, Faculty
of Built Environment, Universiti Malaya, Malaysia2.
1.0 Introduction
Entrepreneurship is defined as developing a new business by searching for chances of improvement, then taking
action to improve and exploit those opportunities (Subhashree, 2020). Within the backdrop of Industrial
Revolution 4.0, entrepreneurs have leveraged on digitalisation to open up new business opportunities which has
led to economic growth. Using technology as the new business platform, otherwise known as the digital platform,
entrepreneurs are required to equip themselves with knowledge in digital financial tools. Entrepreneurs’ financial
literacy, i.e. the level of awareness and knowledge in financial products and services, is vital in navigating various
digital financial services, i.e. far-reaching technology-enabled financial assistance from a broad range of providers
to an extensive category of recipients. Entrepreneurs who managed to adapt to the new way of doing business and
attain the required level of financial literacy may be the game changer in the country’s economy. As such, the
entrepreneurial spirit has the potential to affect individual endeavours and eventually contribute to the country’s
economic growth.
Small Medium Enterprises (SMEs) are non–subsidiary and independent firms with employees below a
certain number. The maximum number of employees differ across countries; for instance, it is 250 employees in
the European Union whilst it is 500 employees in the United States. In Malaysia, the SME Corporation defines
SME as having a sales turnover of less than RM50 million per year manufacturing (RM20 million for service)
and less than 200 employees. Specifically, small firms have fewer than 50 employees while micro-enterprise has
10 or less employees. The SME sector is one of the major contributors to any country’s national and regional
economic development. This recognition is due to the several contributions of SME in socio-economics such as
creating jobs, promoting exports and encouraging people to become a successful entrepreneur. In Malaysia, the
Malaysia Economy Digital Blueprint envisions that by 2025, there will be 875,000 micro, small and medium
enterprises (MSMEs) adopting eCommerce for their business (EPU, 2020). Thus, the issue of digitalisation within
SMEs is imperative, particularly the adoption of the digital finance by the entrepreneur running the SMEs.
Local factors such as local economy and culture may moderate the digital financial literacy across
different states in Malaysia. This study is focused on the state of Terengganu, which can be considered a less
developed or an emerging economy in Malaysia, with GDP growth of -5.7% in 2020 (Department of Statistics,
Malaysia). In order to achieve the eCommerce target for SMEs in Malaysia as stated in the Economy Digital
Blueprint, it is vital to examine digital financial literacy and digital finance usage in all states in Malaysia. This
study selects Terengganu as the study area to provide an insight into the digital financial literacy of SME
entrepreneurs in an emerging local economy. In this study, the SME entrepreneurs are taken to be owners and/or
managers of the company. Three factors motivated this research. Firstly, there is a need to assess the awareness
levels of SME entrepreneurs in Terengganu of digital finance’s benefits. Secondly, the research aims to attain
insights into whether the SMEs in Terengganu are digital platform ready in terms of digital finance usage. Thirdly,
the research results can contribute to policy changes. Thus, this research aims to examine whether SMEs in
Terengganu is ready for the digital economy era in terms of digital finance knowledge and usage. Specifically,
this paper has two objectives: first is to assess the level of digital finance usage among SMEs in Terengganu and
second is to examine their levels of digital financial literacy. The results can inform on specific and useful training
programmes for SME entrepreneurs in Terengganu to enhance the digital finance usage amongst these
entrepreneurs, move the state’s e-commerce in the right direction and ultimately will bring the state at par with
other states with higher GDP than Terengganu. This paper is structured as follows. Following this introduction
section, the literature review section will elaborate on the definitions of pertinent concepts i.e., digital finance and
digital literacy. The context of this paper will be provided before proceeding with the research methodology,
following which will be the results and discussion. Finally, some policy recommendations will be made at the
conclusion section so as to aid decision-makers on how to augment both the digital financial literacy and digital
finance usage among SME entrepreneurs.
189
2.0 Method
2.1 Sampling Frame

From the above, it is gathered that 29,324 of 907,065 SMEs in existence are from Terengganu. Data from the
YPU website documented a total of 4,483 entrepreneurs in Terengganu (https://ypu.com.my). The research
sampled 3% of the entrepreneurs’ population in Terengganu of this data, resulting in 135 respondents. Based on
online sample selection calculator website, this sample resulted in 9.14 confidence interval with a 95% confidence
level. The sample was obtained based on convenience sampling of SME entrepreneurs fulfilling the criteria of
being a business owner having at least one business in Terengganu with the number of employees below 200 per
the SME Corp definition. Turnover was not expressly stated as the criteria, as most of the SMEs will not have
achieved the set ceiling. Potential participants were personally approached and once agreed, the respondents
received a Google Form link to the online questionnaire. The questionnaire distributed during the first movement
control order (MCO) in the year 2020.
2.2 The Questionnaire

The questionnaire consists of two sections: Section A asks questions on demographic data, and Section B solicits
information on digital financial literacy. Section A obtained data on profiles of directors (age, gender, education
level, years of business experience and knowledge in information technology in their discipline as their
educational background) and characteristics of the company (the nature of the business, the industry, age of the
business and size in terms of number of employees and sales volume per annum). In Section B, questions on
digital financial literacy are about knowledge, awareness and user adoption. The participants were asked to rank
their knowledge on certain digital financial applications such as e-wallet, e-banking, cryptocurrency, and the like
in terms of knowledge. For usage, the respondents were asked to rank the level of digital payment and receipt in
their business transactions. Finally, the respondents were asked about the awareness of benefits, risk, rights, and
procedures associated with digital finance applications. The questions used 5-point Likert scale. For digital
financial literacy, the scale was 1 to 5 (1=Very Low, 5=Very High) whilst for digital financial usage, the scale
was 1 to 5 (1=Never, 5=Always). The questionnaire was designed in the Malay language which is the mother
tongue of all respondents commonly used in the state.
2.3 Measurement of Constructs

This research adopted digital financial literacy concept developed by Morgan et al. (2018), which constitutes the
aspects of knowledge (awareness) and adoption. Accordingly, this study measures digital financial literacy based
on two proxies: knowledge (awareness) and digital finance usage. The respondents were asked about learning and
understanding digital finance products or applications, including transactions on payment, receipts, and asset
management. Knowledge was assessed in terms of risk and whether the entrepreneurs were aware of associated
procedures and their rights towards the risk should any issue arise after adopting the digital finance product or
application. There are eight items that measure knowledge and usage of digital finance. Amongst others,
respondents were asked if they are familiar with electronic money transfer, use of mobile wallet, oversea
remittance online, cloud computing, local hosting, peer-to-peer (P2P) computing, cryptocurrency and the risk
associated with digital finance. On the other hand, digital finance awareness consists of 4 items that solicited the
level of agreement or awareness on whether they agree that digital finance is required in a business transaction, if
the use of digital finance can save the business; whether digital transactions can speed up business dealing and if
the company has a control system dealing with the risks of digital financial transactions.
2.4 Reliability
Reliability is defined as the extent to which a scale produces consistent results if measurements were made
repeatedly. Nunnally (1967) recommended a value of 0.5 above as the acceptable levels of reliability coefficient.
The Cronbach’s alpha coefficient of 22 items indicates the α of 0.78, which shows acceptable level of internal
reliability.
3.0 Result
Table 1 summarises results of respondents’ digital financial literacy that used nine proxy variables: Electronic
money transfer (EMT), Online banking (OB), E-wallet (EW), Online money transfer abroad (OMTA), Risk in use
of digital financial transactions (RISK), Cloud computing (CC), Local hosting (LH), Peer-to-peer computing
(P2PC) and Cryptocurrency (CRYP). As mentioned above, evaluation on the level of knowledge is based on the
frequency and mean of the scores of these proxy variables. The frequency results indicate that the respondents
have knowledge concerning digital finance, and the knowledge ranges from moderate to very high. Based on the
frequency mode, most respondents indicated very high knowledge of EMT, compared to knowledge in other
digital finance. At the same time, the mean scores ranged from 2.69 to 4.37, indicating low-moderate to high-very
high levels of knowledge of digital finance among the respondents. Based on the mean values, the highest level
190
of knowledge was recorded for EMT (mean=4.37), which is closely followed by OB (mean=4.32). The level of
knowledge in OB, EW, OMTA and CC can be categorised as high as well with mean values between 3.17 and
3.80. However, the less popularly known digital finance platforms indicated moderate level of knowledge among
the respondents with mean values ranging from 2.69 to 2.77. As for the respondents’ knowledge of risks associated
in digital financial transactions, the mode of 4 and mean of 3.36 reflect a moderate/high level of knowledge.
Table 1: Frequency Data for Level of Digital Financial Literacy

n=135
Knowledge
Digital Financial Knowledge proxies 1 2 3 4 5 Mean
Level
f % f % f % f % f %
Electronic money transfer (EMT) 4 3.0 1 0.7 2 1.5 62 45.9 66 48.9 4.37 Very High
Online banking (OB) 3 2.2 3 2.2 3 2.2 65 48.1 61 45.2 4.32 High
E-wallet (EW) 3 2.2 13 9.6 22 16.3 67 49.6 30 22.2 3.80 High
Online money transfer abroad (OMTA) 13 9.6 20 14.8 23 17.0 61 45.2 18 13.3 3.38 High
Risk in use of digital financial 14 10.4 11 8.1 39 28.9 54 40.0 17 12.6 3.36 High
transactions (RISK)
Cloud computing (CC) 10 7.4 20 14.8 49 36.3 49 36.3 7 5.2 3.17 Moderate/ High
Local hosting (LH) 21 15.6 28 20.7 53 39.3 27 20.0 6 4.4 2.77 Moderate
Peer-to-peer computing (P2PC) 20 14.8 34 25.2 50 37.0 24 17.8 7 5.2 2.73 Moderate
Cryptocurrency (CRYP) 23 17.0 31 23.0 49 36.3 29 21.5 3 2.2 2.69 Moderate
Note: 1=Very Low, 5=Very High
In relation to digital finance usage, respondents were asked to indicate usage in the two main business
transactions: payment and approval. Table 2 depicts the results obtained from the survey on five digital finance
modes viz. Internet banking (IB), Credit/debit card (CDC), Chequebook transfer abroad (CTA) and E-Wallet
(EW), together with Cash. Again, evaluation on the level of usage is based on the frequency and mean of the
scores. The frequency results showed that the level of usage of digital finance being moderate to very high for
payment and very low to very high for acceptance. For both payment and acceptance of digital transaction, IB
was indicated by the frequency scores to have very high level of usage among the respondents. Whilst Cash was
indicated as having a very high level of usage too for payment and acceptance, the mode score of Cash was
approximately half of that indicated for IB. The mean values seem to support the score modes. Firstly, IB attained
the highest mean for both payment (mean=4.47) and acceptance (mean=4.31). Secondly, Cash was also indicated
as having a very high level of usage alongside IB for both payment (mean=3.91) and acceptance (mean=4.04).
For payment, all other digital transaction modes showed moderate to high level of usage. However, E-wallet’s
mode score and mean value were very low for acceptance. This pertinent result signified that the local digital
business ecosystem may not be at par with the rest of Malaysia.
Table 2: Frequency Data for Level of Digital Finance Usage

Company transaction modes n=135
1 2 3 4 5 Mean Usage Level
f % f % f % f % f %
Payment
Internet banking 2 1.5 6 4.4 9 6.7 28 20.7 90 66.7 4.47 Very high
Cash 1 0.7 12 8.9 34 25.2 39 28.9 49 36.3 3.91 Very high
Credit/debit card 14 10.4 24 17.8 23 17.0 40 29.6 34 25.2 3.42 High
Chequebook transfer abroad 21 15.6 31 23.0 36 26.7 25 18.5 22 16.3 2.97 Moderate
E-wallet 42 31.1 26 19.3 35 25.9 16 11.9 16 11.9 2.54 Moderate
Acceptance
Internet banking 3 2.2 7 5.2 16 11.9 28 20.7 81 60.0 4.31 Very high
Cash 4 3.0 14 10.4 25 18.5 36 26.7 59 41.5 4.04 Very high
Chequebook transfer abroad 20 14.8 33 24.4 39 28.9 24 17.8 19 14.1 2.92 Moderate
E-wallet 59 43.7 32 23.7 21 14.8 15 11.1 9 6.7 2.13 Very low
The current trajectory indicates that the era of the digital economy has arrived and was further amplified
by the sudden advent of Covid-19. The literature has shown that digital financial literacy and digital finance usage
are vital in ensuring a sustainable digital business ecosystem, as envisioned by most countries’ digital plans. This
digital culture needs to permeate the SMEs in all locations within the country to take advantage of the borderless
commerce. In the case of Terengganu, which is an emerging economy in Malaysia, the above results were
somewhat encouraging. The levels of both the digital financial literacy and digital finance usage seemed to be
substantial among the respondents. To recapitulate, the respondents indicated moderate to very high levels of
knowledge in all nine digital financial knowledge proxies and moderate to very high levels of usage in all but one
modes of digital finance for payment and acceptance during business transactions. Based on these results, it seems
that most respondents are ready for the implementation of initiatives in the Malaysian Digital Economy Blueprint
(MyDigital).
191

Paper ID: 092-092
RELIGIOSITY AND CAREER CHOICE: A CROSS-COUNTRY AND RELIGION ANALYSIS
Abu Hanifah Ayob1 and Shifa Mohd Nor1
1.0 Introduction
Although conventional wisdom holds that religion is mostly detached from worldly matters, research on the
influence of religion within the field of business nonetheless has been progressing substantially. In the increasingly
secular modern era, most of the global population remains affiliated with a particular religion whilst many
countries continue to embrace religious environment as a social force1. Hence, religion has been found to be a
strong influence on individual behavior including decisions about employment: whether or not to be an
entrepreneur2. This stream of literature improves our understanding that occupational choices can be a
manifestation of religion either as personal beliefs and values 3 or as a macro social factor4.
Despite growing interest, the conceptual and empirical approach of research on this issue is still lacking
in a few respects. Most importantly, the notion of religion is often mixed up with the similar terms of religiosity
or religiousness. The ambiguity that exists about the definitions of these concepts eventually leads to inaccuracy
in the measurement of variable. As a result, contrary findings have emerged from several key studies. For example,
Audrestsch et al. (2013) found that Muslims are more likely to be entrepreneurs in India, but Ayob and Saiyed
(2020) and Zelekha et al. (2014) found otherwise using data from several countries.
While all those works merit acknowledgement, inconsistency in the reported results could be due to the
vague definition and operationalization of religiosity5. Although the majority of prior studies have found that the
teachings of most mainstream religions endorse values favorable to entrepreneurship, the measurement of
religiosity has centered on a single dimension: self-belonging or self-identified religious affiliation to distinguish
religious groups from one another. Unfortunately, this approach neglects heterogeneity in religious practices
among the adherents of a particular religion. In other words, followers of the same religion do not necessarily
practice faith in an identical manner6. Instead, religious affiliation is rarely changed as it is commonly inherited
from the family like ethnicity, but individuals’ level of religiosity is exhibited through their attitudes, behavior,
and values7.
To make progress in our understanding of these issues, we argue, being a member of a specific religious
group does not entirely explain the career decisions of believers. Instead, degree of religious commitment is more
accountable for producing religiously meaningful behavior8. In the present study, we attempt to examine the effect
of religiosity on the likelihood of being self-employed (versus a paid worker), whilst controlling for other
demographic factors. To attain the objective, we use the World Values Survey (WVS) Wave 7 (2017 - 2021) data
obtained from 39,606 working adults in 49 countries. The WVS dataset contains information not only about
religious affiliation but also about the intensity of beliefs and practices.
The main contribution of this study is the multi-dimensional measures of religiosity of devotees across
religions and countries. This approach advances the literature on the influence of religion in entrepreneurial-career
research in several ways. First, we capture religiosity precisely at the individual, rather than the country, level to
support the argument that personal or intrinsically motivated religiosity is more relevant than public religious
practice in modern highly secularized societies9. Second, we consider religiosity to be a multidimensional
construct consisting of Saraglou’s (2011) Big Four religious dimensions: believing, bonding, behaving, and
belonging. This model proposes a standard and universal approach to measuring individual psychological aspects
of religiosity across different religions10. Finally, this empirical strategy allows us to analyze individual data across
religions and nations as opposed to studies of a single religion 11 or country12.
1
Van Buren III et al. 2020
2
Ayob and Saiyed 2020; Henley 2017
3
Hoogendoorn et al. 2016
4
Van Buren III et al. 2020
5
6
Farmaki et al. 2020
7
McAndrew and Voas 2011
8
Smith 2019
9
Inglehart and Norris 2004
10
11
Ayob and Saiyed 2020; Henley 2017
12
Audretsch et al. 2013; Liu et al. 2019
192
2.0 Methods
This study employs the recent WVS Wave 7 (2017-2021) data to examine the effect of religiosity on the career
choice of individuals. WVS has been one of the most widely used cross-country datasets since Wave 1 (1981-
1984) with each subsequent wave representing a five-year period. WVS data are collected through a survey
distributed to over 100 countries with a minimum of 1000 respondents in each nation. It covers a variety of topics
including attitudes, political preferences, religion, and science 13. Therefore, exploiting WVS data allows us to
observe the behavior of individuals in many countries for robust generalizability.
The raw WVS Wave 7 dataset contains data from 70,867 individuals in 49 countries. For this study, we
discarded all respondents who were not employed outside the home: students, non-working housewives, retirees,
and unemployed individuals. Lastly, following the working age of 15 to 64 years old suggested by the
Organisation for Economic Co-operation and Development (OECD), we further removed the adults outside of
this age range. The final sample for analysis consists of 39,606 working adults in 49 countries.
Before analyzing data regarding the primary objective of the study, we first attempted to explore religiosity across
demographics and religions. We ran logit models for binary responses in the believing and belonging dimensions,
and ordinary least squares (OLS) models for continuous responses in the bonding and behaving dimensions. There
was a higher level of religiosity among younger individuals, women, and people with lower education level and
social status.
Two questions arise from the findings. First, why are women more religious than men in all dimensions
except religious service attendance? Is it because it is more culturally acceptable for men to be seen in public
religious ceremonies, or they are more able to do so physically and socially (versus women who often need to
take care of the family at home)? Regardless, this issue certainly validates the contention of Bergan and
McConatha (2001) that a single dimension of religiosity is inadequate because it does not comprehensively reflect
religiosity as compared to the multidimensional measurement of religiosity adopted in this study.
Second, why do individuals with higher educational attainment and social status abandon religion? Is it
because religion is not compatible with achievement in this world? Or is it simply because successful people have
little time to spend on religious matters? Again, regardless of the answer, our data support the view that our world
is becoming more highly secularized than before14. Nonetheless, the fact that the younger generation is more
religious than elders gives many hope that people will get back to religion in the future. Indeed, according to our
results, worldly activities are not disengaged from religious belief and practices.
Lastly, compared to people with no religious affiliation, Catholic, Protestant, Orthodox, Muslim, Hindu,
Buddhist, Jewish, and other denominations are apparently more religious in all respects. Still, little variance was
observed among most of these groups, whereas Jews were no different than non-religious individuals in terms of
belief in hell and only slightly more believe in life after death.
Given that our dependent variable is dichotomous, we used a logit model to estimate the likelihood of
being self-employed. We could neglect potential reverse causality in our model because it is unlikely that the
religiosity of individuals would be altered by virtue of their taking up a particular occupation. As for the controls,
the findings consistently exhibit that self-employment is more prevalent among elder, male, non-citizen, and non-
chief wage earning respondents, as well as those with lower education attainment. Lastly, as compared to
individuals with no religious affiliation, adherents of Catholic, Protestant, Muslim, Hindu, Buddhist, and other
denominations are more likely to be self-employed. However, Orthodox Christians and Jews were little different
from their non-religious counterparts in this regard.
Overall, we found strong evidence across all dimensions that more religious individuals are more likely
to be self-employed, p < 0.001. This findings are indeed robust after controlling for a wide range of demographics.
More importantly, inserting religious affiliation as a control does not significantly change the results. From that,
we can conclude that all mainstream religions (Catholic, Protestant, Muslim), including the Eastern religions
(Hindu and Buddhist), are indeed favorable towards self-employment. Our findings contribute to disentangling
conflicting understandings of Catholic versus Protestant views on entrepreneurship15, as well as correcting earlier
studies that claim Islam16, and Hindu and Buddhism17 are incompatible with entrepreneurship that holds their
believers back from venturing into a secular business profession.
13
Alemán and Woods 2016
14
Inglehart and Norris 2004
15
Nunziata and Rocco 2018
16
Zelekha et al. 2014
17
Audrestsch et al. 2013
193

Paper ID: 095-094
IMPACT OF FOREIGN LABOUR ON FIRMS PRODUCTIVITY: A CASE OF MALAYSIA’S OIL

PALM PLANTATION SECTOR
Aida Izzati Abdul Razak1, Noorasiah Sulaiman1, and Elya Nabila Abdul Bahri2
Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia 1, Faculty of Economics and
Administration, Universiti Malaya, Malaysia2.
1.0 Introduction
Malaysia's agricultural sector relies heavily on oil palm plantations. The oil palm plantation sector contributes
significantly to outputs, labour workforce and agricultural products exports. Despite knowing that the sector is
fueled by foreign labour, the debate over the impact of foreign labour on firm productivity remains an issue. As a
result, this study examines the determinant reliance and impact of foreign labour on firm productivity utilising
data at the firm level.
2.0 Method
The data on oil palm plantation firms obtains from a survey conducted by the Malaysian Department of Statistics
in 2015 (DoSM). The labour productivity of the firms is divided into four categories based on the number of
employees: micro, small, medium, and large firms. The study employs IV-2SLS method to examine the
determinants of foreign and local labour firm’s productivity in Malaysia’s oil palm plantation sector. An inverse
relationship exists between total labour cost and ratio of foreign labour to local labour in a sense that firms with
higher number of foreign labour, experience lower total labor cost.
The empirical results based on IV-2SLS method suggest that other factor such as total expenditure of the firm also
contribute to the labour productivity of the Malaysia’s oil palm firm. While total labour adversely affect the labour
productivity of the firm.
194

Paper ID: 100-100
THE MEDIATION ROLE OF INNOVATION MANAGEMENT ON THE RELATIONSHIP BETWEEN

ENTREPRENEURIAL LEADERSHIP, LEARNING ORIENTATION, TQM PRACTICES, AND
ORGANIZATIONAL PERFORMANCE OF SMEs
Khairul Anuar Mohd Ali1 and Fahad Awad Aber Sawaean1
UKM-Graduate School of Business, Universiti Kebangsaan Malaysia, Malaysia1.
1.0 Introduction
The economists have described small and medium enterprise (SMEs) as an engine of growth and the key source
of entrepreneurial activities, employment generation, dynamism, and creative in developed and developing
countries (Tehseen et al, 20191). Due of their primary role as a strong pillar of growth, the researchers have
increasingly focused on identifying the effective strategies, factors, and antecedents which contribute to improve
the performance of SMEs and achieve their sustainability. The managers of SMEs must comprehend how
entrepreneurial leadership style could affect organizational performance (Nor-Aishah et al, 20202; Bagheri &
Harrison, 20203). Entrepreneurial leaders improve the organization's talents and ability to develop and formulate
new and creative ideas, thereby improving the outcomes of the organization (Miao et al, 2019 4). Therefore,
entrepreneurial leaders are not only competent to create radical changes or establish new projects through the
development of a common vision, but they are presently considered indispensable in directing operations and
methods of innovation as well as ensuring organizational effectiveness by discovering new opportunities and
providing a climate that support the generation and implementation of these ideas to achieve the vision (Imran &
Aldaas, 20205). Entrepreneurial leaders must have a predetermined management philosophy and organizational
structure in their endeavor to achieve these lofty objectives. These philosophies and structure provide a platform
to gather knowledge which is then incorporated in new processes, products, and operational activities.
Entrepreneurial leadership and organizational performance can be integrated with a management philosophy that
is based on learning orientation, TQM practices and IM practices in the most productive manner in an attempt to
realize the aspirations of an organization. These practices became the most applicable management philosophy
used in enhancing SMEs performance (Al-Suwaidi et al., 20216). This study has reviewed earlier studies and
reports regarding the accomplishments made by SMEs in Kuwait in an effort to design a theoretical foundation
for the study's model. The literature review reveals that there is a lack of studies on Kuwait’s SMEs which examine
more than one variable as a predictor of SMEs’ accomplishment. Previous researchers contended that managerial
problems are one of the areas that are most regularly attributed to the failure of the SMEs in developing countries
(Haroon & Shariff, 20167). The present study focuses on four fundamental managerial problems which have an
impact on the performance of SMEs namely: entrepreneurial leadership (EL), learning orientation (LO), TQM
practices, and innovation management (IM).
2.0 Methods
The study conducted an inclusive review for the conceptual and theoretical frameworks that used in the previous
studies in the context of SMEs. Consequently, a new conceptual model has been proposed which combined the
four significant constructs (EL, LO, TQM practices, and IM) of SMEs organizational performance. In verifying
the conceptual model, the study will use a quantitative method and tested a structural model using variance based
structural equation modelling. The study data will be generated from Kuwait SMEs, using a well-organized survey
questionnaire. A set of questionnaire will be formulated based on the literature review. The organizational
1
Tehseen, S., Ahmed, F.U., Qureshi, Z.H., Uddin, M.J., and Ramayah, T. 2019. Entrepreneurial competencies and SMEs’ growth: The
mediating role of network competence. Asia-Pacific Journal of Business Administration, 11(1):2-29.
2
Nor-Aishah, H., Ahmad, N. H. and Thurasamy, R. 2020. Entrepreneurial leadership and sustainable performance of manufacturing SMEs in
Malaysia: The contingent role of entrepreneurial bricolage. Sustainability, 12(8):3100.
3
Bagheri, A. and Harrison, C. 2020. Entrepreneurial leadership measurement: A multi-dimensional construct. Journal of Small Business and
Enterprise Development, 27(4):659-679.
4
Miao, Q., Eva, N., Newman, A., and Cooper, B. 2019. Ceo entrepreneurial leadership and performance outcomes of top management teams
in entrepreneurial ventures: The mediating effects of psychological safety. Journal of Small Business Management, 57(3):1119-1135.
5
Imran, R. and Aldaas, R.E. 2020. Entrepreneurial leadership: a missing link between perceived organizational support and organizational
performance. World Journal of Entrepreneurship, Management and Sustainable Development, 16(4):377-388.
6
Al Suwaidi, F., Alshurideh, M., Al Kurdi, B., and Salloum, S. A. 2020, October. The impact of innovation management in SMEs
performance: a systematic review. In International Conference on Advanced Intelligent Systems and Informatics (720-730). Springer, Cham.
7
Haroon, U. and Mohd Shariff, M.N. 2016. The interplay of innovation, TQM practices and SMEs performance in Pakistan: moderating
effects of knowledge inertia and external environment. South East Asia Journal of Contemporary Business, Economics and Law, 9(2):57-
62.
195
performance (OP) will be represented by three dimensions namely, financial performance, operational
performance, and growth. The operationalization of (EL) is based on four dimensions namely, visionary,
proactivity, innovation, and risk-taking propensity. In addition, the operationalization of (LO) is based on four
dimensions namely, commitment to learning, shared vision, open-mindedness, and intra-organizational
knowledge sharing. The operationalization of TQM practice is based on four dimensions namely, leadership and
top management commitment, customer focus, training, and continuous improvement. This study also
operationally measures (IM) as a mediating variable using three dimensions, innovation culture, innovation
process, and human capital. The questionnaire for this study will be designed in different sections based on the
research questions. All the items of measurement for the variables will be measured on a 5-Point Likert Scale of
measurement which ranges from strongly disagree to strongly agree. A face-to-face survey approach will be
adopted to administer the questionnaire to the respondents. The respondents will be either owner/CEOs of SME
which will be chosen based on simple random sampling method. The fitness and validity of the conceptual model
will be tested using statistical tools for data analysis such as partial least square-SEM (PLS-SEM).
The conceptual framework of this study will provide more understanding of the relationship between EL, LO,
TQM practices, and IM on SMEs' organizational performance. This paper discusses the proposed mediating role
of IM on the relationship between EL, LO, TQM practices and organizational performance as shown in conceptual
model (Figure: 1). Entrepreneurial leadership and learning orientation considers relatively new concepts and have
not been fully understood in developing countries such as Kuwait. Contrasting scholars’ opinions and research
findings regarding the direct impact of EL, LO, and TQM practices on SMEs’ performance have made it necessary
to examine and bridge the gap between the mutual influence of EL, LO, TQM practices and other variables, such
as innovation management. Thus, the proposed model shows several contributions regarding the performance of
SMEs in developing countries particular in Kuwait.
First, if the proposed framework is validated, the findings will provide important insight to owners/CEOs
of SMEs and other business firms on the nature of the relationship between EL, LO, TQM practices, IM, and
organizational performance. These identified constructs can influence and enhance the organizational
performance of SME. Second, the paper also suggests as showing in the framework that, if EL, LO, TQM
practices, IM, and organizational performance integrated then the findings will have valuable implications for the
owners/CEOs of SMEs, contributions for an increase in Kuwait GDP and employment level respectively. Third,
in the exemplary hypothesized scenario as Figure 1, the model suggested that EL has an indirect effect on the
performance of SMEs through the mediating construct of the IM. These findings reinforced the need for SMEs
managers to devise strategies that focus on EL to be more entrepreneurial in their effort to enhance IM, which in
turn can lead to positive organizational performance. Finally, the owners and leaders of SMEs must run their
organizations more effectively to achieve higher levels of sustainability and competitiveness.
196

Paper ID: 102-105
OPTIMIZATION: A MEDIATING IMPACT TOWARDS IMS AND PRODUCTION PERFORMANCE
Nurshamimah Samsuddin1, Maliza Mohd Nor1, and Nur Azizah Mohamad Parij2
Faculty of Business, Multimedia University, Malaysia1, Faculty of Business, Communication & Law, Inti
International University, Malaysia2.
1.0 Introduction
SCM is the management of material and information flows both in and between facilities, such as vendors,
manufacturers, assembly plants and distribution centres 1. Based on this definition, this study foresees that SCM
is able to reach external information and accommodate the entire supply chain with accurate information. This
valuable information will then be useful to enhance supply chain performance.
These inventory components play relevant but different roles in operations management and have a
certain association with policies related to the downstream customers and upstream suppliers. Furthermore, firms
may array these inventory components to reflect the operational needs and macroeconomics environment. In fact,
excess inventories were considered as indications of wealth. Management by then considered over stocking
beneficial. Historically, organizations have ignored the potential savings from proper inventory management,
treating inventory as an evil and not as an asset requiring management2. The allocation of inventory configuration
may offer some information content to outside investors3.
In ensuring a flexible and responsive supply chains, it is important that a firm possesses sufficient stock
on hand to meet consumer’s needs4. Hence, a good inventory management practice needs to be exercised along
the chain. Therefore, this study conducted to determine either the technological, organizational and environmental
context give impacts in the inventory management systems towards production performance in terms of the
flexibility, time accuracy, quality and agility of manufacturing industries focusing in Malaysian context. This
research contributes to the growing body of knowledge in supply chain and inventory management especially
inventory management system literature as specifically on the antecedents and outcomes of production
performance. Within the context of supply chain integration this study illuminates the production performance
impacts through the lens of inventory management theory.
2.0 Methods
The data is collected using questionnaires from selected 63 electric and electronic manufacturing company in
Melaka, Johor and Selangor. The data was collected from only two types of E&E manufacturing companies
namely, semiconductor manufacturer and OEM manufacturer.
Cronbach’s alpha is a reliability coefficient that shows stability of the items in a set with positive correlation to
one another5. Therefore, in this study found all the alpha are greater than 0.60 which commonly accepted for
exploratory research to show the reliability of the data. It indirectly shows a significance relationship between the
variables of the study.
Convergent validity emphasizes the inclusion of external loads and assesses whether the indicators are
positively correlated with other indicators of the same structure. AVE is used to measure the effectiveness of
convergence to a certain level.
1
Avelar-Sosa, L., García-Alcaraz, J.L., and Castrellón-Torres, J.P. 2014. The effects of some risk factors in the supply chains performance:
A case of study. Journal of applied research and technology, 12(5):958-968.
2
Temeng, V. A., Eshun, P.A., and Essey, P. R. K. 2010. Application of inventory management principles to explosive products manufacturing
and supply-a case study. International research journal of finance and economics, 38:198-209.
3
Alvarez, G., Pilbeam, C. and Wilding, R. 2010. Nestlé Nespresso AAA sustainable quality program: an investigation into the governance
dynamics in a multi‐stakeholder supply chain network. Supply Chain Management: An International Journal, 15(2):165-182.
4
Capkun, V., Hameri, A. P. and Weiss, L. A. 2009. On the relationship between inventory and financial performance in manufacturing
companies. International Journal of Operations & Production Management, 29(8):789-806.
5
Sekaran, U. and Bougie, R. 2019. Research methods for business: A skill building approach. John Wiley & Sons.
197
Table 3.1: AVE
Discriminant validity refers to the level of the construct differs from each other 6. It is a measure of
identifying the extent of difference exist between each overlapping construct included in the model. The
researchers can evaluate Discriminant validity through using three different methods including cross loading of
indicators, Heterotraitmonotrait (HTMT) ratio of correlation and Fornell & Larcker criterion.
Table 3.2 Fornell & Larcker Creation
The main foundation that is included for surveying discriminant legitimacy is Fornell-Lacker standard.
Through this methodology, look into contrasts the connection of dormant builds and the square base of the normal
change extricated. For accomplishing the criteria of discriminant legitimacy, it is essential that square foundation
of AVE of each build ought to be more prominent as contrast with the connection with different develops. As
indicated by the outcomes, table 3.1 affirm the discriminant legitimacy of each develop in an ideal way. Another
method for discriminant validity is identify cross loading of each item integrated in the model.
Keywords: Inventory management system, Optimization, Production performance.
6
Tashakkori, A., Teddlie, C., and Teddlie, C.B. 1998. Mixed methodology: Combining qualitative and quantitative approaches (46). Sage.
198
Track: Values, Risks and Opportunities

Paper ID: 103-104
THE IMPACT OF COVID-19 ON THE STOCK MARKET IN MALAYSIA
Nur Izzatie Mohd Sah1 and Wai-Yan Wong1
1.0 Introduction
COVID-19 started in Wuhan, China, in the late December 2019 (Liu et al., 2020) and has spread drastically. In a
matter of months, it has brought most countries into a complete standstill (Fanelli and Piazza 2020). Economies
and business were severely affected by the sudden halt and most people were unprepared to face the consequences
and aftermath of the pandemic. Malaysia is unfortunately not spared from the effects of COVID-19 as well. The
first case was detected on 25 January 2020 involving Chinese nationals who had entered Malaysia via Johor from
Singapore (Hassan, 2020). The cases continued to rise and on 18 March 2020, the Prime Minister was forced to
implement the Movement Control Order (MCO) (Tang, 2020) to curb the spread of the virus. During the MCO,
there are tight restrictions on international travel, schools were closed, people were given stay-at-home orders,
they are banned from gathering, nonessential businesses were ordered to close, face masks are mandatory, and
social distancing must be adhered. The MCO is essentially a complete lockdown and this action of restricting
people’s movement which was aimed to break the COVID-19 chain has also severely affected the country’s
economy. For instance, the Malaysian economy has recorded a slower growth of 0.7% in the first quarter of 2020,
which is 3.6% lower than the fourth quarter of 2019 (Hamdan, 2020). Meanwhile, the Malaysian economy
recorded a contraction of 17.1% in the second quarter of 2020 due to MCO and Conditional Movement Control
Order (CMCO) implementation. Gross domestic product (GDP) also declined by 2.7% in the third quarter
(Hamdan, 2020). Among the economic sectors that was severely affected was the trade and services sector, mainly
due to travel restrictions and border closures (Lim, 2020). Impairment of the trade sector will negatively impact
companies engaged in export and import activities, especially multinational companies. At the same time, the
impact on the tourism sector will affect other sectors such as hospitality, food, and transportation industries due
to the lack of influx of tourists from abroad.
Hence, this study has one objective. We aim to identify the impact of COVID-19 on the overall Malaysian
stock market, which is relatively unexplored up to the time of writing. As shown by Mazur et al. (2021), the even
the S&P500 in United States experienced high volatility in March 2020 and subsequently crashed. Since this is
the first time modern Malaysia has experienced a pandemic which not only affects the entire global economy but
also its local economy simultaneously, therefore, it is interesting to see the reaction of investors towards the
Malaysian stock market.
2.0 Methodology
The data of this study is obtained from Bursa Malaysia. The daily stock price is also obtained for three major local
banks – Malayan Banking, CIMB Bank, and Public Bank. The reason for choosing only these three banks is due
to their high combined market capitalization. As such, we believe that incorporating these three banks will be
sufficient for us to make a good representation of the local banks in Malaysia. The Kuala Lumpur Composite
Index (KLCI) was also obtained from Bursa Malaysia.
The main analysis was conducted using the event study method. According to He et al. (2020), the event
study method is a method to study the change in abnormal returns after an event occurs. Researchers using this
method to investigate the impact of COVID-19 on the stock market, stock prices, and local banks' profits. The
calculation of abnormal returns is usually based on three models - the average adjusted return rate model, market
index adjusted return rate model, and market model. However, this study only used market models where this
model is commonly used and has excellent predictive power (Brenner, 1979) and the calculations are as follows:
Figure 1: Estimation Window (-70,-10), Pre-event Window (-10,0), Post-event Window (0,+10),
and Event Date (0)
199
3.1 The effect of MCO announcement on the stock market

Table 1 and Figure 2 shows that the cumulative abnormal return (CAR) for KLCI in the pre-event window. It
shows a negative CAR of -49.03 but the t-value indicates that it is insignificant. This suggests that 10 days before
the announcement of MCO, the market has been trading at a downturn. There might be two possible reasons for
this downturn.
First, of course is the outbreak of the COVID-19 pandemic in Malaysia and abroad. Before the MCO
announcement, there was already rumours spreading that MCO will be imminent. There were less than 10 new
daily cases in February 2020 but since March 2020, daily new cases were on the rise. Refer to Figure 4 for the
increase in the number of daily cases. According to Figure 2, even before the MCO announcement was made, it
has already affected the overall Malaysian stock market. The COVID-19 situation in China might also affect
Malaysia’s stock market because Malaysia received substantial business supplies from China, primarily supplies
related to electronic devices. So, when COVID-19 hit China and certain provinces were subjected to full lockdown
or partial lockdown, their exports to Malaysia was affected. Thus, the day-to-day operations of certain businesses
in Malaysia were affected. Second, is the political situation in Malaysia in the period before the MCO lockdown.
There was a political instability on which lasted from 23 to 29 February 2020 when the incumbent government
was unexpectedly toppled. Eventually a new administration was appointed but instability persists. Financial
markets naturally react to political instability and hence the negative CAR in the pre-event window may be caused
by political factor as well.
Table 1: The Cumulative Abnormal Return of KLCI due to the MCO Announcement.
Event Window CAR t-value
Pre-event (-10, 0) -49.03 0.00241
Post-event (0, +10) -461.27 0.001682
Figure 2 & 3: KLCI’s Cumulative Abnormal Return during the Pre-event Window of 10 Days Before
Event Date.
4.0 Conclusion
This study uses the event study methodology to examine two things - the effect of MCO announcement on the
overall Malaysian stock market and the effect of loan moratorium on the local bank's stock price. When COVID-
19 began to spread in Malaysia, it caused the country’s economic growth to decline as many businesses had to
close in order to help the government stop the chain of transmission of COVID-19 immediately. In addition, the
government took steps to implement MCO and border closures that prohibit any export and import activities. This
affects the financial performance of the businesses and directly affect the instability of the financial markets.
When the economy and financial markets are unstable, it reduces investor confidence, causing the stock market
to suffer. Political instability has made investors less confident in their country’s economic development, whether
it can provide a profitable or detrimental return to them in the future.
The ever-increasing number of COVID-19 cases from time to time not only affects the country’s
economy but also affects the people’s well-being. The implementation of MCO to reduce COVID-19 cases has
restricted people from going out to work because they have to stay at home, making it difficult for them to earn
income. Banks were then instructed to provide loan moratorium to help overcome the financial problems faced
by the people. As a result, the performance of banks is postulated to suffer and this results in lower confidence
among investors in buying banks’ stocks.
COVID-19 represents a novel risk and therefore, it causes feverish behaviour by investors. Nonetheless,
despite the panic, rational expectations are expected to explain the movements of stock prices of the market and
also individual companies. The implications from our research can potentially instigate further research. There is
a lot of possibilities to look into the reaction of investors towards the fiscal and monetary policy reactions from
the government during the pandemic as it is also obvious that these policies could results either in economic
recovery or harm. We leave this question for future investigations.
200

Paper ID: 105-106
HALAL TRANSPORTATION: DIFFUSION OF INNOVATION THEORY AND TECHNOLOGY

ACCEPTANCE MODEL APPROACH
Yusrizal Sufardi Mohd Yunan,1 and Mohd Helmi Ali2
Politeknik Tuanku Syed Sirajuddin, Perlis, Malaysia1, Graduate School of Business, Universiti Kebangsaan
1.0 Introduction
Halal transportation is an innovative service that has been introduced by a transportation provider1. Despite the
expectation, the issues on halal transportation adoption among Malaysia halal manufacturers has been raised by
the scholar2 and transportation provider3. Many arguments on the lack of halal transportation adoption have been
given. The study on halal transportation adoption got attention from scholars. However, the scandal on cross-
contamination along transportation activities is still unsolved. Despite the role played by halal transportation to
maintain the halal integrity along the supply chain, the issues on halal transportation acceptance are still not
answerable. Using the Diffusion of Innovation theory by 4 and the Technology Acceptance Model by5 as
underpinning theory, this study aims to discover the impact of halal transportation characteristics on the intention
of halal transportation. The findings contribute to a deep understanding of halal transportation adoption issues.
Perhaps transportation industries can enhance strategic planning with the result provided by this study and increase
the demand for halal transportation service.
The characteristic of a new service can influence the adoption of innovation among potential adopters.
Therefore, halal transportation characteristics also should have the same impact on the rate of adoption. Diffusion
of Innovation (DOI) theory has been suggested relative advantage and compatibility as characteristics that can
influence factors on halal transportation adoption intention. Additionally, the Technology Acceptance Model
(TAM) suggested that the innovation service or product be easy to use. Table 1 indicates the model of this research.
Therefore, this study explores the relationship between relative advantage, compatibility and ease of use with
halal transportation adoption intention. Based on this argument, this study hypothesized that:
H1: Relative Advantage has a positive relationship with halal transportation adoption intention.
H2: Compatibility has a positive relationship with halal transportation adoption intention
H3: Ease of Use has a positive relationship with halal transportation adoption intention
Table 1: Research Model
Innovation Characteristics
• Relative Advantage
Halal Transportation
• Compatibility Adoption Intention
• Ease of Use
2.0 Methods
The population of this study is Malaysia halal product producers. The respondents come from 99 halal
management practice officers from halal product producers. 110 sets of questionnaires have been distributed and
only 105 of them are collected. After the cleaning process, 99 sets of questionnaires have been used for data
analysis. The purposive random sampling technique has been used. Table 2 indicates the respondent working
experience as a halal management practice officer. The measurement item for relative advantage, compatibility,
ease of use and halal transportation adoption intention is based on the previous study. The variable has been
1
Ali, M. H., Alam, S. S., Nor, S. M., Amin, S. I. M., and Omar, N. 2019. Elucidation of supply chain integration in halal food industry.
Malaysia Applied Biology, 48(2):71-76.
2
Yunan, Y. S. M., Ali, M. H., and Alam, S. S. 2020. Safeguarding halal integrity through halal transportation adoption: A case of food
manufacturers. Institutions and Economies, 12(3):19–41.
3
Ngah, A. H., Zainuddin, Y., and Thurasamy, R. 2014. Adoption of halal supply chain among Malaysian halal manufacturers: An exploratory
study. Procedia - Social and Behavioral Sciences, 129:388–395.
4
Rogers, E. M. 1983. Diffusion of innovations (Third). The Free Press, New York, 213p.
5
Davis, F. D. 1989. Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13:319–340.
201
measured with seven Likert scales. The Harman single-factor test has been used to manage the issues on common
method variance6.
Table 2: Respondents Working Experience

Respondents Working Experience Total
1- 5 years 31
6-10 years 39
11-15 years 13
More than 15 years 16
The structural equation model (SEM) approach was implemented with Smart PLS package version 3.0
as a data analysis tool. The Smart PLS is suitable for the study that wants to explore the relationship between one
variable with another variable7. Internal consistency reliability, indicator reliability and convergent validity can
be used to evaluate reflective measurement models8. Therefore, composite reliability was used to evaluate the
internal consistency reliability9 and the validity of the measurement construct10. The average variance extracted
(AVE) evaluated the indicator reliability and convergent validity 11. The value of outer loading is used to test the
reliability of the indicator12. Meanwhile, the hypothesis testing is done using structural model test by implementing
bootstrapping procedure as suggested by13 with 99 samples, 5000 subsamples and no sign change to determine
the significance level of the path coefficients. Table 3 indicates the result of the measurement model and structural
model test.
Table 3: The Results on Measurement Model and Structural Model Test

Model Constructs CR AVE Path Coefficient p-Value Support
Relative Advantage 0.973 0.876 0.380 0.001 Yes
Compatibility 0.963 0.812 -0.067 0.339 No
Ease Of Use 0.960 0.827 0.120 0.236 No
Halal Transportation Adoption Intention 0.955 0.780
The results show interesting findings. Relative advantage has been identified as a positive influence factor on
halal transportation adoption intention. Meanwhile, compatibility and ease of use give the opposite result. The
significant result on relative advantage indicates that halal product producers will be more intent to use halal
transportation to gain the business advantage. The benefits of increasing customer satisfaction and corporate
image can drive the intention to adopt halal transportation among halal product producers. Despite that,
compatibility and ease of use do not share the same value for halal product producers. Halal product producers do
not put compatibility and ease of use as motivation factors on halal transportation adoption. Perhaps with further
strategic action by the stakeholders such as halal transportation providers and related government agencies, the
positive perception of the compatibility and ease of use can be increased.

This study offers several theoretical and practical contributions. This current study has proven that commercial
theories such as DOI and TAM can be used for innovative services related to religion, such as halal transportation.
The findings can enrich the literature review on innovation adoption. Meanwhile, transportation providers can use
this study to overlook the current halal transportation practice. The practice and availability of halal transportation
need to be more convenient for halal product producers. The level of compatibility should be considered back
since the result shows the opposing direction to the halal transportation adoption intention. Perhaps, this study can
enhance the understanding of halal industries players on halal transportation issues. Future research should
discover other factors that can influence the intention to adopt halal transportation, such as organisational factors.
6
Jabeen, G., Ahmad, M. and Zhang, Q. 2021. Factors influencing consumers’ willingness to buy green energy technologies in a green
perceived value framework. Energy Sources, Part B: Economics, Planning, and Policy, 16(7):669-685.
7
Ringle, C. M., Sarstedt, M., Mitchell, R., and Gudergan, S. P. 2018. Partial least squares structural equation modeling in HRM research. The
International Journal of Human Resource Management, 5192(January):1–27.
8
Hair, J. F., Hult, G. T. M., Ringle, C. M., and Sarstedt, M. 2017. A premier on partial least square structural equation modelling (PLS-
SEM)(2nd ed.). SAGE Publications Inc., California, 111p.
9
Hair, J. F., Ringle, C. M., and Sarstedt, M. 2013. Partial least squares structural equation modeling: Rigorous applications, better results and
higher acceptance. Long Range Planning, 46:1-12.
10
Wang, Q., Zhao, X., and Voss, C. 2016. Customer orientation and innovation: A comparative study of manufacturing and service firms.
International Journal of Production Economics, 171:221–230.
11
Hair, J. F., Hult, G. T. M., Ringle, C. M., and Sarstedt, M. 2017. A premier on partial least square structural equation modelling (PLS-
SEM)(2nd ed.). SAGE Publications Inc., California, 112p.
12
T. Ramayah, Cheah, J., Chuah, F., Ting, H., and Memon, M. A. 2018. Partial least squares structural equation modeling (PLS-SEM) using
SmartPLS 3.0: An updated guide and practical guide to statistical analysis(2nd ed.). Pearson, Kuala Lumpur, 84p.
13
T. Ramayah, Cheah, J., Chuah, F., Ting, H., and Memon, M. A. 2018. Partial least squares structural equation modeling (PLS-SEM) using
SmartPLS 3.0: An updated guide and practical guide to statistical analysis(2nd ed.). Pearson, Kuala Lumpur, 98p.
202

Paper ID: 107-113
THE EVOLUTION OF RESEARCH TRENDS IN ENTERPRISE RISK MANAGEMENT (ERM)
Sharifah Faatihah Syed Mohd Fuzi1,2, Mohamat Sabri Hassan2, Romlah Jaffar2, and Mohd. Hafizuddin
Syah Bangaan Abdullah2
Faculty of Administrative Science and Policy Studies, Universiti Teknologi MARA, Malaysia 1, Faculty of
Economics and Management, Universiti Kebangsaan Malaysia, Malaysia 2.
1.0 Introduction
The coronavirus disease (COVID-19) brings greater attention globally due to its impact on daily life, individuals'
norm, and the organisation's operational activities. Many countries have taken the initiative by declaring the
phased lockdown and 'stay at home' policy to reduce COVID cases1. In response, the organisations need to change
their previous norms and practices by allowing employees to work from home and most activities through online
communication. Thus, the pandemic requires an effective risk management system to proactively respond to that
event and reduce losses. Enterprise risk management (ERM) is a paradigm shift from the traditional approach of
risk management. ERM is essential to the organisation's operational activities in managing enterprise-wide risks2
and enhancing firm performance3. Arguably, the ERM approach of managing risk holistically can help in making
strategic decisions4. To the best of our knowledge, this study is the first that uses bibliometric analysis and network
mapping to provide an overview of ERM's research trend. Hence, this study can help future researchers explore
the ERM concept more strategically by referring to the current dynamism of ERM research. This study is driven
by the following research questions (RQs) RQ1: What is the current state of the article's publication and citation
patterns in the ERM studies? RQ2: Which themes and intellectual terms gaining more popularity among scholars
of ERM?
2.0 Methods
This study conducts a topic search using the Scopus database 5, establishes a research protocol, and analyses the
collected documents using the bibliometric method. We extracted data from the Scopus database as of 26 August
2021. The following combination of keywords was used: "enterprise risk management", "consolidated risk
management", "holistic risk management", "integrated risk management", "chief risk officer", or "enterprise-wide
risk management". The targeted publications are limited to journal articles and conference papers, which lead to
the final sample consists of 518 documents. Additionally, the final sample only consists of paper written in the
English language. There is no time limit included in searching for the documents. This study uses Microsoft Excel,
Harzing's Publish or Perish and VOSviewer software for data analysis and visualisation.
3.1 Current State of Publications and Citations in ERM Literature

Figure 1 shows the research trends of total publications and citations of ERM literature. The pioneer year of ERM
literature started in the year 1992. Based on the range between the early year 1992 to 2000, the graph shows a
small number of articles produced on the ERM concept. Since ERM is the evolution from the traditional approach
of risk management (financial risk management or hedging or financial derivatives), thus only a few researchers
participate in the publications of ERM literature. The result is also consistent with the total citations of the
documents. The slow progress continued for almost eight years until the year 2000. Interestingly, although there
was an Asian financial crisis for 1997/1998, total publications are still at the lowest in 2000. The situation gives
a sign that the ERM approach getting less attention in explaining that crisis. The range between the year 2001
until 2010 shows the increasing trends of publications for the year 2005 onwards. Even the year 2005 shows the
rising number of total citations. Compared to the Asian financial crisis, by 2008, the world was confronting
another global turmoil due to subprime mortgage issues. In the next phase, between 2011 until 2020, we can see
that the area of ERM or integrated risk management is receiving greater attention among researchers. Further, the
1
Verma, S. and Gustafsson, A. 2020. Investigating the emerging COVID-19 research trends in the field of business and management: A
bibliometric analysis approach. Journal of Business Research, 118, pp.253-261.
2
Bohnert, A., Gatzert, N., Hoyt, R. E., and Lechner, P. 2018. The drivers and value of enterprise risk management: Evidence from ERM
ratings. The European Journal of Finance, 25(3):234–255.
3
Malik, M. F., Zaman, M., and Buckby, S. 2020. Enterprise risk management and firm performance: Role of the risk committee. Journal of
Contemporary Accounting and Economics, 16(1):100178.
4
McShane, M. 2018. Enterprise risk management: History and a design science proposal. Journal of Risk Finance, 19(2):137–153.
5
Kushairi, N. and Ahmi, A. 2021. Flipped classroom in the second decade of the Millenia: A bibliometrics analysis with Lotka’s law.
Education and Information Technologies, 26(4):4401–4431.
203
articles published in 2011 getting the highest total citations. Figure 1 presents 2019 recorded the highest number
of total publications. However, the number of publications for 2020 is slightly dropped. The data for 2021 is not
complete as the data collection is only up to mid-year. Figure 1 also indicates the overall number of total citations
for 1992 until 2021 are also rising in the last ten (10) years. However, it is a little bit worried about the inconsistent
trends of total citations. Based on the top 20 countries that contributed to the total publications (table is not
reported), the United States' top list (130 publications). Three Asian countries ranked among the top 10 of the
lists: China (48 publications), Malaysia (44 publications), and Indonesia (17 publications). Three European
countries also contributed to the top 10 lists: the United Kingdom, Germany, and Italy. The results prove that
ERM publications dominated among researchers from the United States, which that country is the pioneering
country that introduced the ERM concept. Besides, the ERM framework developed by the Committee of
Sponsoring Organisations (COSO) is adopted by most countries.
Figure 1: Total Publications and Total Citations

60 900
800
50
700
Total Publications
Total Citations
40 600
500
30
400
20 300
200
10
100
0 0
Year
Total Publications Total Citations
The visualisation network mapping presents the relationship between terms and depicts the cluster for
each theme (the diagram upon request). Five main themes can be grouped as:1) business and accounting (purple
colour), 2) economics and finance (light blue colour), 3) information management and technology (dark blue and
green colour), 4) construction and project management (red colour), and 5) organisational behaviours (yellow
colour). Overall, many intellectual terms are used in the information management and technology cluster
compared to other clusters. Only a few numbers of intellectual terms are recorded in the business and accounting
cluster. Hence, many potential avenues can be explored in future research, especially for business and accounting
clusters.
4.0 Conclusion
Studies of ERM serve as a crucial means in improving the organisation's internal control system for for-profit or
non-profit organisations. The present study suggests that the articles publication of ERM or integrated risk
management receive greater attention among scholars, especially in the latest ten (10) years. Authors globally
contributed to the various field of disciplines when studied about ERM. The intellectual terms and co-occurrence
analysis show that researchers are primarily focused on information management and technology themes.
However, attention should be given to the area of business and accounting because very few intellectual terms are
used, and the relation between each term is not well connected compared to other themes. This study makes
several contributions to the theory and practices. First, we examine the publications pattern in the ERM research
stream by analysing yearly publications and the country-level contribution. Second, we identify the relations of
research trends with the global economic crisis. Third, we map the intellectual terms used in the ERM publications
to identify the most prominent themes and the related positions of each term. The findings can also benefit scholars
and practitioners to understand better the development of research in ERM and how to build a projection in their
future research for novel contributions.
204

Paper ID: 108-112
DIGITAL EVOLUTION AND THE IMPACT OF DIGITAL TECHNOLOGY INTEGRATION ON

LOGISTICS PERFORMANCES: A SYSTEMATIC LITERATURE REVIEW
Chandru Angamuthu1, Lokhman Hakim Osman1, and Che Aniza Che Wel1
1.0 Introduction
The growing volume of international trade, the disappearance of borders between countries and the expansion of
the concept of globalisation have recently made the logistics sector more important in world trade. Today, logistics
has emerged as one of the largest and most dynamic activities in the world (1). Technology implementation and
Industry 4.0 digitalization allows and gives rise to the functionality and integration for all the traditional SC
constructs previously found by the literature review1. LP processes and roles need to be mapped onto a
combination of metrics aligned to the overall business strategy and address the performance of various LP
functional areas2. Among extant literature, research regarding the application of digital technology in logistics
performances is rather fragmented and diverse in topics. We also realize the need for reporting the current status
and potential of digital integration and its emerging applications across different industries in the logistics
performances context. In this regard, we proposed certain question to develop the logical connection between
relevant extant articles and the potential for further research. The research question in this study are as follows:
RQ: Which digital integration-logistics performance were most instrumental in driving the development of supply
chain management? The aim of using SLR was to present a general overview of recent research by conducting a
systematic analysis of extant literature. Thus, we outline the understanding regarding the research path based on
our comprehension of related research interests and topic distributions. The literature analysis highlighted several
potential research areas that may point out certain research gaps for future study.
2.0 Methods
This paper presents a systematic literature review information from 134 articles, including journal and conference
papers published in a variety of sources during the period 1990 to early 2020, this study presents illustrative topics
related to digital technology evolution in the recent decade. The major research methods adopted in these studies
have also been reported to outline the relationship between the main topics and methodologies. The Science
Direct, Scopus, Web of Science and Google scholar databases were used in the literature search to capture as
many publications as possible from as many research disciplines as possible (e.g., Management, Economy,
Transportation and Probability). The initial search using the aforementioned search string in the four academic
databases resulted in 1,202 papers.
In the first stage, the relevant research was identified by constructing a search string to capture the essence
of our research focus. The final search string is compiled as follows. (“Logistic” OR “Logistics” OR “Logistic
Performance” OR “Logistic performance Trade” OR “Trade {AND} “Digital” OR “Digitalization” OR
“Technology” OR “Supply Chain” OR “Integration” OR “Logistic Integration”. In the second stage of the review,
the relevant papers were selected in several steps. First, we filtered out Proceeding paper (298), early access (41),
Book Chapters (10), Letters (1) and Editorial Materials (1) reducing the list to 851 papers. Second, we excluded
journals that mostly do not focus on integration, logistics performances or digital technologies from an operational
research perspective, including those with mathematical, medical or tourism with a primary focus. Journals that
did not meet the quality requirements, for example not following a rigorous double-blind peer-review process,
were also omitted. In total, 89 articles were excluded at this stage. Third, an additional 628 articles could be
deleted, as the abstracts revealed that they did not adequately reflect our research aim – including articles with a
limited notion of integration, that is long-term business growth, as well as not including any tools to measure or
manage logistics performance in digital logistics performances. This resulted in a final count of 134 articles

Fig. 1 displays the distribution of the sources of the selected review articles and illustrates the proliferation of
digital technology integration research in the field of logistic performance. This indicates the potential and
opportunities for this emerging technology in various facets of logistics performances related issues. To answer
the RQ we classified the selected papers in terms of logistics performance centric topics to identify the research
1
Raimbekov, Z. and Syzdykbayeva, B. 2021. Assessing the impact of transport and logistics on economic growth in emerging economies: A
case study for the conditions of the Republic of Kazakhstan. Transport Problems, 16(2):199-211.
2
Lim, S. F. W., Jin, X., and Srai, J. S. 2018. Consumer-driven e-commerce: A literature review, design framework, and research agenda on
last-mile logistics models. International Journal of Physical Distribution & Logistics Management, 48(3):308-332.
205
foci and examine the potential influence of and emphasis on digitalization in logistics performance applications.
The classification of selected paper is presented in Figure 1 with a brief description of related topics. A
considerable number of papers covered traceability/transparency issues and the influence of digital technology in
the logistics performance context. Similar efforts highlighted the potential of digital integration of logistics
performance applications in diverse sectors and a combination of other emerging technologies. We noticed that
each paper may have referred to more than one topic to better respond to the scope of the selected papers. To
answer the RQ, the most addressed topics were divided into five main categories: (1) traceability and transparency
(6-10) (2) general influence/ overview, (3) physical distribution and logistics, (4) distributed ledger technology
and smart contract and acceptance & adoption (Fig. 1). The results of our topical discussion were reasonable since
the major focus of the research interest and proposed solutions began with the pursuit of major digitization on
logistics performance concern. Simultaneously, the focus on the previous stage's research topics increased both
in amount and in depth. More publications that explored traceability and transparency were presented and there
was also a growing interest in practical applications among various industries. From the results we reviewed, we
can note that nascent digital integration-based logistics performance studies focus on the discussion of its potential
to improve traceability and transparency. Researchers have addressed the importance of digital evolution in
logistics performance by establishing a general influence, physical distribution, DLT and acceptance & adoption 3.
From a value-creation perspective, digital integration on logistics performance enables the incorporation of a less
focused topics for discussion such as governance, supply chain integration, tactical planning, manufacturing and
business modal. Digital integration of logistics performance has the technical capability to play a critical role in
the mentioned topics. The way in which supply chain partners achieve strategic and business objectives using
digital technology relies on the integration of logistics business processes. Therefore, supply chain digitalization
is expected to promote stakeholder involvement in achieving common objectives.
Figure 1: The Most Topics Discussed in the Papers.

Governance
Tactical planning /…
Business Modal &…
Information Sharing
Acceptance &…
Physical Distribution…
Traceability &…
0 5 10 15 20 25 30 35 40

Based on the findings we reviewed, researchers have focused more on the improvement of processes and business
performance than the overall examinations of how digital technologies adopters may derive economic gains from
value creation and revenue strategies. Future research on managerial issues should address the perspective of
resource allocation and network collaboration. This theoretical work may help analyse, elaborate, and forecast the
impacts of blockchain in supply chain management. This paper has identified key research topics and the
methodologies required to explore digital integration in logistic performance context. However, operational
challenges such as how to determine whether digital integration is required remain at the discretion of managers
and practitioners. The use of digital integration should be carefully considered in terms of product (or service)
characteristics, alternative surrounding technologies, and a supply chain strategy. The positioning of this research
with its adopted methodologies contributes to the understanding of digital technologies integration on logistics
performance by providing an overview of digital technologies research and highlighting the distribution of and
gaps in extant literature. This presents promising areas for future research. Academic researchers can devote their
efforts on less-explored fields, while practitioners could conduct empirical studies to evaluate the effectiveness of
digital integration-logistics performance adoption or implementation.
3
Bienhaus, F. and Haddud, A. 2018. Procurement 4.0: Factors influencing the digitisation of procurement and supply chains. Business Process
Management Journal., 24(4):965-984.
206

Paper ID: 110-110
TRANSFORMASI DIGITAL INSTITUSI KEWANGAN SOSIAL: KAJIAN KES DI LEMBAGA

ZAKAT NEGERI KEDAH
Noor Syafira Abdul Rahman1 and Shifa Mohd Nor1
Fakulti Ekonomi & Pengurusan, Universiti Kebangsaan Malaysia, Malaysia1.
1.0 Pengenalan
Dalam mendepani cabaran terutama ketika pandemik Covid-19 berlaku, transformasi digital dilihat berkembang
dengan pesat selepas tahun 2016. Ini termasuklah digitalisasi dalam industri kewangan seperti di peringkat
pengurusan kewangan dan pelaburan kewangan. Penggunaan teknologi kewangan atau Fintech telah merubah
landskap kewangan di peringkat global. Perkembangan ini berterusan lantaran menghadapi krisis ekonomi dan
kesihatan di peringkat dunia. Lalu, transformasi digital ini dilihat sebagai satu kepentingan dalam memastikan
tercapainya matlamat keadilan sosioekonomi.
Dalam kepesatan transformasi digital di industri kewangan Islam, tidak ketinggalan juga institusi
kewangan sosial seperti pusat-pusat zakat. Antara pusat zakat yang terkehadapan dalam transformasi digital ini
adalah Lembaga Zakat Negeri Kedah (LZNK) yang mempunyai beberapa platform digital untuk kegunaan pihak
berkepentingan seperti pembayar dan penerima zakat. Antara platform digital yang telah dibangunkan oleh LZNK
adalah seperti Zakat On Touch (ZOT), Jom Zakat dan Asnaf Care. Bagi platform ZOT, pengguna 1 perlu memuat
turun aplikasi ini di google play store manakala Jom Zakat dan Asnaf Care hanya perlu diakses melalui laman
web LZNK. Tiga platform digital ini merupakan tonggak kepada pengurusan zakat di LZNK dengan objektif yang
sama iaitu kesejahteraan masyarakat, namun perlu diakses daripada platform berbeza.
Sebagai contoh, pengguna mengakses laman web Asnaf Care untuk memberi sumbangan untuk projek
food bank manakala melalui aplikasi ZOT pula pengguna boleh melihat maklumat mengenai laporan kutipan
zakat. Selain itu, laman web Jom Zakat pula membolehkan pengguna untuk membuat kiraan zakat, membayar
zakat harta, membayar zakat fitrah dan boleh menggunakan potongan gaji untuk membayar zakat. Kepelbagaian
platform ini menurunkan daya tarikan pengguna dan menjejaskan peluang untuk penyediaan pengurusan yang
lebih cekap. Ini kerana, pengguna perlu mengakses platform berbeza untuk dapatkan maklumat yang diperlukan
seperti maklumat pembayaran zakat, laporan kutipan zakat dan juga peluang untuk menyumbang.
Dengan ketidakseragaman platform, LZNK mempunyai ruang penambahbaikan untuk menarik minat
pengguna dan mengekalkan kesetiaan penggunaa. LZNK dicadangkan untuk menyediakan platform one-stop-
centre yang dapat menyediakan perkhidmatan menyeluruh kepada pihak berkepentingan yang mempunyai
pelbagai kehendak. Oleh yang demikian, kajian ini dijalankan bertujuan untuk mengkaji lanskap digitalisasi
LZNK dan juga memahami kekuatan, peluang, kelemahan dan ancaman yang dihadapi oleh LZNK.
2.0 Metodologi
Kajian ini merupakan kajian kes yang berbentuk kualitatif. Bagi mencapai matlamat kajian ini, analisis SWOT
telah digunakan sebagai panduan dalam mencari maklumat berkenaan dengan transformasi digital LZNK. Data
telah diperolehi melalui kaedah temu bual bagi mendapatkan informasi yang padat dan mendalam. Serta dapat
merungkai persoalan yang diutarakan.
Analisis SWOT adalah alat yang digunakan untuk perancangan strategik dan pengurusan strategik dalam
sesuatu organisasi. Menurut Thompson et al (2007), analisis SWOT adalah alat yang mudah tetapi hebat untuk
meningkatkan kemampuan sumber organisasi dan kekurangan, peluang pasarannya, dan ancaman luaran untuk
masa depannya. Akronim SWOT bermaksud strengths (kekuatan), weakness (kelemahan), opportunities
(peluang) dan threats (ancaman). Analisis SWOT adalah alat yang penting untuk menganalisis situasi yang
membantu pengurus untuk mengenal pasti faktor organisasi dan persekitaran. Analisis SWOT mempunyai dua
dimensi iaitu dalaman dan luaran. Dimensi dalaman merangkumi faktor organisasi iaitu kekuatan dan kelemahan
manakala dimensi luar pula merangkumi faktor persekitaran iaitu peluang dan ancaman.
Kesimpulannya, dalam analisis SWOT kekuatan dan kelemahan organisasi dikenal pasti dengan
memeriksa elemen di dalam persekitaran organisasi, sementara peluang dan ancaman ditentukan dengan meneliti
unsur-unsur di luar persekitaran organisasi. Dalam pengertian ini analisis SWOT merupakan alat perancangan
strategik yang biasa digunakan untuk menilai kekuatan, kelemahan, peluang dan ancaman organisasi. Analisis ini
akan memberikan maklumat yang berguna dalam memadankan sumber dan keupayaan organisasi dengan
persekitaran yang kompetitif. Kekuatan dan peluang berguna untuk mencapai objektif organisasi, manakala
kelemahan dan ancaman pula berbahaya dan perlu diatasi untuk mencapai objektif organisasi. Oleh itu, untuk
1
Pengguna adalah merupakan pembayar zakat dan juga penerima zakat.
207
membolehkan pemilihan strategi yang berjaya adalah melalui analisis kekuatan dan kelemahan dalaman
organisasi dan juga analisis kepada peluang dan ancaman di persekitaran luar organisasi.
Oleh itu, analisis SWOT ini merupakan teori yang boleh digunakan untuk menganalisis transformasi
digital yang telah dilakukan oleh Lembaga Zakat Negeri Kedah (LZNK). Melalui analisis ini pengkaji dapat
mengetahui mengenai kekuatan, kelemahan, peluang dan ancaman yang dihadapi atau bakal dihadapi oleh LZNK.
Melalui analisis kekuatan, pengkaji akan mendapat maklumat mengenai kelebihan LZNK dalam transformasi
digital berbanding organisasi pesaing yang lain. Selain itu, melalui analisis kelemahan pengkaji dapat melihat
mengenai kelemahan organisasi yang perlu diatasi supaya LZNK boleh terus bersaing dalam melakukan
transformasi digital ini. Seterusnya, melalui analisis peluang pengkaji dapat melihat peluang yang dapat diambil
oleh LZNK untuk menambahbaik transformasi digital yang telah dilakukan mereka. Akhir sekali, melalui analisis
ancaman pengkaji dapat melihat ancaman-ancaman dari persekitaran luar yang boleh memberi kesan negatif
kepada LZNK untuk menjayakan transformasi digital mereka.
Melalui kajian ini, pengkaji memerlukan beberapa data untuk menjalankan kajian ini. Antara data yang
diperlukan adalah data dalaman. Data dalaman adalah yang diambil dari dalam syarikat atau organisasi untuk
membuat sesuatu keputusan. Oleh itu, data dalaman yang merupakan data primer diperlukan dengan menjalankan
temu bual bersama wakil dari Lembaga Zakat Negeri Kedah (LZNK) untuk mendapatkan maklumat secara terus
dan tepat mengenai transformasi digital yang telah dijalankan atau yang bakal dijalankan. Selain itu, pengkaji juga
akan menjalankan kajian dengan melayari laman web rasmi LZNK untuk mendapatkan maklumat tambahan
mengenai transformasi digital di LZNK.
Selain daripada data dalaman, pengkaji juga akan menggunakan data luaran. Pengkaji akan
menggunakan bahan bacaan daripada jurnal dan kertas kajian lepas untuk menambahkan lagi pemahaman
mengenai tajuk kajian. Oleh itu, melalui kajian ini pengkaji akan menggunakan data dalaman dan data luaran
untuk menjalankan kajian kes mengenai transformasi digital di LZNK.
3.0 Hasil Kajian

Kajian ini telah menunjukan bahawa LZNK mempunyai kekuatan dalam tadbir urus organisasi apabila bernaung
di bawah institusi Sultan. Malah kekuatan LZNK ini dapat dilihat dengan pengurusan yang cekap apabila LZNK
memperkasakan unit IT mereka. Selain itu, inovasi yang telah digunakan melalui platform digital ini telah
meningkatkan lagi urusan kutipan zakat. LZNK juga mempunyai sinergi dengan agensi kerajaan dan swasta untuk
Bersama-sama mencapai objektif organisasi.
Walaupun begitu, terdapat kelemahan yang perlu diambil perhatian untuk menambah baik kecekapan
pengurusan sedia ada. LZNK menyediakan platform digital yang tidak selaran dan bersifat individu. Terdapat
banyak peluang dan ruang untuk tambah baik dengan memperkasakan platform digital terutama dalam agenda
kutipan dan agihan zakat. Selain itu, peluang yang ada adalah dengan memiliki data pihak berkepentingan di mana
ianya merupakan asset untuk menghasil satu dataraya. Walaupun pelbagai peluang dan kekuatan yang dimiliki
oleh LZNK, terdapat ancaman dan risiko yang perlu diberi perhatian terutamanya berkenaan dengan sekuriti siber
dan risiko lain seperti kurangnya sentuhan kemanusiaan.
Hasil kajian dapat diringkaskan seperti jadual 1 yang memaparkan kekuatan, kelemahan, peluang dan
ancaman bagi LZNK dalam proses transformasi digital.
Jadual 1: Analisis SWOT LZNK

Strength/Kekuatan Weakness/Kelemahan
1. LZNK merupakan satu-satunya institusi zakat di Malaysia yang 1. LZNK mempunyai platform-platform digital yang
berada di bawah naungan sultan. tidak selaras antara satu sama lain.
2. Status negeri pembayar zakat dapat dikesan melalui nombor kad 2. Platform digital yang digunakan adalah platform
pengenalan dan alamat yang didaftarkan oleh pembayar zakat. individu.
3. Konsep wakalah agihan memberi kebebasan kepada indidvidu 3. Pembayar zakat individu yang membayar zakat
mahupun syarikat korporat untuk membuat sumbangan. kurang daripada RM 10,000 tidak dapat menentukan
4. Pembayar zakat menerima pesanan ringkas (sms) apabila selesai kepada siapa wang zakat mereka akan diagihkan.
membayar zakat. Sebaliknya syarikat atau korporat yang membayar
5. LZNK membeli tiga buah server baru dan menambah kakitangan zakat lebih daripada RM 10,000 dapat menentukan
dalam bidang IT. kepada siapa wang zakat diagihkan melalui konsep
6. My Majikan membolehkan majikan membuat pemotongan gaji wakalah agihan.
kakikatangan untuk pembayaran zakat dan menguruskan senarai
kakitangan yang membayar zakat. Kakitangan juga boleh membuat
permohonan pemotongan gaji untuk membayar zakat.
7. Platform Asnaf Care membolehkan orang ramai untuk memberi
sumbangan yang berupa bantuan makanan asas kepada golongan yang
memerlukan.
8. ZOT membolehkan pembayar zakat melihat jumlah kutipan dan
agihan zakat yang dilakukan pada setiap tahun.
9. Kutipan zakat di Kedah telah meningkat sebanyak 8% hingga 20%
pada setiap tahun iaitu pada tahun 2019 dan 2020.
10. Bajet kewangan 2021 LZNK bersifat syariah Islam dimana setiap
agihan akan diberikan sama rata kepada semua lapan golongan asnaf.
208
Opportunity/Peluang Threat/Ancaman
1. Platform Asnaf Care dan Jom Zakat boleh diakses melalui website 1. Platform-platform digital yang dibangunkan boleh
rasmi LZNK manakala ZOT perlu di muat turun di aplikasi google terdedah kepada risiko digodam dan risiko sekuriti
play store. yang lain.
2. LZNK boleh mengambil peluang dengan kemajuan teknologi digital.
3. LZNK boleh menyatukan semua maklumat ataupun data-data yang
diperolehi di dalam satu tempat ataupun satu platform yang sama dan
tidak berasingan seperti sebelum ini.
4. LZNK masih dalam peringkat perbincangan untuk membuat
pengekodan baucer bagi pembelian item-item yang disenaraikan
dalam Asnaf Care.
5. LZNK juga masih di peringkat pelaksanaan untuk mengubah konsep
foodbank
6. LZNK juga bercadang untuk menubuhkan estet padi.
4.0 Kesimpulan
Secara kesimpulannya, ketidakseragaman platform digital merupakan satu masalah yang perlu diatasi oleh LZNK
untuk meningkatkan kecekapan pengurusan dan juga meningkatkan kepuasan pengguna yang menggunakan
platform digital ini. Penggunaan platform digital yang dibangunkan oleh LZNK ini menunjukkan bahawa LZNK
merupakan antara salah satu institusi zakat yang sedang membangun dari segi penggunaan teknologi digital dalam
pengurusan zakat. Platform-platform digital yang dibangunkan oleh LZNK ini membuktikan bahawa kakitangan
LZNK adalah berkebolehan dalam membina dan menjalankan sistem digital ini. Oleh itu, sebarang
penambahbaikan berkaitan teknologi digital adalah mampu dilakukan dan keberangkalian untuk berjaya adalah
tinggi.
Masalah ini mungkin boleh diatasi dengan menyatukan semua platform digital ini di dalam satu platform
sahaja yang boleh dikenali sebagai ‘one-stop centre’. Platform ZOT yang dibangunkan oleh LZNK ini berpotensi
untuk menjadi ‘one-stop centre’ bagi semua platform digital tersebut. Penggunaan teknologi blockchain juga
boleh digunakan untuk mewujudkan ketelusan dalam pemberian maklumat dan memudahkan pengurusan
pengagihan zakat kepada asnaf.
209

Paper ID: 113-116
DETERMINANTS OF RISK MANAGEMENT PRACTICE – CASE EVIDENCE FROM MALAYSIAN

ZAKAT INSTITUTIONS
Nazifah Mustaffha1 and Sharifah Norzehan Syed Yusuf2,3
Faculty of Management and Muamalah, Kolej Universiti Islam Antarabangsa Selangor, Malaysia 1, Accounting
Research Institute, Universiti Teknologi MARA, Malaysia2, Faculty of Accountancy, Universiti Teknologi
MARA, Malaysia3.
1.0 Introduction
Risk management is a crucial aspect of good governance in every institution. Effective risk management helps the
institutions strengthen their accountability towards their stakeholders1 by improving their management, optimising
the use of their resources and providing better services to the stakeholders. Due to the importance of risk
management, such practice expands from corporate to public sector, from non-religious institutions to religious
including zakat institutions. As a religious institution, zakat institution has greater accountability, namely
accountability to God aside from its accountability to their stakeholders. Thus, risk management practice is
considered as one of the mechanisms that can assist zakat institutions to enhance their accountabilities. Currently,
some of the zakat institutions have taken a step further by practicing risk management. In other words, they have
specific risk management functions within their institutions. This function plays significant role in addressing
reputational risk and public perceptions towards performance of zakat institutions 2. Like any other public
institutions, the risk management practices adapted in zakat institutions are influenced by various factors which
are yet to be understood. Thus, this article aims to explain the determinants of risk management practices in the
four zakat institutions in Malaysia.
2.0 Methods
The article presents qualitative case studies of four zakat institutions in Malaysia that have implemented risk
management in their institution. These four institutions consist of three corporatised and one non-corporatised
zakat institution, respectively. Due to confidential reasons, the four zakat institutions are labelled as C1, C2, C3
and C4. The article was prepared based on two phases of research. The first phase is through a website review,
which aims to identify zakat institutions that have implemented formal risk management in their institution. In
this study, the term "formal risk management" refers to the formalisation of risk management function as a separate
unit or department, or at least, the establishment of a risk management committee with a well-defined risk
management framework or rules that guides, direct and control the institution concerning risk 3. The second phase
involves semi-structured interviews with the risk management officers from the four selected zakat institutions,
based on the findings from the first phase. The data were collected and managed by using ATLAS.ti version 9.
Additionally, the article synthesises the institutional isomorphisms and objectives of shariah (maqasid shariah)
framework to interpret the determinants that influences these institutions in adapting their risk management
practices.

The results and discussion of the article are divided into three subsections, as follow:
3.1 First Phase of Study

The website review of 12 zakat institutions in the Peninsular Malaysia indicates that four zakat institutions have
implemented risk management. C2 explicitly disclosed their risk management practice in their Annual Report.
Meanwhile, risk management practice was implicitly identified through the organisational structure of C3 and C4,
in which they disclosed their risk management portfolio in the organisation. Finally, C4 reported that they were
certified with MS ISO 9001:20154 (Quality Management Systems), in which risk management is part of the
recommendation of the Standard. Generally, these findings reflect that there is no standardisation in risk
management disclosure by the zakat institutions. Indirectly, this might reflect different determinants behind the
risk management practice by these institutions.
1
Bakar, B. A., Rasid, S. Z. A., Rizal, A. M., and Baskaran, S. 2019. Risk management practices to strengthen public sector accountability.
Asian Journal of Business and Accounting, 12(1):1–40.
2
Ascarya, Hakim, C. M., Rahmawati, S., Masrifah, A. R., Beik, I. S., Zaenal, M. H., Rizkiningsih, P., & Choirin, M. 2018. Zakat Risk
Management. Centre of Strategic Studies - The National Board of Zakat, 42p.
3
ISO 31000:2018. Risk Management — Guidelines (https://www.iso.org/obp/ui#iso:std:iso:31000:ed-2:v1:en).
4
Department of Standards Malaysia (2015). Quality Management Systems – Requirements (Second Revision) (MS ISO 9001:2015).
210
3.2 Second Phase of Study

Based on the findings in first phase, semi-structured interviews were conducted with the Risk Management Officer
of their respective zakat institutions. It is found that there are several contributing factors that drive the zakat
institutions into implementing risk management in their institutions. The findings were categorised according to
the three institutional isomorphisms of the New Institutional Sociology (NIS) 5 and Old Institutional Economy
(OIE)6 as shown in Table 4. The table indicates that the zakat institutions' determinants of risk management
adaptation align with the three isomorphic pressures of NIS and internal pressures of OIE, in which normative
pressure is the primary determinant. The normative factor is associated with the compliance to the relevant
standards, mainly the MS ISO 9001:2015 (Quality Management Services) by all zakat institutions under study.
Additionally, C2 and C3 also refer to the MS ISO 310007, specifically related to the risk management principles
and guidelines. The practice of risk management is also influenced by the preserving reputation of the institutions
in the eyes of Muslims, particularly zakat payers. In other words, the risk management practice is considered as
one mechanism for the zakat institutions to improve their credibility and commitment towards Muslims at large.
Other influencing factors include achieving objectives of shariah and fulfilling legal maxims, which are
considered as religious coercive pressure, and adaptation of risk management practices to imitate other
organisations, mainly Islamic financial institutions that have similar nature. On top of the external influences, the
supports and motivation of the management team are also important factors to ensure the success of risk
management practice within the institutions.
Table 4: Institutional Pressures Influencing Zakat Risk Management Practices

Pressures/ Zakat Institutions C1 C2 C3 C4
EXTERNAL PRESSURES
Coercive pressures
Islamic Law
- Maqasid Shariah (objectives of shariah) X X
- Legal Maxims X
Regulatory requirements for statutory bodies X
Mimetic pressures
Influence of the approach adopted by other ZI X
Adoption of the practices of other organisations X X
Normative Pressures
The professionalisation of the risk management field X X X X
Recommendation from consultant X X
Other External Institutional Pressures
Credibility in the eyes of potential zakat payers/Muslims at large X X X
INTERNAL INSTITUTIONAL PRESSURES
The impulse from the management team X X
Organisational culture X
3.3 Discussion of Findings

The study has empirically proved that coercive, normative and mimetic factors are the driving pressures, with the
normative mechanism being the most influential factor. However, as religious institutions, it is suggested that the
religious factor be the implicit coercive pressure to the zakat institutions to implement risk management. For
instance, since zakat institution plays a vital role in managing zakat funds, they are responsible for ensuring that
the funds are managed effectively and efficiently to achieve the objective of zakat in providing the socio-economic
justice to Muslim society. This role is highly related to preserving the wealth and religion of the Muslims, which
are among the objectives of shariah. Additionally, the study indicates the importance of zakat institutions to
practice risk management, particularly in improving their performance and quality of services by adhering to the
relevant standards. Consequently, they will enhance the trust among the public in their ability in managing zakat
funds.
5
DiMaggio, P. J. and Powell, W. W. 1983. The iron cage revisited: Institutional isomorphism and collective rationality in organizational
fields. American sociological review, 48(2):147–160.
6
Burns, J. and Scapens, R. W. 2000. Conceptualising management accounting change: An institutional framework. Management Accounting
Research, 11(1):3–25.
7
Department of Standards Malaysia. 2010. Risk management - Principles and guidelines (MS ISO 31000:2010).
211
Track: Strategic Partnership

Paper ID: 118-122
EXPLORING THE POTENTIAL OF PUBLIC PRIVATE PARTNERSHIP IN AGRICULTURE

SECTOR FOR MALAYSIA
Suzana Muhamad Said1, Aini Aman1, Nazura Abd Manap2, and Zaizul Abd Rahman3
Global Business and Digital Economy Research Centre, Faculty of Economics and Management, Universiti
Kebangsaan Malaysia, Malaysia1, Faculty of Law, Universiti Kebangsaan Malaysia, Malaysia2, Faculty of
Islamic Studies, Universiti Kebangsaan Malaysia, Malaysia3.
1.0 Introduction
The objective of this paper is to explore the potential of public-private partnership (PPP) initiative in agriculture
sector in Malaysia. Public-private partnership (PPP) deals with public asset or service where the private party
bears significant risk and management responsibility where remuneration is linked to performance 1. Commonly,
public-private partnership is resorted when a government entity needs funding, technical expertise or sharing of
risks and management responsibilities in public assets and services. Overcoming the problem of funding is always
a major concern and in agriculture, it is still new. The traditional way of receiving only Government funds is not
a good option. Self-funding is becoming a necessity and alternative for sustainable financing cannot be avoided.
Thus, this research is suggesting for Public Private Partnership (PPP) implementation which would benefit the
public and private entity given careful consideration. This initiative is an arrangement with a private party on a
long-term contract. PPP has potentials in the area of smart farming, seeding, fertiliser, insect’s industry for food
and feed and automation. It is suggested that public-private partnership is considered to boost the agriculture
sector particularly in the area that needed financial assistance.
2.0 Method
The methodology used is content analysis which applies the socio-legal analysis. Reference is made to socio-legal
texts and statutes of Malaysia pertaining to PPP and agriculture including official websites of the World Bank,
Food and Agriculture Organisation. This paper also explores PPP implementation and experience from other
countries including India, Kenya and the Russian Federation. Materials were also obtained from online platforms
relevant to PPP.
Careful consideration is required before selecting services, interest or activities for PPP based on these aspects:
i. Its viability and potential profitability

ii. Cost and benefit analysis
iii. Feasibility of fragmentation
iv. Special characteristic of services e.g security
v. Social objectives of basic services and maximisation of profit
vi. Assessing the extent of duplication and need for coordination
vii. Employees, etc.
In a nutshell, the objectives of PPP are:

• to deliver quality services to the public, drawing best practices and competencies from public
and private sector emphasizing on value for money through optimum risks allocation;
• to promote private sector investment and being the nation’s engine of growth; and
• as a tool for the nation’s economic transformation strategy
PPP is one of government procurement tools to promote private sector investment so that the government
can focus on its core business to provide the best service to the people and to focus on social projects. PPP has the
potential to make a real impact in agriculture to modernise the agriculture sector and deliver benefits that can
contribute towards inclusive and sustainable agricultural development. The combination of operational and
economic efficiency of the private sector and the public sector’s role will ensure that the social interests in agri -
PPP are considered2. In Malaysia, the Secretariat for planning and coordination of PPP projects is Unit Kerjasama
1
Public‐Private Partnership Reference Guide. 2017. World Bank Group Publication, version 3, International Bank for Reconstruction and
Development / The World Bank, file:///C:/Users/Prof%20Idris/Downloads/PPPReferenceGuideVersion31.pdf
2
Singh, K.M. 2018. Public private partnership for effective marketing of agricultural produce.
212
Awam Swasta (UKAS)3. The PPP selection process starts with identifying the projects by the relevant agency at
the ministry level and negotiated at UKAS which is chaired by the Chief Secretary of Malaysia. Various
discussions on matters concerning technical, finance and legal issues will be sorted out at UKAS which shall
include analysis of needs statement of all affected sectors and value management lab to ascertain the value for
money of the project. The decisions are all made by the Cabinet consisting of all ministers and chaired by the
Prime Minister as the approving authority. For purpose of PPP, once a private party is selected, a special purpose
vehicle (SPV) company will be incorporated solely to manage the project. This is to ensure that all matters on
finance are ‘ring-fenced’ and not mixed with other affairs of business and that the management of the SPV
company is focussed and specialised only for that particular project.
PPP has the potentials in many areas of agriculture such as smart farming, seeding, fertiliser, insect’s
industry for food and feed and automation. It has the potential to reduce threats and uncertainties related to crop
failure, pest and diseases, natural disasters and natural resource management. Food safety-related barriers in the
export context were addressed through PPP approach for example in Kenya and India 2. In India, PPP was
promoted through contract farming and leasing arrangements to allow acceleration of technology transfer, capital
inflow and assured market for crop production, especially of oilseeds, cotton and horticultural crops undertaken
by agri-business companies2. The contract farmers are required to plant the company's crop on the farmer’s land
and to harvest and deliver it to the company. The company will supply selected inputs along with technical advice.
Russia adopts PPP to secure the country preparation for food security including sustainability development and
modernization of agriculture and fisheries, agriculture production, feed additives and breeding of livestock 4,
According to the Russian law, PPP “is traditionally considered as an effective interaction between the state and
business in various forms by combining their resources to achieve the common goals of socio-economic
development”. India on the other hand, needs PPP to achieve its goal for the growth rate in agriculture as a useful
tool to accelerate development of agribusiness.5
Some challenges of PPP include unsupportive policy and institutional environments. lack of awareness
and enforcement of Intellectual Property regulations, confusion in terms of roles and responsibilities of the parties
and lack of transparency and objectivity in partner selection. However, PPP could enhance productivity and
encourage involvement in technology transfer.
In conclusion, PPP is necessary for funding, technical expertise or sharing of risks and management of
responsibilities as it is a beneficial tool for economic development in Malaysia. The importance of PPP in
agriculture provides a shared mechanism among partners for input, resource, market, risk, technology and
benefits.
3
Unit Kerjasama Awam Swasta (UKAS) Guideline (2009).
4
Kozin, M., Pyrchenkova, G., and Radchenko, E. 2020. Public-private partnership in the agricultural sector: Empirical estimation by factorial
characteristics. In E3S Web of Conferences (175:13016). EDP Sciences.
5
Marbaniang, E. K., Chauhan, J. K., and Kharumnuid, P. 2020. Public private partnership (PPP) in agriculture: A step towards sustainable
agricultural development. Agric Food e-Newsletter, 2(2):387-91.
213
Track: Accounting
Paper ID: 119-121
HUBUNGAN STRATEGI PEMATUHAN DENGAN PEMATUHAN CUKAI INDIVIDU DI

MALAYSIA: SATU KAJIAN TINJAUAN ELEMEN GANJARAN CUKAI
Norul Syuhada Abu Hassan1, Mohd Rizal Palil1, Rosiati Ramli1, and Ruhanita Maelah1
Fakulti Ekonomi dan Pengurusan, Universiti Kebangsaan Malaysia, Malaysia 1.
1.0 Pengenalan
Menyedari akan kepentingan hasil cukai langsung yang dipungut oleh Lembaga Hasil Dalam Negeri Malaysia
(LHDNM) sebagai sumber utama pendapatan negara (pungutan melebihi 50%), sebarang ketirisan disebabkan
oleh tingkah laku ketidakpatuhan cukai bakal memberi kesan kepada negara yang akhirnya turut menjejaskan
rakyat. Isu ketidakpatuhan cukai yang diukur menggunakan indikator jumlah pungutan penalti serta bilangan
sekatan perjalanan ke luar negara menunjukkan trend peningkatan saban tahun 1. Peningkatan tertinggi tercatat
pada tahun 2015 (119.9%) dengan pungutan penalti sebanyak RM9.843 bilion berbanding RM4.477 bilion tahun
sebelumnya selain lonjakan kepada 222,072 sekatan perjalanan yang dikeluarkan pada tahun 2016 berbanding
10,933 pada tahun 2005 ketika ia mula diperkenalkan. Unjuran statistik tersebut memberi signal akan masalah
ketidakpatuhan yang semakin membarah selain mekanisme sistem taksiran sendiri yang turut membuka ruang
untuk memanipulasi cukai terutamanya bagi pembayar cukai individu2. Strategi pematuhan merupakan salah satu
mekanisme bagi mengurangi masalah ketidakpatuhan cukai 3 yang boleh dikategorikan kepada dua iaitu
pendekatan pencegahan yang lebih keras di samping pendekatan galakan yang lebih lembut 4. Gabungan dengan
keseimbangan antara dua pendekatan tersebut berkesan bagi mendapatkan hasil yang optimum 5.
Menyedari akan kepentingan tersebut, LHDNM turut mengorak langkah dengan mengambil strategi
yang seimbang dengan sasaran ‘memudahkan pematuhan dan menyukarkan ketidakpatuhan’ semenjak tahun
2016. Ia menekankan tindakan yang tegas terhadap pesalah cukai melalui ancaman hukuman (audit dan penalti
cukai) di samping mempelbagaikan usaha bagi memudahkan urusan percukaian termasuk memberi kesedaran
melalui program pendidikan cukai selain meningkatkan mutu perkhidmatan khidmat pelanggan yang diberikan.
Selari dengan moto, ‘Your Tax Service Provider’, LHDNM mula mengorak langkah dalam memberi impak positif
dan mesra pelanggan kepada pembayar cukai6. Di samping itu, LHDNM turut memberi peluang kedua kepada
pesalah cukai dengan tawaran pengampunan cukai melalui Program Khas Pengakuan Sukarela (PKPS) bagi
menggalakkan pembayar cukai tampil secara sukarela dengan tawaran pengenaan penalti yang lebih rendah.
Namun begitu, pelaksanaan strategi sedia ada dilihat masih tidak dapat menambahbaik isu
ketidakpatuhan cukai malahan trend peningkatan memberi signal akan persoalan tentang keberkesanan strategi
pematuhan yang diguna pakai kini. Ia juga memberi indikasi akan kemungkinan terdapatnya faktor lain yang
belum diambil kira dalam dimensi strategi pematuhan sedia ada. Selari dengan penemuan kajian terdahulu serta
pengaplikasian elemen ganjaran cukai di kebanyakan negara terutama di negara Asia 7, kajian ini mengambil
inisiatif dengan turut menguji elemen tersebut dalam model kajian. Kajian terkini di Malaysia 8 telah mula
memberi saranan akan kewajaran pelaksanaannya bagi menambahbaik dimensi strategi pematuhan sedia ada
namun masih belum diuji secara empirikal. Untuk rekod, elemen ganjaran cukai melalui pemberian cabutan
bertuah bagi pembayaran cukai pintu oleh Pihak Berkuasa Tempatan telah digunakan semenjak tahun 2009 namun
masih belum dipraktikkan secara meluas dalam perspektif cukai langsung di bawah agensi LHDNM. Atas sebab
itu, kajian ini cuba mencungkil potensi pelaksanaannya untuk diserapkan sebagai salah satu strategi LHDNM.
Kajian ini dijalankan bagi mengenal pasti pengaruh strategi pematuhan terhadap pematuhan cukai dalam
kalangan pembayar cukai individu di Malaysia. Pengujian dijalankan ke atas lapan strategi pematuhan yang
melibatkan empat strategi sedia ada (ancaman hukuman (audit dan penalti cukai), pendidikan cukai, layanan
positif pentadbir cukai, PKPS) di samping menyerlahkan potensi elemen ganjaran cukai yang diperincikan kepada
empat bentuk (baucar tunai, cabutan bertuah, sijil penghargaan, kad keistimewaan). Penemuan kajian ini dapat
dijadikan platform dalam menyalurkan input relevan kepada pentadbir cukai serta pembuat dasar khususnya
1
LHDNM 2011-2017. Laporan Tahunan 2011-2017. Kuala Lumpur, Malaysia
2
Josephine, H. D. 2013. Enforcement trend and compliance challenge: Malaysia’s experience. The Fourth IMF-Japan High-Level Tax
Conference for Asian Countries. Tokyo
3
Alm, J. 2019. What motivates tax compliance? Journal of Economic Surveys, 33(2):353-388.
4
Murphy, K. 2008. Enforcing tax compliance: To punish or persuade? Economic Analysis and Policy, 38(1):113-135
5
Kornhauser, M. E. 2007. A tax morale approach to compliance: Recommendation for the IRS. Florida Tax Review, 8(6):599-640.
6
LHDNM 2016. Laporan Tahunan 2016. Kuala Lumpur, Malaysia.
7
Bornman, M. and Stack, L. 2015. Rewarding tax compliance: taxpayers’ attitudes and beliefs. Journal of Economic and Financial Sciences,
8(3):790-807.
8
Azhar, M., Neazlin, R., and Zarinah, H. 2017. Tax arrears amongst individual income taxpayers in Malaysia. Journal of Financial Crime,
24(1):17–34.
214
LHDNM dalam menilai, menambahbaik serta merangka strategi pematuhan dengan misi membudayakan
pematuhan cukai terutamanya dalam kalangan pembayar cukai individu.
2.0 Kaedah Kajian

Kajian ini menggunakan instrumen soal selidik yang dihantar kepada pembayar cukai individu dengan
memfokuskan kepada ahli akademik Institut Pengajian Tinggi Awam (IPTA) di seluruh Malaysia. Kaedah
tersebut bersesuaian dalam kajian berkenaan persepsi, sikap, kepercayaan, motivasi serta tingkah laku 9. Pemilihan
responden kajian tersebut selari dengan fokus kajian yang melibatkan kontrak psikologi di antara pentadbir dan
pembayar cukai di samping tumpuan terhadap pendekatan galakan selain mendapatkan maklum balas awal
berkenaan ganjaran cukai. Ini memandangkan mereka merupakan ‘orang sebenar’ berdasarkan definisi Akta
Cukai Pendapatan 1967 yang membuat pertimbangan sendiri termasuk urusan percukaian selain diandaikan
sebagai pembayar cukai patuh kerana tertakluk kepada Potongan Cukai Berjadual (PCB) 10 yang lebih sesuai
diberikan pendekatan galakan11. Sebagai ahli akademik, mereka juga sering menjadi rujukan berkenaan isu
semasa yang dalam kajian ini merujuk kepada elemen ganjaran cukai. Berdasarkan populasi sebanyak 31,586
ahli akademik meliputi 20 IPTA di seluruh Malaysia, saiz sampel disasarkan kepada 40012. Setelah pra ujian serta
kajian rintis dijalankan, sebanyak 2,500 soal selidik dihantar melalui e-mel rasmi. Berpandukan kepada 501
maklum balas yang diterima, penganalisisan data dijalankan menggunakan analisis regresi berganda perisian IBM
SPSS versi 26 bagi menjawab objektif kajian.
3.0 Hasil, Perbincangan dan Rumusan Kajian

Berdasarkan analisis demografi, responden kajian ini memiliki latar belakang pendidikan tinggi dengan majoriti
memiliki sumber pendapatan dalam kumpulan pertengahan dan tertinggi (74.5%). Mereka juga merupakan
pembayar cukai sebenar yang telah matang di mana 55.7% telah membayar cukai melebihi 10 tahun selain 76.7%
pernah memiliki pengalaman berurusan atau berinteraksi dengan LHDNM. Berdasarkan pengalaman mereka
dalam sistem percukaian di Malaysia, responden kajian ini amat bersesuaian dalam memberi maklum balas
berkenaan strategi pematuhan yang diambil oleh LHDNM.
Hasil analisis regresi berganda menemui lima strategi memberi pengaruh signifikan terhadap pematuhan
cukai individu di Malaysia. Tiga daripadanya merupakan strategi sedia ada iaitu ancaman hukuman (audit dan
penalti cukai), layanan positif pentadbir cukai serta PKPS di samping dua bentuk ganjaran cukai bukan material
iaitu sijil penghargaan dan kad keistimewaan. Penemuan tersebut memberi implikasi ancaman hukuman yang
dikenakan oleh LHDNM, layanan positif oleh kakitangan LHDNM serta persepsi positif terhadap PKPS terbukti
mempengaruhi pematuhan cukai. Ia sekaligus memberi indikasi akan kejayaan fokus LHDNM berdasarkan Pelan
Korporat LHDNM 2016-2020 yang menekankan penguatkuasaan yang tegas selain usaha meningkatkan
perkhidmatan khidmat pelanggan di samping pungutan cukai tertunggak melalui PKPS yang telah berjaya
mengumpulkan RM7.877 bilion13. Namun, elemen pendidikan cukai yang tidak signifikan memberi signal akan
keperluan penambahbaikan dalam program pendidikan sedia ada yang disarankan melalui penerapan subjek
percukaian di peringkat sekolah dan universiti selain penggunaan teknologi semasa dan terkini 14. Seterusnya,
hasil analisis berjaya menyerlahkan potensi pelaksanaan elemen ganjaran cukai berbentuk bukan material iaitu
sijil penghargaan dan kad keistimewaan yang boleh dipertimbangkan oleh LHDNM dalam usaha meningkatkan
pematuhan cukai di Malaysia. Sebaliknya, ganjaran berbentuk material (baucar tunai, cabutan bertuah) yang gagal
menemui hubungan signifikan agak memeranjatkan dan berbeza daripada jangkaan awal 15. Perbezaan tersebut
mungkin didorong oleh faktor persekitaran serta budaya selain responden kajian yang berada dalam kumpulan
berpendapatan sederhana dan tinggi yang lebih tertarik kepada ganjaran bukan material berbanding material16.
Sebagai rumusan, penemuan kajian ini mampu memberi input relevan kepada LHDNM dalam menilai,
menambahbaik serta merangka strategi pematuhan. Dalam usaha membudayakan pematuhan cukai terutamanya
dalam kalangan pembayar cukai individu, tiga strategi sedia ada iaitu ancaman hukuman (audit dan penalti cukai),
layanan positif pentadbir cukai serta PKPS terbukti berjaya mencapai misi pelaksanaannya, namun program
pendidikan cukai perlu ditambahbaik selain pertimbangan penerapan elemen ganjaran cukai di dalam model
9
Sekaran, U. and Bougie, R. 2016. Research methods for business: A skill-building approach. New York: John Wiley and Sons Inc.
10
Raihana, M. A., Khadijah, I., and Salwa Hana, Y. 2014. The impact of threat of punishment on tax compliance and non- compliance attitudes
in Malaysia. Social and Behavioral Science, 164:291-297.
11
McKerchar, M. 2002. The effects of complexity on unintentional noncompliance for personal taxpayers in Australia. Australian Tax Forum,
17(1):3-26.
12
Krejcie, R.V. and Morgan, D. W. 1970. Determining sample size for research activities. Education and Psychological Measurment, 30:607-
610.
13
Bernama. 2020. Lebih 286,000 pembayar cukai buat pengakuan sukarela PKPS dari Nov 2018 – Sept 2019. Astro Awani, 19 Februari
14
Marhaini, M. 2012. Compliance risk management strategies for tax administrations in developing countries: A case study of the Malaysian
Revenue Authority. Tesis Dr. Fal, The University of Warwick.
15
Bazart, C. and Pickhardt, M. 2010. Fighting income tax evasion with positive rewards. Public Finance Review, 39(1):124-149.
16
Bornman, M. and Stack, L. 2015. Specific rewards for tax compliance: Responses of small business owners in Ekurhuleni, South Africa. e-
Journal of Tax Research, 13(3):799-818.
215
pematuhan sedia ada. Kajian ini menyarankan penerapan elemen ganjaran cukai berbentuk bukan material seperti
sijil penghargaan dan kad keistimewaan diaplikasikan terlebih dahulu berbanding bentuk material.
216

Paper ID: 121-123
EXPLORING OWNERSHIP SUPPLY CHAIN FLOWS IN DIFFERENT ISLAMIC FINANCE

MODES: CASE OF A LEADING FULL-FLEDGED PAKISTANI ISLAMIC BANK
Zubair Ahmed1, Mohd Adib Ismail1, Lokhman Hakim Osman1, and Zizah Che Senik1
1.0 Introduction
Islamic finance and supply chain are considered two different fields of studies. But, a recent study found that
Islamic finance is involved in the supply chain flows of the financed assets 1. Islamic banking is growing very fast,
especially after the global financial crisis in 2008; it is gaining popularity also from non-Muslims2. Still, most
people have not properly understood what Islamic banking is. In a large population survey in Pakistan, 95% of
non-banked and 83% of banked respondents admitted they are not familiar with the Islamic banking model 3.
Therefore, it is difficult for most people to understand how Islamic finance is involved in financing assets’ supply
chain. Fortunately, Ownership supply chain flow-related studies like this can easily communicate Islamic finance
to the masses. Still, there is a lack of studies about the Ownership supply chain flows and Islamic banks’ financing
modes. In this regard, the research question of this study is how should people consider Islamic banks as
stakeholders in ownership supply chain flows of the financed asset? The objective of this paper is to analyse the
stake of Islamic banks in Ownership supply chain flows of the financed assets in different transactions. This study
fulfils the literature gap and can support practitioners to promote Islamic bank financing easily.
2. Methods
Overall, this study employed the case study research method because it is more suitable to study a bounded
system4 such as a banking institution as the context of the study. According to Yin5, case study research is more
appropriate when the contemporary phenomena are focused, and the research question is in the form of how or
why, and the researcher has no control over the event. In this study, all these three conditions are available;
therefore, case study research is the best choice for this research. Two levels of sample selections were involved;
the first is case selection, then the evidence sampling. Purposive sampling was used in this study where the leading
Islamic banks in Pakistan which are practicing Islamic banking were selected as the participants. They fit to be
part of the study because these leading Islamic banks offer all modes of finance-based transactions mentioned by
the Islamic banking bulletin of the central bank of Pakistan 6.
This study used multiple data sources as recommended by Yin (2018) and other case study methodologists.
These included semi-structured interviews; Official website and documents reviews, and eight subcases between
the bank and its different clients in different transactions. Due to the distance and travel restrictions (because of
covic-19 pandemic) online platform was carried out for data collections using different approaches. The first two
participants, the Manager Product Structuring Department and Senior Shariah Scholar of the leading Islamic Bank
were involved with online face to face via Zoom meeting tools and the third participant of the study who was the
Assistant Manager, Shariah Compliance Department, provided written answers on MS word document via
WhatsApp. Eight subcases’ documents have been received via email from an official of this bank. These
documents consist of end-to-end transaction steps that how the financed asset will be procured and sourced in the
case of Murabahah and how it will be sold and delivered in case of Istisna, Salam and Tijarah (Musawamah type
2). Therefore, these documents were also subcases between Islamic banks and their SME or Corporate clients.
Along with the subcases or process flows documents, official web pages and documents were also obtained
from the selected bank’s websites. The selection of the official website was the same as the selection of cases, i.e.,
Islamic banks. The web pages and documents from these websites were being selected with the help of purposive
sampling. It means the financing related web pages and documents were being collected rather than the deposit
and other services related official web pages and documents (such as Fatawas or Shariah certificates and
structures) from the selected banks’ websites. This data type mostly provides information about the transactions
1
Ahmed, Z., Ismail, M. A., Osman, L. H., and Senik, Z. C. 2021. Islamic finance involvement in supply chain of financed assets: A library
research and systematic literature review. Turkish Journal of Islamic Economics (TUJISE), 8(2).
2
Wahid, N. A. and Furqani, H. 2013. Worldwide development of Islamic finance: Trends, prospects and challenges. Journal of Islamic
Business and Management, 3(1):71–90.
3
State Bank of Pakistan, Department for International Development, & Edbiz Consulting. 2014. Knowledge, attitude and practices of Islamic
banking in Pakistan (KAP Study).
4
Merriam, S. B. and Tisdell, E. J. 2016. Qualitative research (A guide to design and implementation) (Fourth). John Wiley & Sons, Inc.
5
Yin, R. K. 2018. Case study research and applications: Design and methods (Sixth).
6
State Bank of Pakistan. 2020. Islamic Banking Bulletin (October - December).
217
between Islamic banks and their consumer and agriculture type of clients and financed assets. This data also
supports triangulating the subcases (processes flow or transaction fact sheet) data about the SME and corporate
clients. Furthermore, the answers from the study participants are also being triangulated and extended with the
help of subcases and official web pages and documents.
For the case study research, Yin7 provided four general strategies and five specific analytical techniques.
Following his approach mainly, this study overall employed the “Case Description” general analysis strategy,
which is also endorsed by Eisenhardt8 as within-case analysis. “Case Description” general analysis strategy is
more suitable for the situation between data grounding up (pure inductive) and a priori theoretical propositions as
analysis strategies one and two provided by Yin. As the specific analytical technique, this paper employed “Logic
Models” because it is more suitable for a “Complex chain of occurrence of events over an extended period” (Yin
p.186). For the analysis till write-up, this study employed the following steps:
• For the Transcription of Manager Product Structuring Department interview, MS Word online
transcription facility has been used. Whereas for the interview, the senior Shariah Scholar transcription
has been done with the help of Ottar.ai transcription software. The second one was found more efficient
and accurate as free transcription option and availability as the website and the mobile app.
• Subcases documents, official web pages and documents and the answers from the Assistant Manager
Shariah Compliance Department were already in the written form, so these were ready for further steps.
• The written data and audio/video files have been imported to NVivo 12 Plus qualitative and mixed-
method data analysis software.
• For the coding and further data analysis and management, this study got support from NVivo 12 plus
software.
• In the MS word document, the “Logic Models” have been prepared along with the write-up considering
the Ownership supply chain flows of different Islamic finance modes.
• For validity and reliability, this study uses triangulation which is the most common strategy for this
purpose9.
3. Results/Discussion
In this study, findings explore the Ownership supply chain flows in different Islamic finance modes. Interestingly,
this bank’s findings consist of the interviews and official website reviews and strengthen the findings with the
help of eight sub-cases documents between Bank A and its different clients. Normally, Islamic finance modes,
also called products, are categories based on the nature of the contract. For example, according to Razak and
Saupi10, these can be categorized as sale (or trade), partnership (equity), lease (like Ijarah) and fee - (like Wakalah)
based products. In contrast to the literature, this study found the Ownership supply chain flows-based categories.
Theoretically this study contributes towards the ownership supply chain flows which has lack of studies in
previous literature. Furthermore, practically it can support to people to understand Islamic banks’ financing which
has lack of understanding especially outsiders of the system.
7
Yin, R. K. 2018. Case study research and applications: Design and methods (Sixth).
8
Eisenhardt, K. M. 1989. Building theories from case study research. The Academy of Management Review, 14(4):532–550.
9 Merriam, S. B. 2016. The methodology section of a qualitative research study. In Qualitative Research (4th ed., pp. 293–299).
10 Razak, L. A. and Saupi, M. N. 2017. The concept and application of dam an al-milkiyyah (ownership risk): Islamic law of contract
perspective. ISRA International Journal of Islamic Finance, 9(2):148–163.
218
Track: Development and Impact

Paper ID: 025-019
THE IMPACT OF SOCIAL MEDIA ADOPTION ON BUSINESS PERFORMANCE OF SMALL AND

MEDIUM ENTERPRISES IN SAUDI ARABIA
Ahmed Alhamami1, Noor Azuan Hashim1, Roshayati Abdul Hamid1, and Siti Ngayesah Ab. Hamid1
Faculty Economics and Management, Universiti Kebangsaan Malaysia, Malaysia. 1
Abstract
Today, social media networks became an integral part of marketing plans of small and medium enterprises (SMEs)
all over the world. One of the major challenges that SMEs are facing in Saudi Arabia is lack of effective adoption
to social media network for their business plan. While most of Saudi SEMs include social media in their marketing
strategies, but they still lacking the understanding on how social media contribute to business performance. Based
on this claim, the aim of this study is to examine the direct relationship between social media adoption and
business performance of SMEs. To achieve this objective, this study adopted quantitative methods, the empirical
data was collected from a sample of SME’s owners and CEO, as well as directors in Saudi Arabia. The findings
of the study provided a guideline for SMES to improve their marketing strategies based on the influence of social
media networks.
Keywords: Social Media Adoption, Small and Medium Enterprises (SMEs), Business Performance.
219
Track: Accounting
Paper ID: 123-127
DOWN THE MEMORY LANE BEFORE USHERING IN NEW ERA: REVISITING CORPORATE
GOVERNANCE AND TRANSPARENCY NEXUS AFTER TWO DECADES OF CHANGE IN
MALAYSIA
Hairul Suhaimi Nahar 544, Maslinawati Mohamad545, and Mohd Taufik Mohd Suffian546
Department of Accounting, College of Economics and Political Science, Sultan Qaboos University, Sultanate of
Oman1, Accounting Research Institute, UiTM, Malaysia2, Faculty of Accountancy, UiTM Perak Branch, Tapah
Campus, Malaysia3.
1.0 Introduction
As the world ushers into the new era of post-pandemic, the present study takes the usual historical path down the
memory lane by revisiting corporate governance and transparency nexus after two decades of change in Malaysia
(commonly referred to as “reform”) and thereby filling the governance literature void by empirically assessing a
crucial vintage issue arising from the “maintained assumption” stated in the Malaysian government’s first policy
report on corporate governance that the introduction of the Malaysian Code of Corporate Governance (herein “the
Code”) being part of its comprehensive governance reform program introduced two decades ago would improve
firm’s financial transparency (FT) through a direct channel of governance practices improvement by corporate
participants1. The initiation of various Malaysian governance reform programs effectively reflects significant
changes in the Malaysian governance regime expected to enhance investors’ confidence. Its subsequent responses
by firms have systematically created affluent areas for empirical governance research.
The present study is motivated by the fact that although the Code was introduced and enforced two
decades ago, the explicitly provided “maintained assumption” remains an essential unresolved empirical issue till
today as the extent of governance and financial reporting literature provides no direct empirical support (or
otherwise) to the claim that such enhancement in governance environment produces results initially envisaged by
regulators. A review of empirical research repertoire on corporate governance and transparency nexus, specifically
the Code’s impact on firm’s FT, reveals limited attempts to directly assess FCCG’s “maintained assumption” with
only two empirical papers directly related to the issue, albeit using different FT measurements which are capital
market-based in nature. While the first study finds both disclosure indexes and corporate governance measures
were significantly value relevant for post-crisis period only2, the second study finds shorter reporting lag and
mostly immaterial impact on the timeliness of price discovery post Code period 3. As the capital market-based
measurement of FT is an indirect and blurry measure of FT as it includes “market noises”547, from the empirical
perspective, the extent of governance reform effectiveness towards ensuring a firm’s FT in Malaysia remains
empirically unclear. The imperative of this study is even more compelling in view that despite the subsequent four
revisions to the Code in the past two decades (in 2007, 2012, 2017, and 2021), the fundamental pillar supporting
the Code, i.e., the “maintained assumption” remains the same throughout. Thus, examining the first Code’s
implication over the firm’s FT facilitates our empirical efforts to justify its introduction.
Accordingly, the empirical gap is addressed by (1) investigating the trend of governance practices,
ownership patterns, and accruals quality (AQ) representing measured firm’s FT across pre and post Code periods;
(2) examining across different governance regimes, the link between firm’s FT and board characteristics; and (3)
investigating the moderating role of changes in the governance regime on the link between firm’s FT and selected
board characteristics.
544
Finance Committee on Corporate Governance (FCCG). 1999. Report on corporate governance, Malaysia: Ministry of Finance. Malaysia.
545
Morris, R. D., Pham, T. A. M., and Gray, S. J. 2011. The value relevance of transparency and corporate governance in Malaysia before
and after the Asian financial crisis. Abacus, 47(2):205-233.
546
Lim, M., How, J., and Verhoeven, P. 2014. Corporate ownership, corporate governance reform and timeliness of earnings: Malaysian
evidence. Journal of Contemporary Accounting & Economics, 10(1):32-45.
547
De Long, J. B., Shleifer, A., Summers, L. H., and Waldmann, R. J. 1989. The size and incidence of the losses from noise trading. The
Journal of Finance, 44(3):681-696.
220
2.0 Methods
The firm’s AQ representing the measured firm’s FT is examined across different pre-and post-code governance
regimes. To ensure objectivity in the assessment procedures, a balanced-data-balanced-period approach based
on restricted samples of non-financial firms listed on Bursa Malaysia’s main board survived throughout the pre
(1996 to 1999) and post (2003 to 2006) reform periods was adopted. The paper conjectures that the firm’s FT
should improve post Code period, evidencing reform effectiveness, particularly towards ensuring enhanced
governance practices and firm’s FT. The selected five board characteristics are leadership structure, board
independence, multiple directorships, family directors, and directors’ financial expertise, commonly examined in
prior research.
The research models (model 1: basic and model 2: interaction) are presented below.
AQ = α0 + α1DUALITY + α2BOD_INED + α3BOD_MULTI + α4BOD_FM + α5BOD_FE + α6SIZE +

α7AUD_QLTY + α8LEV + α9ROA + α10BOD_SIZE + ε....………………...................... (Model 1)
AQ = β0 + β1DUALITY + β2BOD_INED + β3BOD_MULTI + β4BOD_FM + β5BOD_FE + β6SIZE +

β7AUD_QLTY + β8LEV + β9ROA + β10BOD_SIZE + β11CODE + β11DUALITY_C +
β12BOD_INED_C + β13BOD_MULTI_C + β14BOD_FM_C + β15BOD_FE_C + ….....(Model 2)
Conceptually, the intercept and slope interacting variables (with prefix “c”) in model 2 effectively extend
the relevant regression equations to detect any structural changes between pre and post events 548. The interaction
terms’ coefficients are expected to be statistically significant for that particular interacted variable to be
interpretable549. Statistically, the insignificant interacted variable’s coefficient means that the Code provides a
benign effect on the association between that variable and AQ. Interaction effects as reflected by the interaction
terms’ coefficients represent the combined effects of both moderating (CODE) and independent variables (board)
on a dependent variable (AQ), implying that when an interaction effect is present, the impact of governance on
AQ depends on the presence of the moderating variable.
The results indicate that while governance reform improves governance practices, it did not bring improved firm’s
FT. Specifically, descriptive level results indicate that almost all governance variables reflect an improvement
trend post Code period. Such improvement trend is considered as a measured response to governance regime
change. However, the reform did not seem to induce enhanced firm’s FT, culminating on lower AQ measured
post Code period. It is speculated that as the Code encapsulating the changes in the governance regime was
introduced and enforced during the uncertain economic conditions (i.e., the slowing down of the world economy
during the recovery period550), results imply that changes in the governance environment were not the most
efficient mechanism through which improved firm’s FT could be ensured. The interaction analysis provides
evidence of Code’s ability to favorably moderate the link between the firm’s FT and two board attributes (family
and financial expert directors), suggesting improvement in governance practices in ensuring the firm’s FT post
Code period. These results also represent cogent evidence supporting the board’s role in ensuring the firm’s FT
in Malaysia had generally improved post Code period. Sensitivity tests suggest that, except for some minor
differences in results, these findings are moderately robust to alternative variables specification.

Overall, the paper contributes to corporate governance and transparency nexus literature in developing economies
in at least three specific ways. First, it provides evidence on the link between various board attributes and the
firm’s FT across different governance regimes from a developing country like Malaysia. Second, it presents
evidence on the public policy implications towards governance practices and measured firm FT. Thirdly, the
research contributes to public policy debate concerning governance reform effectiveness from the specific angle
548
Owusu‐Ansah, S. and Yeoh, J. 2005. The effect of legislation on corporate disclosure practices. Abacus, 41(1):92-109.
549
Aiken, L. S., West, S. G. and Reno, R. R. 1991. Multiple regression: Testing and interpreting interactions. Sage.
550
World Economic Situation and Prospects 2000. United Nations, New York. Available at
https://www.un.org/en/development/desa/policy/wesp/wesp_archive/2000wesp.pdf
221
of the firm’s FT, thereby confirming the potential condition upon which the “maintained assumption” would be
valid.
222

Paper ID:112-115
CHALLENGES OF WOMEN IN LEADERSHIP ROLE IN MALAYSIAN HIGHER EDUCATION.

RESULTS OF THE PLS PATH MODELING
Shnna Chong Yenyi1, Vimala Kadiresan2, Suguna Sinniah3, and Zafir Khan Mohamed Makhbul3
Faculty of Business, Economics & Accounting, HELP University, Malaysia1,2, Graduate School of Business,
Universiti Kebangsaan Malaysia, Malaysia3.
1.0 Introduction
Women are gaining more exposure and recognition internationally as organizational professionals. This
phenomenon has been linked to various factors such as disparities in social attitudes towards employment,
economic development, married women with children, and other developments in political and legal terms.
Nevertheless, there is still a major discrepancy in the amount of men and women holding leadership roles across
a variety of organizations, comprising higher education. Several empirical findings show the underrepresentation
of women in key management roles in higher institutions. As in Malaysia, higher education leadership roles are
male-dominated and gender imbalanced. Women's underrepresentation in education leadership indicates that male
behaviours and leadership function to exclude women.
According to Rahn (2015) neither male nor female claimed that gender inequality unjustifiably influences
opportunities for women to advance top level administrative careers in educational institutions. Numerous woman
working in higher institutions remained in middle management positions, instead of progressing to top managerial
roles. An analysis of several research on women's job advancement shows that women are substantially
underrepresented at leadership roles. Today, few women find themselves in leadership roles in Malaysia higher
education. Education management reveals the gender, apart from age, experience, background or competence to
decide the individual position to be named in education based on equality of opportunity. Top leadership are
overwhelmingly men, although women numerically dominate the workforce. The contribution of women to the
labor force is growing, however women still cannot achieve parity with men. Institutionalize gender practices,
social methods frameworks in education institutions lead to the obstacles encountered by women as they progress
up the job ladder, regardless of their abilities or achievements. Educational institutions understand the importance
of gender balance in leadership positions, and institutions continue to engage in leadership activities that
encourage both men and women participate. However, many leaderships initiatives emphasis on the value of
attributes of leadership, qualities and abilities with little emphasis on capabilities. In a growing dynamic world,
education leaders face numerous challenges. Women will not be reducing her family responsibilities coupled with
increasing organizational commitments. They still take on family responsibility and the care burden. Female
leaders identify several challenges including lack of role models, lack of training and growth, and lack of job
opportunities. In order to boost the quantity and variety of role models across a wide spectrum of careers, the
number of woman representatives to higher education needs to be expanded. Therefore, this research attempts to
recognize the challenges faced by women in taking leadership roles in Malaysia’s higher education.
2.0 Methods
A quantitative approach was used to provide a detailed overview of the research problem and to collect the data
for this research. An online survey instrument used to capture responses from faculty members who are working
in the higher institutions. For current research, the target respondents are lecturers, administrators, admin
employees, faculty members, principal and dean of Malaysia higher education. Malaysian higher education site
is the unit analyses of current study. This research is descriptive and conscious since all the questionnaires were
sent to the site of Malaysia higher education. A comprehensible questionnaire was disseminated to the population
of Malaysian higher education in the interest of finding out what contributes to the challenges of women in taking
leadership roles in Malaysia higher education. The obtained responses were then keyed into IBM SPSS and Partial
least squares structural equation modeling (PLS-SEM) approach was used to analyze the quantitative data through
SmartPLS 2.0 software. Data analysis using PLS technique has been used in numerous fields and its being one of
the vital tool among researchers. The usage of this tool becoming popular in fields such as Marketing, psychology,
management and computer science. A five point Likert scale was used to assess the respondents' viewpoint which
is 1= strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, 5 = strongly agree. Measurement instruments have
been adapted from the previously published journals and unpublished theses as follows. Leadership Role (Samuel,
Omar, & Hassian, 2020); Lack of Opportunity (Bly, 2018); Lack of Training (Alsubaihi, 2016; Saleem, Rafiq, &
Yusaf, 2017); Gender Stereotypes (Tiwari, Mathur, & Awasthi, 2018), and Family and Work Conflict (Samuel,
Omar, & Hassian, 2020; Yet-Mee, Luen Peng, & Chan Yin-Fah, 2020).
223
Figure I disclose PLS structural model of challenges faced by women in their leadership role. Its shows the
hypothesized relationship between independent constructs (LOO, LOT, GS and FWC) and the dependent
construct (LR). The path coefficient values exemplify the beta value of, 1 0.234, 2 0.194, 3 0.116 and 4 0.169.It
also shows, latent variables with the measurement items which LOO (four items), LOT (three items), GS (three
items) and four items measured for dependent variable of LR. Items with loading value less than 0.50 has been
deleted. Henceforth, the R2 value shows 0.190 which interpret 19% of the variance of LR. This study obtained
PLS regression by finding cross-loading, path coefficient, discriminant validity, R2 value and the weight value
for the latent variables of the measurement items. The below equation presents PLS regression model of the
equation: LR (LR) = 0.234*LOO +0.194*LOT +0.116*GS +0.169 *FWC. Carmines and Zeller (1979) argue that,
if loading exceed over 0.70 considered more variance between the latent variables. Some scholars argues that, the
cross loading is appropriate if the value above 0.40 or 0.50 61.
This study shows the mixed range of loadings between 0.585 and 0.809 which as mentioned by Lew and
Sinkovics (2012) that outer loading over 0.5 is acceptable while Chin (1998a) mentioned 0.40 can be acceptable.
As a result of this study, the loading met the recommended threshold value of 0.40. Table I presents the results of
reliability of the construct including average variance extracted (AVE), composite reliability (CR) and Cronbach’s
alpha. Crobach’s alpha and CR are used to examine internal reliability. The study construct reveal that the
Cronbach’s alpha and CR value is more than 0.70 which is greater than the threshold value 0.7. While the CR
value range is from 0.763 to 0.840 which is greater than the threshold value of 0.7. At the same time, all the AVE
value shows greater than 0.50 which directs the sufficient level of convergent validity. Square root of AVE and
cross loading is can be examined by Discriminant validity in PLS path modeling. Table II reveals that the square
root of AVE for each construct were greater than the highest correlation between that the constructs. While, Figure
I shows that, the exploratory power of the PLS structural model can be evaluated by examining the amount of
variation in the dependent variables.
The PLS model results reveals, LOO is the most vital and strongest encounters for LR, with the path
coefficient 0.234 and it follows by LOT (0.194), FWC (0.169) and GS (0.116). The significance path modeling is
tested using bootstrapping in PLS structural equation modeling. The bootstrapping is used to identify better
approximations for the true small-sample properties. Hair, Ringle, and Sarstedt (2011) revealed that critical t-
values for two-tailed test are 1.65 (significance level 10 per cent), 1.96 (significance level 5 per cent) and 2.58
(significance level 1 per cent).
Table II revealed the standardized path coefficient results and hypothesis test with the result of LOO and
LOT are positively significant to the dependent variables LR (LOO 0.234 t-value 3.292 p 0.001; LOT 0.194 t-
value 2.588 p 0.01); meanwhile GS and FWC are not significant (GS 0.116 t-value 1.270 p 0.205; FWC 0.169 t-
value 1.750 p 0.081). The path coefficient value should be minimum 0.20 and ideally above 0.30 to be considered
as a strong relationship and meaningful for discussion.
Table I: Reliability and Validity of Constructs

Variables AVE CR Cronbach’s alpha
LOO 0.530 0.818 0.704
LOT 0.522 0.763 0.583
GS 0.569 0.840 0.766
FWC 0.560 0.784 0.655
LR 0.545 0.826 0.732
Note: LOO = Lack of opportunity, LOT= Lack of training, GS= Gender stereotypes, FWC= Family and work conflict, LR= Leadership
role
Table II: Path coefficient (LR)

Path Relationship Path coefficient t-value (by bootstrap) Significant (Two-tailed) (%) Inference
H1 : LOO ➝ LR 0.234 3.292 Sig. at 1 Supported
H1 : LOT ➝ LR 0.194 2.588 Sig. at 1 Supported
H1 : GS➝ LR 0.116 1.270 Sig. at 1 Not Supported
H1 : FWC➝ LR 0.169 1.750 Sig. at 1 Not Supported
Note: LOO = Lack of opportunity, LOT= Lack of training, GS= Gender stereotypes, FWC= Family and work conflict, LR= Leadership role
224
Figure I: PLS-PM Structural Equation Model
Based on the above, the results in this study posits that lack of opportunity and lack of training have a
noticeable influence on leadership role among the faculty members in the Malaysian Higher Education. The
findings are supported by previous studies undertaken by Alsubaihi (2016). Limited chance had postponed
women’s attainment to leadership. Women are receiving fewer substantial opportunities from institutional leaders
to develop and enhance their opportunities for advancement and there is a lack of opportunities for women to gain
essential development work experiences in institutional challenges. Women would have to work harder to convert
this into more hours of work before women take on a leadership role. In order to succeed in higher education
leadership, women are affected by lack of opportunity.
As for the latter, the findings of lack of training is supported by Samuel, Omar, and Hassian (2020), Diehl
(2014), Webster, Larry, and Brown (2019), and Garza (2019). There are significant limitations imposed on women
in relation to availability of trainings which leads to shortage of woman expertise and skills hence limiting to
leadership roles. In addition, poor trainings given to woman before assigning to managerial position could also
lead to the above. Managers draw a horizon on futures thinking and scenario planning that outline its blueprint by
benchmarking its male staffs instead of the female workforce. This could be due to women being perceived to be
an additional cost that leads to increasing financial liability in an organization. Hence, this superficial
understanding that women pose a lesser productive outcome, limits women to training offers which discourages
woman from acquiring the capabilities needed to compete with the male for senior roles. On the other hand , there
is a possibility that woman are not aware or being less exposed of the training opportunities available around
them as they receive less support from their managers .All this, in a nutshell, results in women being the less
favourable choice when a decision for crucial positions in organisations are in place.
On the other hand, the results of gender stereotypes and family and work conflict are not supported on
leadership role among the faculty members in the Malaysian Higher Education. The findings are supported by
previous studies undertaken by Moloto, Brink, and Nel (2014). Male and female leaders in higher institutions
were found to be the same in terms of leadership behaviour. The possible explanation for this is, gender stereotypes
is diminishing, and more females are entering leadership roles. Women have outstanding performance in
leadership role, which evaluates their emphasis on development. They have great interest in attaining goals
whereas men tend to get good outcomes on leadership that measure the emphasis on strategic planning. As for the
subsequent findings on family and work conflict are supported by previous studies undertaken by Jauhar and Lau
(2018). Scholars have found family commitment does not seem to be a significant challenge to women's career
development. It was observed that family had no detrimental effect on managers of married women, but rather an
opportunity for career development. Flexible job schedules are utilised by women to achieve their career ambitions
and handle the workload of other responsibilities.
Based on the findings above, the study emphasizes the importance of creating better leadership
opportunities for female. Institutions can initiate a process of impartiality and foster the climate of women leaders
in higher education by appointing more women to the management. Offering female the ability to carry out
administrative roles would potentially expand the applicant pool, but ultimately help retain administrator since
these results would welcome qualified women to institutions.
225
The higher education ministry should continue to make every initiative to include Malaysian women
leaders in elite roles in higher education field. It is important to increase the ratio of women leaders over males in
leadership positions to encourage female in leadership roles. Higher institutions must concentrate on the
introduction of leadership development and succession planning, with a focus on getting more Malaysian female
into elite leadership roles. Besides, in order to encourage women leaders to be able to lead professionally, higher
institutions have to give women leaders more leadership opportunities. The results draw attention to the necessity
for more chances for women to lead efficiently. The more opportunities female leaders gain, the less barriers they
will face as they develop their careers in leadership.
In addition, the academic institutions must have a robust system for training and succession planning
structure in order to transfer the current faculty into a leadership role. Professional leadership programs and
trainings should be made common at higher institutions. Effective leadership approach that emphasizes principles
like teamwork, confidence, willingness to admit faults, delegation and sincerity should be pursued in order to
spread unfavorable insight into women's leadership skills. Proportionally, female leaders should take on chances
to apply and demonstrate their leadership characteristics. On the other hand, managers can make internal surveys
as compulsory practice to mitigate the problem concerning gender-based training gaps thus making woman feel
valued and understood. In line with this, managers in the higher education can play a very important role by
making training and learning opportunities beneficial to all and should be shared equally across man and woman.
Lastly, women themselves must speak out for their concerns and desires to have their voices known at
all levels of society. Female leaders should be vocal about discriminatory rules or laws that exempt them from or
prohibit them from taking elite leadership roles in the presidency of women's universities in Malaysia higher
education.

The results analysis will add to the ongoing study on the achievement of higher education leadership by women
and their journey to leadership. The study found that the number of women in higher education continues to grow,
and it was important to explore whether women would inspire other women and whether those in institutions
would accept more women in leadership role. Information from this study will contribute to these field of concern.
Higher institutions will enable to recognize the existing challenges presented by women role in
leadership. The research is valuable in gaining perspective and improving women's potential to achieve leadership
roles in institution. Researcher endeavoured to recognize existing challenges affecting women in leadership
positions in order to raise recognition of women's challenges. In this research, the following beneficiaries will
achieve a considerable benefit.
Ministry of Education will benefit from this research since they will be able to comprehend the significant
challenges affecting women in higher education engagement. Through this study, Ministry of Education will
deduce the significant conclusions and recommendations which have been created in the research and use them
as the framework for analysis of women in careers management and particularly in education management. It will
boost the appreciation and recognition of women in managerial and educational fields. Policy makers can tailor
appropriate plans by making significant investments in the higher education by emphasizing empathy and flexible
workplace. Moreover, this research is a direction of model for women's societal perspective. It helps the
populations to recognise women in academic leadership roles and female students in early education particularly.
Consequently, the research removes the deep-rooted conventional idea of women as only a homemaker, who can
perform dual roles with adequate education and training. Female students can also gain from the study findings
since it underlines the magnitude of gender imbalance and how they can overcome the challenges to managerial
and leadership engagement analysis of women in careers management and particularly in education management.
It will boost the appreciation and recognition of women in managerial and educational fields.
While women's leadership has been under-studied, the knowledge gained from the research included here
relates to the actual labor force associated with women and to the development of leadership. This revolutionary
research should be used as a starting point to produce potential studies and provide a framework for understanding
how ideas connected to this phenomenon continue to progress based on current women's expertise in institutions.
226

Paper ID: 036-035
RISK MANAGEMENT EFFECTIVENESS, CORPORATE SOCIAL RESPONSIBILITY

DISCLOSURES, AND COMPANY PERFORMANCE
Husaini1, Ridwan Nurazi1, and Saiful1
Faculty of Economics and Business, Bengkulu University, Indonesia 1.
1.0 Introduction
The concept of Corporate Social Responsibility (CSR) has evolved over the last two decades. Until now, many
companies have implemented CSR into their business strategy. This shows that the CSR program has become the
company's good image and reputation to its stakeholders. Several studies such as Brinkman (2003) concluded that
corporate commitment to CSR improves company performance. The results of the research by Simionescu and
Gherghina (2014) show that CSR has a positive effect on market performance (EPS), as well as the results of
research by Godfrey et al. (2009) stated that CSR disclosure can protect companies and improve company
performance. Similar results were concluded by Nekhili et al. (2017) stated that CSR disclosure has a positive
effect on firm value (Tobin's Q). In this case, when a company implements CSR, the company's risk is more
controlled, minimizes losses, and gains a competitive advantage (Simionescu and Gherghina, 2014). Thus CSR is
beneficial for corporate risk management (Kim et al., 2020). On the other hand, investment in CSR is not only
aimed at minimizing corporate risk (Orlitzky and Benjamin, 2001; Sun and Cui, 2014), but also opportunities to
improve company performance (Bassen et al., 2006).
Until now, research on the application of risk management is more aimed at proving that there is an
increase in company performance after implementing risk management, such as research by (Gordon et al., 2009;
Hoyt and Lybenberg, 2011; Florio and Leoni, 2016) who concluded that the application of risk management can
improve company performance. However, several studies show the opposite results that the application of risk
management does not affect company performance (Pagach and Warr, 2010; Husaini et al., 2020). The
inconsistency of the results of these studies allows risk management variables to be assumed to be mutually
substituting or can be considered as a substitute or complement to CSR disclosure in explaining company
performance so that increased risk management is expected to strengthen the relationship between CSR disclosure
and company performance. Testing the interaction of risk management implementation and CSR disclosure is the
novelty of this study.
Realizing the importance of CSR, the Indonesian government through Company Law No. 40 of 2007,
stipulates that companies that carry out business activities that have an impact on natural resources are required
to implement and disclose social and environmental responsibilities. However, in terms of reporting, it is still
voluntary. Until now, many companies in Indonesia have started to disclose their social and environmental
activities, using various media, such as annual reports, sustainability reports, websites, online media, and
advertisements. Therefore, the purpose of this study is to describe the level of disclosure of CSR, application of
risk management, and company performance in Indonesia, then this study will examine the relationship between
CSR disclosure and company performance, and test the application of risk management in moderating the
relationship between CSR disclosure and company performance.
2.0 Methods
The population of this study is non-financial companies listed on the Indonesia Stock Exchange (IDX). Purposive
sampling technique was used in sampling, obtained 253 companies during 2014-2018. The dependent variable in
this study is the company's financial performance. Company performance (CP) is measured by several indicators,
namely financial performance (ROA, ROE, NPM, EPS) and market performance (Tobin's Q and Stock Price).
The independent variable of this study is the disclosure of CSR based on the Global Reporting Initiative (GRI G4)
Index totalling 91 disclosure items. Disclosures are stated in dummy, 1 if disclosed and 0 other. Next, the
moderating variable, namely Total Risk Management (MRT), is measured by the standard deviation of sales
compared to the standard deviation of return on assets (ROA) and standardized by the level of industrial risk.
Some of the control variables in this study are company size (SZ) and Leverage (LV), and company age (AGE).
The conceptual model of this research is of the following.
CP = β0 + β1CSRit + β2MRTit + ∑β2Control + εit ………………………........................................................(1)

CP = β0 + β1CSRit + β2MRTit + β3CSRit*β2MRTit + ∑β2Control + εit …….…............................................(2)
Furthermore, data analysis to test the hypothesis using structural equation modeling (SEM) with partial
least squares (PLS) approach (WarpPLS).
227
The results of hypothesis testing are carried out after going through the validity, reliability, and goodness of fit
test of the WarpPLS model. The test results are presented in the following Figure 1.
Figure 1. Structural model of equations I and II

Structural Model (Model I) Structural Model (Model II)
The results of testing Hypothesis 1 prove that CSR disclosure improves company performance. The
results of this study are in line with Godfrey et al. (2009) where the implications of CSR disclosure are to improve
company performance, both financial performance and market performance (Simionescu and Gherghina, 2014;
Nekhili et al., 2017). The results of testing Hypothesis 2 show that there is an interaction between the application
of total risk management on the relationship between CSR and company performance. These results are in line
with agency theory that the application of risk management can reduce agency costs with the aim of monitoring
agent behaviour and at the same time creating benefits for improving company performance. In this case, CSR is
seen as a tool to protect reputation, where CSR activities are more focused on the activities of companies with the
highest potential risk (negatively related to business risk), which is an inverse view of corporate risk management
(Devie et al., 2019). The results of this study are in line with research by Lu et al. (2020) that companies with
better CSR performance tend to adopt risk management practices, where effective risk management capabilities
will ensure the company's resilience to risk, which will ultimately result in better organizational performance
(Khan et al., 2020). The results of this study are also in line with Tran et al. (2019) stated that CSR is the optimal
action to minimize risk and improve.

This study contributes to the agency theory that disclosure of information such as CSR plays a role in minimizing
information asymmetry between agents and principals. Similar support to the stakeholder theory that disclosure
of the company's CSR activities is in line with the interests of the stakeholders to improve company performance.
This study also supports the signalling theory that CSR disclosure is good news information for investors that has
an impact on company performance.
228

Paper ID: 036-035
The Relationship Between Supply Network Embeddedness Structure and Firm’s Sustainable
Performance
Lokhman Hakim Osman1
1.0 Introduction
Supply network embeddedness is the degree of involvement that a firm has within the supply network that the
firm is embedded in. A growing body of supply chain management literature has proposed and researched the
role of the network of buyer-supplier relationship and supply network embeddedness on a firm’s performance
instead of the traditional dyadic buyer-supplier relationship approach1. A firm’s supply network embeddedness
can affect inbound innovation practices, research and development output, and firm’s geographical expansion.
Thus, effective management of the supply network embeddedness will enhance the firm’s product performance,
productivity improvement, dynamic capabilities, and sustainable development strategies. A firm that is deeply
embedded in the supply network structure amplifies the effects of cooperation on product performance in
environmental R&D
The social network structure attributes of embedded firms can considerably influence the firm's level of
integration in the supply network, information sharing capacities, level of reputations, firm’s innovative
capacities, market information, and potentially disruptive innovation. Consequently, understanding the roles of
the supply network embeddedness is vital for the firm’s competitive ability and sustainable business performance.
Nevertheless, empirical evidence indicating the relationship between different supply network embeddedness and
supply network performance remains to be seen. Thus, this research will investigate the relationship between
three specific network embeddedness parameters which are the degree centrality of the firms, clique-overlap and
the multiplexity of ties among firms, that a firm may possess on the firm sustainable practices i.e. Green SCOR
practices. Thus, this study will address the following research question:
What is the relationship between supply network embeddedness and sustainable performance?
2.0 Methods
Objective of this study is to test the relationship between the different network embeddedness measurement of
firm in a supply network and its sustainable performance. For inter-dependency argument that a special class of
statistical models is preferred when investigating social relations phenomena, the Social Network Analysis (SNA)
and the Exponential Random Graph Model (ERGM) is adopted. This objective is achieved by comparing the
outcome of the Pure Attribute Base Network Effect models against the Pure Structural Effects model of the
corresponding network.
Parameter ML Standard Magnitude Convergence

Estimates Error (MLE/Std Err) t-ratio
Model 1a: Pure Structural Effects(No
attributes)
Arc -1.101 0.082 13.33 0.014*
Reciprocity 1.478 0.401 3.69 0.048*
A-in-S -1.350 0.429 3.14 0.014*
A-out-S 0.128 0.399 0.32 0.019
AT-T 1.096 0.259 4.23 0.027*
AT-C -0.273 0.109 2.51 0.076*
AT-D 0.469 0.212 2.21 0.037*
AT-U -0.089 0.131 0.69 0.019
A2P-T -0.163 0.045 3.59 0.010*
A2P-D -0.124 0.075 1.65 0.012
A2P-U 0.084 0.027 3.07 0.035*
Model 1b:Pure Attribute Based
Network Effects (Attribute: SCOR)
Arc -1.227 0.078 15.67 0.010*
Reciprocity 1.507 0.398 3.78 -0.012*
229
A-in-S -1.339 0.403 3.32 0.004*

A-out-S 0.156 0.041 3.79 -0.0008*
AT-T 1.101 0.265 4.145 0.003*
AT-C -0.277 0.113 2.45 -0.047*
AT-D 0.464 0.236 1.96 -0.0004
AT-U -0.083 0.127 0.66 0.019
A2P-T -0.162 0.044 3.65 -0.002*
A2P-D -0.129 0.075 1.72 0.020
A2P-U 0.085 0.026 3.23 0.048
Sum of continuous attributes 0.071 0.006 11.42 0.042*
Difference of continuous attributes -0.036 0.007 4.78 0.067*
*A parameter estimates are considered significant when the absolute value of the ML is greater than twice the
magnitude of standard error.
Model 1a and 1b were used to test embeddedness based on degree centrality, multiplexity and clique overlap in
information sharing tie effect on sustainable performance (SCOR network ties). The parameters that are included
in the model of the network are as follow: Reciprocity, A-in-S, A-out-S, AT-T, AT-D, AT-U, AT-C, A2P-T, A2P-
U, and A2P-D. Structurally these parameters reflect certain form of ties structural formations in the SCOR
network. Evidently, these parameters reflect degree centrality (A-in-S, A-out-S), cliques (AT-T, AT-D, AT-U, and
AT-C) and multiplicity (A2P-T, A2P-U, and A2P-D). As this study argues that network embeddedness would
influence SCOR application of the embedded firms, this study expects to found the presence of degree centrality
(A-in-S, A-out-S), cliques (AT-T, AT-D, AT-U, and AT-C) and multiplicity (A2P-T, A2P-U, and A2P-D)
parameters in the SCOR network.

The ERGM results shows that degree centrality can improve firm’s sustainable performance. Moreover, the
relationship between multiplexity and clique overlap and sustainable performance is negative. Degree centrality
is found to be positively linked to firms’ sustainable performance. Theoretically this demonstrates that having
connections from other actors represents the focal firm's importance in the network, providing it with more
knowledge access and leverage over the supply network. Firms with a high degree of centrality can act as supply
chain integrators, systematizing and preserving the overall product offerings and thus achieving better supply
chain leverage for business success. However, deliberately establishing a large number of links to other actors
(i.e.multiplexity) does not increase the efficiency of the focal firm. Since the majority of them are SMEs, they
may have difficulty successfully managing a large number of supply chain partners due to a lack of resources and
administrative consideration towards each of the firm's partners. Firms with a large number of partners can lose
sight of their target markets and customers. This finding means that a firm in a strongly connected supply network
will be able to obtain additional services and knowledge not available to a less reputable firm in order to increase
its efficiency, likely as a result of its more positive image. A firm with a high clique-overlap, on the other hand,
may perform worse. By connecting with a large number of unrelated supply chain partners, a firm could be more
likely to be discovered and classified as an out-group member. Members of the supply network can then keep its
access to information and exert leverage over the supply chain, resulting in improved firm efficiency. According
to social capital theory, information sharing can reduce the impact of cliques-overlap on firms' sustainable
performance by increasing the number of similarly reputable firms in the same network, resulting in a power
struggle and dispute among network members. This is a new discovery, and further research is needed.
230

Paper ID: 080-085
MILLENNIALS GENERATION AND KEY FACTORS ON THE SELECTION OF KOREAN

RESTAURANTS IN MALAYSIA
Nor Azlina Kamarohim1, Khaizan Azril1, and Manisah Othman1
School of Business and Economics, Faculty of Economics and Management, Universiti Putra Malaysia,
Malaysia1.
1.0 Introduction
Korean restaurant has become one of the largest and fastest trending restaurants in Malaysia based on the global
phenomenon due to the popularity of the Korean celebrity. In particular, Korean food is gaining popularity
worldwide, and consumers throughout the globe have revealed interests in the culture of Korean food (Gan.X.N,
2019). Korean restaurant is a restaurant that serve Korean cuisine dish and food. It is the habitual cooking
traditions and practices of the culinary arts of Korea. Many of Korean restaurant have their own franchise in
Malaysia, because for them franchise is one of the important approaches to create a good restaurant. Nowadays,
there are so many kinds and branches of Korean restaurant established in Malaysia and mostly it is originated
from South Korea. However, there are also several Korean restaurants that operated by local Malaysian. Since the
first Korean show arrived on Malaysian shores, Korean culture has consistently saturated the hearts of numerous
Malaysians. From K-Pop to popular music to cooking part. According to 11 street, the sale of Korean food items
on its platform has doubled since its inception in April 2015, with the 26 to 35 age group contributing on average
40 per cent of total Korean food sale in 2016. From this, it can lead Malaysians soon became diverted towards the
Korean food, beauty, music, and fashion in which the food businesses took advantage and spread its root in
Malaysia to gain further success (Mohd Nazlin and Ishak, 2018). Several studies shown that Malaysian loves
Korean food and prefers Korean food over other ethnic food choices in Malaysia. It has been taken into
consideration that due to the increased of the South Korean population in Malaysia, the non-Korean customer
base are influenced and attracted towards the Korean cuisine and heritage. For the Korean expatriates and food
businesses, Malaysia is considered as the second home. This growing interest is rooted in customer perception
and preferences (Rahayu, Koeswandi and Wibowo, 2018). The Korean restaurants' business philosophy is
observed to be based upon the belief that they make a profit by providing friendly services and high-quality goods
to the people (Lee, 2019a).
In this research, millennials customer behaviour and how it influences Malaysia's Korean restaurant
selection are being studied. The researcher has applied this aspect for assessing the factors chosen by the
millennial’s consumers for the selection of Korean restaurants in Malaysia. Malaysians especially millennials
generation have different perceptions and behaviour towards selecting of Korean restaurants and it changes by as
service quality, food quality, social media influence and peer influence. With this regard, this paper discusses the
factors based on previous scholars’ literature on Malaysians’ perceptions of Korean foods.
2.0 Methods
This study using quantitative method to examine the factors affecting to choose Korean restaurant in Malaysia.
The platform was Google form to collect the data due to the pandemic situation. Then the data were imported into
Statistical Package Social Science (SPSS) for further analysis. Multiple regression in SPSS was used to get the
result for this study.
The questionnaire for the online survey was designed using simple and unbiased wordings so that
respondent could easily understand the questions. A five-point Likert scale (very strongly disagree, strongly
disagree, neutral, strongly agree and very strongly disagree) was used for all the variables.
The targeted population for the current study was millennials generation residing in and around Klang
Valley. Simple random sampling was adopted to select the respondents for the study. This method can avoid
biasness and result can represent the target sample and population. Sample size for this research was 200.
Millennial’s generation is considered to have an integral influence upon restaurant selection as it is highly
important to analyse the preferences of them. On the other hand, the Korean food is being accepted in different
nations across the world because the younger generations tend to follow the pop culture of Korea which is a
powerhouse of Korean media. The Korean restaurants are found to be gaining highly competitive advantage in
Malaysia over the other ethnic restaurants. This is due to the customer positive perception regarding the Korean
food and its culture. In this research, the focus is upon the identification of the influence of millennial generation
of selecting a Korean Restaurant in Malaysia.
231
According to the research findings on Korean restaurants in Malaysia, this study found that factors such
as food quality, social media influence and peer influence are influencing millennials generation to choose Korean
restaurant in Malaysia. However, the service quality factor had not influence towards Korean restaurant preference
among millennial generation. Table 1 below show the P-value.
Table 1: Result of Hypothesis

Hypothesis P-Value Conclusion
H1 There is a significant relationship between service quality 0.363 Not significant
and consumer behaviour at Korean restaurants
H2 There is a significant relationship between food quality and 0.000 Significant
consumer behaviour at Korean restaurants
H3 There is a significant relationship between social media 0.001 Significant
influence and consumer behaviour at Korean restaurants
H4 There is a significant relationship between peer and 0.000 Significant
consumer behaviour at Korean restaurants

In the theoretical part, this study contributes some knowledge toward consumer behaviour decision making which
is Korean restaurant in Malaysia and millennial generation as a new setting in the research. On the other hand,
practically, this study contributes to various sector to have better understanding of millennial generation and
implement better social marketing strategies. This study also will give benefit to sectors such as food producers
and restaurant organization. Other than that, the study of factors influence behaviour may also give some
knowledge the owner or the related person to have a superior comprehension towards customer feeling as far as
administration and condition or surrounding quality. From that the findings data also can help marketers or
managers to make a better decision making related to service quality, then they can improvise the existing service
to meet the customers’ preference.
232

Paper ID: 042-129
GOLD HEDGE AGAINST INFLATION: A SEEMINGLY UNRELATED REGRESSION APPROACH
Nurul Fasyah Mohd Ussdek1 and Mohd Fahmi Ghazali2
Labuan Faculty of International Finance, Universiti Malaysia Sabah, Malaysia 1, Faculty of Economics and
1.0 Introduction
Gold stands out among every single precious metal and is the most popular choice for investment. In times of
uncertainty, the attractiveness of gold may increase due to the relative simplicity of the gold market. The gold
might become an attractive investment, offering investors a greater sense of certainty during the period of market
turbulence. Nevertheless, despite the advantages of gold as a hedge against inflation, investigation on this issue is
relatively scarce in multi-country analysis. Most of the previous studies investigate the hedging ability of gold on
average; however, none of them has accounted for the unobservable factors on the error terms that might influence
the hedging ability of gold against inflation. There are two primary motivations for the use of the seemingly
unrelated regression (SUR) method. The first is to gain efficiency in estimation by combining the information on
a different equation. Second, SUR imposes and tests the restrictions involving different equations' parameters.
Therefore, the SUR method is more efficient because it provides more robust parameter estimates of coefficients,
standard errors, and covariance. Theoretically, the hedging ability is based on Fisher's hypothesis, which first
drew attention to the relationship between assets’ rate of return and expected inflation, concluding that the nominal
rate of return comprises the expected real rate of return and expected inflation. This hypothesis unfolds the ability
of gold to hedge against inflation. The study contributes to the related literature in the following aspects. First,
this study provides new evidence on the issue of inflation hedging from the perspective of multi-country. The
study focusing on these countries is motivated by the size of their gold markets and their diverse currencies and
inflation rates. Second, this study uses the SUR approach to investigate gold returns and inflation. Economists
frequently use ordinary least squares (OLS), GARCH and Cointegration to estimate a series of regression
equations from data on the same observation entities. However, this method does not consider the interactions
that may exist among the different regression equations. Thus, by utilizing the SUR approach, a set of equations
that share a common error structure with non-zero covariance is said to be contemporaneously correlated.
2.0 Methods
Although the inflation rate is selected from different countries and might operate somewhat independently, it
might influence all the risks contemporaneously. Hence, the residual terms in the equations should be highly
correlated. The SUR approach is a better econometric method of estimating a system of equations than the
individual equations, e.g., ordinary least squares (OLS), generalized autoregressive conditional heteroskedasticity
(GARCH) and cointegration method. Nevertheless, there is a lack of studies in economic research that has used
this method. The SUR equations of hedging abilities of gold against inflation can be presented as follows:
𝑘 𝑙
𝑑𝑔1 𝑡 = 𝛽01 + ∑ 𝛽𝑘 1 𝑔𝑘 1 + ∑ 𝑦1 𝜋𝑡 − + 𝜀1
𝑡−1 𝑗
𝑘=1 𝑗=0
𝑘 𝑙
𝑑𝑔2 𝑡 = 𝛽0 2 + ∑ 𝛽𝑘 2 𝑔𝑘 2 + ∑ 𝑦2 𝜋𝑡 − + 𝜀2
𝑡−1 𝑗
𝑘=1 𝑗=0
.. .. ..
. . .
𝑘 𝑙
𝑑𝑔3 𝑡 = 𝛽0 3 + ∑ 𝛽𝑘 3 𝑔𝑘 3 + ∑ 𝑦3 𝜋𝑡 − + 𝜀𝑡
𝑡−1 𝑗
𝑘=1 𝑗=0
where 𝑑𝑔1𝑡 , 𝑑𝑔2𝑡 and 𝑑𝑔3𝑡 denote gold returns at time 𝑡, 𝜋𝑡 is ex-post inflation rate at time t, and 𝜀1 , 𝜀2 and 𝜀𝑡
are the disturbance terms. 𝜀𝑡 is the part of the return not explained by inflation. 𝛽01 , 𝛽02 and 𝛽03 are the constant
terms, 𝛽𝑘 1 , 𝛽𝑘2 and 𝛽𝑘3 are the coefficients of lagged gold return and 𝑦1 , 𝑦2 and 𝑦3 are the parameters of
contemporaneous and lagged inflation. 𝑦1 , 𝑦2 and 𝑦3 are the hedging coefficients that denote how well gold
investment could hedge against inflation or the cross-price elasticity between gold return and inflation. Gold is a
strong (weak) hedge for inflation if 𝑦1 , 𝑦2 and 𝑦3 are positive and statistically significant (insignificant).
233
3.0 Results and Discussions

All the results were tabulated in Table 1 and Table 2. Table 1 represents the descriptive statistics of gold returns
in each country. Generally, the table shows that, on average, the gold returns significantly outperformed inflation
over the sample period of study (January 1993 – December 2019). Nonetheless, the gold return does not
outperform inflation in Russia. Although the gold returns are higher than inflation, these are not sufficient for gold
to be considered an effective hedge against inflation. On the other hand, gold returns volatility (risk) is
significantly higher than inflation, particularly gold in Brazilian and Turkish terms.
Table 1: Descriptive Statistics of Inflation and Gold Returns.

Inflation Gold
Countries Mean SD Mean SD Correlation t-stat
Brazil 2.154 6.738 2.486 8.130 0.793*** 23.307
Canada 0.146 0.341 0.475 3.468 0.094*** 1.684
Chile 0.338 3.605 0.681 3.606 0.055 0.983
China 0.306 4.139 0.527 4.139 0.231*** 4.259
Egypt 0.728 0.960 0.953 4.880 0.163*** 2.955
Ghana 1.405 1.485 1.900 4.223 0.056 1.001
Hungary 0.392 2.902 0.857 3.928 0.492*** 10.138
India 0.572 0.820 0.744 3.612 -0.032 -0.575
Indonesia 0.705 1.255 1.057 6.619 0.224*** 4.118
Japan 0.019 0.324 0.423 3.588 -0.041 -0.731
Jordan 0.257 0.852 0.474 3.561 0.052 0.926
Malaysia 0.203 0.392 0.610 3.697 -0.001 -0.019
Mexico 0.650 0.848 1.027 4.817 0.098** 1.758
Mongolia 1.129 3.613 1.363 6.057 0.267*** 4.965
Pakistan 0.663 0.752 1.019 3.667 0.107** 1.919
Poland 0.518 0.846 0.738 4.000 0.092*** 1.662
Romania 1.765 3.188 1.864 4.847 0.446*** 8.918
Russia 2.198 4.288 1.994 7.049 0.546*** 6.028
South Africa 0.474 0.465 0.945 4.343 -0.003 -0.045
Saudi Arabia 0.154 0.470 0.465 3.550 0.141*** 2.544
South Korea 0.243 0.431 0.587 4.200 0.319*** 6.024
Sweden 0.104 0.395 0.546 3.672 -0.011 -0.189
Switzerland 0.048 0.325 0.339 3.436 0.066 1.183
Thailand 0.222 0.487 0.518 3.747 -0.003 -0.046
Turkey 2.118 2.379 2.480 5.378 0.467*** 9.472
United Kingdom 0.164 0.326 0.513 3.669 -0.003 -0.062
United State 0.182 0.332 0.465 3.553 0.188*** 3.424
Zambia 1.471 1.898 1.600 6.197 0.181*** 3.302
Observations: 323.
Notes: SD and t-stat represent standard deviation and t-statistics, respectively. (***), (**), (*) denote significant 1%, 5% and 10% levels,
respectively.
Table 2 presents the results of the SUR estimates. The contemporaneous hedging coefficients for gold
denominated in 18 countries (out of 28 countries) are positive and statistically significant. Hence, this study finds
evidence of a strong hedge of gold against inflation. Although the contemporaneous inflation is significant in
Chile, Indonesia, Japan, Mexico, Mongolia, Russia, South Africa, South Korea, Turkey, the US, and Zambia, their
once-lagged coefficients is not in tandem with the hedging characteristic. Canada, Jordan, Poland, South Africa,
and Thailand, however, work as a weak hedge against inflation because of their insignificantly positive
parameters. On the other hand, since the contemporaneous hedging parameters are statistically insignificant and
negative, gold does not hedge against inflation in India, Japan, Malaysia, Sweden, and the UK. Therefore, the
returns of gold do not increase, along with an increasing inflation rate.
234
Table 2: Estimation Results of the OLS and SUR Analysis
OLS SUR
𝛽 𝜋𝑡 −1
𝑟𝑡 −1 𝜋𝑡
𝛽 𝑟𝑡 −1 𝜋𝑡 −1 𝑟2 𝑟2
𝜋𝑡
0.346 0.170*** 0.752*** 0.035 0.379 0.220*** 0.653*** 0.059
Brazil 0.631 0.630
(0.288) (0.057) (0.153) (0.148) (0.278) (0.038) (0.098) (0.095)
0.458** 0.106** 1.145** -1.328*** 0.411*** 0.211*** 0.066 -0.279
Canada 0.034 0.004
(0.220) (0.055) (0.569) (0.571) (0.194) (0.024) (0.214) (0.215)
0.676*** 0.092* 0.912** -1.085** 0.403** 0.214*** 0.940*** -0.554***
Chile 0.024 0.004
(0.273) (0.055) (0.518) (0.519) (0.217) (0.028) (0.245) (0.245)
0.025 0.056 0.774*** 0.758*** 0.233 0.169*** 0.439*** 0.217
China 0.080 0.051
(0.242) (0.055) (0.285) (0.291) (0.226) (0.031) (0.142) (0.146)
0.461 0.088 0.890*** -0.325 0.327 0.179*** 0.802*** -0.172
Egypt 0.036 0.027
(0.366) (0.056) (0.300) (0.302) (0.318) (0.040) (0.208) (0.210)
1.519*** 0.182*** 0.241 -0.225 1.115*** 0.279*** 0.216** -0.044
Ghana 0.040 0.026
(0.346) (0.056) (0.199) (0.198) (0.269) (0.032) (0.108) (0.107)
0.501*** 0.146*** 0.650*** -0.065 0.430*** 0.250*** 0.751*** -0.209***
Hungary 0.259 0.244
(0.195) (0.056) (0.068) (0.077) (0.189) (0.017) (0.011) (0.017)
0.792*** 0.080 -0.141 -0.064 0.481*** 0.209*** -0.002 0.173**
India 0.008 -0.013
(0.268) (0.056) (0.260) (0.259) (0.210) (0.023) (0.093) (0.093)
0.582 0.114** 1.596*** -1.081*** 0.154 0.179*** 1.413*** -0.392*
Indonesia 0.089 0.070
(0.418) (0.060) (0.394) (0.362) (0.381) (0.043) (0.258) (0.235)
0.395** 0.135*** -0.376 -0.532 0.355** 0.218*** -0.027 -0.638**
Japan 0.023 0.015
(0.200) (0.055) (0.626) (0.625) (0.198) (0.034) (0.356) (0.356)
0.384** 0.134*** 0.187 -0.080 0.347** 0.247*** 0.016 0.022
Jordan 0.021 0.006
(0.213) (0.056) (0.238) (0.238) (0.197) (0.019) (0.029) (0.029)
0.499** 0.062 -0.119 0.466 0.466*** 0.180*** -0.173 0.328*
Malaysia 0.006 -0.008
(0.250) (0.056) (0.543) (0.543) (0.212) (0.025) (0.195) (0.195)
0.846*** 0.112** 2.120*** -2.008*** 0.769*** 0.182*** 1.846*** -1.729***
Mexico 0.064 0.059
(0.336) (0.056) (0.578) (0.570) (0.284) (0.033) (0.320) (0.314)
0.770*** 0.264*** 0.412*** -0.196*** 0.624** 0.329*** 0.463*** -0.193***
Mongolia 0.139 0.133
(0.342) (0.054) (0.090) (0.091) (0.327) (0.039) (0.063) (0.065)
0.702*** 0.079 0.512** -0.156 0.546*** 0.226*** 0.279*** 0.085
Pakistan 0.018 -0.007
(0.308) (0.056) (0.279) (0.279) (0.220) (0.026) (0.102) (0.102)
235
0.483** 0.211*** 0.636** -0.439 0.521*** 0.239*** 0.235 -0.157

Poland 0.056 0.052
(0.263) (0.055) (0.364) (0.356) (0.226) (0.028) (0.158) (0.154)
0.580** 0.214*** 0.561*** -0.066 0.639*** 0.239*** 0.378*** 0.055
Romania 0.229 0.223
(0.278) (0.057) (0.114) (0.111) (0.251) (0.036) (0.067) (0.064)
0.261 0.386*** 1.706*** -1.249*** 0.392 0.369*** 1.693*** -1.280***
Russia 0.455 0.454
(0.327) (0.049) (0.124) (0.133) (0.304) (0.034) (0.824) (0.089)
1.068*** 0.123*** -0.038 -0.476 0.911*** 0.192*** 0.241 -0.561
South Africa 0.018 0.012
(0.385) (0.056) (0.562) (0.555) (0.307) (0.037) (0.358) (0.353)
0.189 0.122*** 0.936*** 0.500 0.315 0.246*** 0.187*** 0.053
Saudi Arabia 0.041 0.013
(0.212) (0.055) (0.422) (0.425) (0.194) (0.020) (0.062) (0.063)
0.030 0.191*** 3.273*** -1.426*** 0.234 0.247*** 1.913*** -1.046***
South Korea 0.142 0.123
(0.265) (0.055) (0.544) (0.563) (0.233) (0.033) (0.305) (0.316)
0.574*** 0.136*** -0.208 -0.885* 0.453*** 0.214*** -0.086 -0.246
Sweden 0.028 0.017
(0.218) (0.055) (0.515) (0.514) (0.204) (0.026) (0.193) (0.192)
0.309 0.123*** 0.736 -1.121** 0.271 0.186*** 0.400** -0.449***
Switzerland 0.029 0.020
(0.194) (0.055) (0.593) (0.590) (0.189) (0.028) (0.249) (0.246)
0.457*** 0.121*** -0.002 -0.004 0.431*** 0.169 0.001 0.001
Thailand 0.017 0.011
(0.210) (0.056) (0.004) (0.004) (0.208) (0.029) (0.002) (0.002)
0.661** 0.257*** 1.485*** -0.923*** 0.640*** 0.300*** 1.405*** -0.885***
Turkey 0.317 0.315
(0.345) (0.053) (0.154) (0.158) (0.299) (0.038) (0.108) (0.110)
0.605*** 0.201*** -0.425 -0.885 0.413** 0.229*** -0.062 -0.163
United Kingdom 0.046 0.040
(0.248) (0.055) (0.619) (0.613) (0.208) (0.026) (0.257) (0.255)
0.305 0.139*** 2.925*** -2.376*** 0.328* 0.241*** 0.470*** -0.327**
United States 0.085 0.026
(0.226) (0.055) (0.653) (0.658) (0.192) (0.021) (0.161) (0.162)
1.122*** 0.176*** 1.098*** -0.967*** 1.196*** 0.247*** 0.956*** -0.954***
Zambia 0.099 0.094
(0.429) (0.056) (0.272) (0.255) (0.385) (0.042) (0.201) (0.188)
Notes: The asterisks (***), (**), and (*) indicate statistical significance at the 1%, 5% and 10% levels, respectively. The number in the parentheses denotes standard errors. Lighter shades indicate strong hedge and
unshaded indicate no hedge.
236

The findings of this investigation are essential for investors since they will acquire a piece of new empirical
evidence and knowledge for decision making on whether or not to invest in gold. The findings of this study serve
as literature for future studies and thus enrich the gold literature in multi-country analysis. Finally, this study is
vital to economic policymakers. Suppose the results incline to suggest the desirable feature of gold as an
investment asset. In that case, the researcher supports the initiative by the government in introducing gold as an
investment driver for preserving wealth, particularly during inflation turbulences.
4.0 Conclusions
The primary findings of this research are that gold is a viable hedging instrument against inflation in Brazil, Chile,
China, Egypt, Ghana, Hungary, Indonesia, Mexico, Mongolia, Pakistan, Romania, Russia, Saudi Arabia, South
Korea, Switzerland, Turkey, the US, and Zambia. Gold denominated in the currencies of India, Japan, Malaysia,
Sweden, and the UK performs poorly as a hedge. This demonstrates that different markets, economic situations,
domestic cost factors, and measurements of inflation influence the relationship between both variables. That is,
gold plays a major role in high inflation countries. On the other hand, despite gold value increases in times of
crisis and can be used as a hoarding vehicle, it is not a store of value in the low inflation countries.
In conclusion, our results showed that the SUR estimator performed better and more efficient in
predicting hedging property (due to the small standard errors of the SUR estimates). Therefore, rather than
estimating the gold equations individually by, e.g., OLS, the gold’s behaviour can be captured efficiently using
the SUR models.
237

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