THE ROLE OF WOMEN ON BOARD AND FINANCIAL PERFORMANCE IN INDONESIA.

TI{E

ROLE

OF

WOMEN

ON

BOARD

ANI)

FINANCIAL

PEIIJORMANCE

IN

INDONESIA

TIIESIS DRAFT

Sabnilled

I!

P.niat Fulftttnetrt of tn. Requircn.trr For UnderZndrate Dc3rce itr EconoEis

IKA

NT]RUL

SUKMA

BP.

05 153 034

ACCOUNTTNC DEPARTMENT IACULTY OI' ECONOM]CS

TH L

ROLI

OT

WOMIN

ON BOARD AND FINANCIAL PEMORM.{NCE

IN INI'ONESLA

AISTRACT

Fis

snrdy

€min6

th€

pBsce

aid

rols

of

wonen on hodd

in

Indonsis

Public Listed cohpeies in th€ €oDr.xt ot fr@cial

od

omufeluing

idusEies. €Lted

Mth their

lmid

p€domdce. Furlh.r. this study olso hlestigate atDut doE won@ on

bodd conpding with

les

wooo

on boed, in ordq ro idertined the betlor one,

noE

wonen

or

less wom@.

The

mple

@sh1s

of

all

co6panis

i!

fimciql

ed

neuf@tuins sclor

indusiriq ovd the

tdiod

20eL2008, whlch

il

su

227 conpani6 witir

ll55

obeflarios.

IlE

Fsull of this stndy wilh Nine

R€tm

on Equity (ROE)

ed

Rerd

on Sals (ROS)

6

the

rerb@ce

nruEmenl

is no posilive

ad

signin@l

innuence

to*dd

woD@ ob board bot! in

fimcial

ed

neufacding

se.tor

induni6.

Fbm drat €dpilioal

Fsul! c&

be conclu.led that in hdonesia tlte

ole

ol wonen is

mt

incr€ding the @mpey s

perfomee signific

dy.

Bu! if

conpding

bet{en

tnecial

dd

IMufactuin!.

fmial

have a bd€r

6ult

thd

mduf&tuing

s{lor

indElris

i!

th€

@nicxl of their

mnm\

ole.

Ald if

@mpN moE

mn

with less vohen on boad jn

fiMcial

ed

ndulactunng selor,

noe

wmen have belle! €nlincal

8dl

lno

less ore.

CIIAPTf,R

I

INTRODIJCTION

rle

Asid

linecial

crisis

in

1997

h6

highlklted the problems

of

corporare govemd€ mong souti East Asie cotpomtioru. Tnis crisis b€.oD6 a

mljor

indiaror that

orponle

_Sovem.ne pmcli€s

i. Ed

Asia ned

imprcvmflt.

One ol rhc inproveme.ts is lo i.troduce mrpoFte govern ce

codes, directing conprniB how

io

besr imprcve lh€n corDoFte goremsce pEcties

(Novlu4

2007). As one oflhe nosl affeded ountries, Indonesia

hd

coipomre gowance Efom at the mrin point of rhe ndioMl agenda. Tlis niehl

be

sn

r6onable, tin@ the oipoFtions

e

subslantial part of lhe emnonic

syslem

4d

the implementdion

of

b€s1 _eovcndce

pncriB

mieht hare a

si8nilienl impaol on the fronomy

(Lukvimd.

2005).

One ofthe mlin points in sund govemdce is agency rh@ry. ln Z:nn

dd

Peme (1939)

rcrch

state rhaq lne rcle of boards h6 been _{suided by rour}

direrent thorclical peEpetives,

ud

agency thNry bemme lhe non cruoial in

qnomi6

_{Md vdious}

@dch

Elared wirh bdrds. This thory also b€code the

o.l]

p€Bp€ctive that @ve6 the shregic mle of b@ds! which Lhe tunorion

of

boaris

ft

monitding,

snhlling,

providing infomatio(

dd

linking tne

coaodtion

b

c$cnal envioment (Monks

sd

Minos,2004

sd

Carter et al..

200n

ad

@nttullina

bonc

a fom

ol

one bcneficirl ncclnism of

eud

As mention above, rgmcy 6edry

play

imp.rtont rolc on board, rhal is

to ftsolve

pbblds

bdwM

maageB

ad

sheholdeu by scning coftpensdrion

and replacing ndageB thar do nol oane value for rhe sh@holde6. Divcniiy

ol

board that link wirh rhat theory suggens thar more diveBe

bdd

h

a b€ner

monito!

od

antolling

de

mdaeets since boad diveBity

irc6e

boed

i

€pendence (Cde. er ,l-. 2007), but

il

linked wi6 fim perfomdce. fleoalin

Md weisbsh (2000) slate dur agency rhsry does not povi'le a clee prenidio.

of the nle of board

divdiiy

in

fim

velue. Cobtrdy wilh lha! F

dcur

ct al.. (2007) &8ue that

ton

m agcncy stlndp.int bodd diversity would imp@ve or

imp.ir $und govemsce and ale colpoBte

lin

cial pdfomuce.

Seveal

6dchd

foud rhc

Iwns

rhy

febale di@to* b€ in tne low

numbe6:

(l)

CoDpanies do not rnow wheE

lo

look for qualined lemole

cmdidatesi (2)

ClOs

l*

appoinling

*ome.

who

m

not

cuffitly

boed ncobosi (3) cEos

m

concemed thar wonen will havc a

\!oncn\

asddai ' (4)

CEOS beliele rbrt ronen de unqurlificd. (PereM. hd Philpoi p.I78.2006).

Since rhoe facts,

e

nm)

stndy about the

distdce

ol

wono

in

boadr@n. The disptity

b.Me.

wond

dd

men Egardin8 pEvalence in top

mmgenent positions still prompb debat

od

study

$

lo extent of syslemaiic

bi6

agajnst femlle

naageB

&d

pbfessionals

6

they

eek

positions

of

incrsing authority

sd

Esponsibility. Pernaps, key lo fm!1e advoement

ud

ptrity is tben presence

sd

i.volvement mong bodd of diEclo6. As in Burkc

(1991) studi6, male CEOS @ognize rhat then female

dieioN

mo&e unique

od

Tle

pieedins chafler

ns

prese.l tbe

€npincd

resutls md rhis chapter

pbvides

anclsions

dEM

non

tne

6ndi4s

md

discusiom pnsented

i!

the

lEvious chapterj followe{i

by

6s6Menl

ol

the potenrial

linilarios

pi€ent in

this studt &d possible

tutw

directions lor

reFNh.

CHAI{ER V

CONCLUSION

Tbe objeclive

of &is

study is

lo

_sct

eopincd

Eslni rhar shows wherhd wohen on board have a role in the conpany, which seen by its anmcial

F.fommce,

dd

lhen

lo

&swc

the hylolnesis about the prcposilion

of

_{voden on}

botr(

_in

najoriry or ninonry b*ard nm !€domdce, tnal nesur€d by ROE

ed

ROS.

This Esedch

invdtisats

hypotheses _{sratB tbal rhere}

m

insignjfic

_t

innuenccs

ol

lhe

bodd chect€dstic

vdiables

tow&ds

bdting

fD

cial perfomdce

ol

Indonsim

kldic

banls which cov€u five

y€s

datz. ihe results

L

TheE is no

signitcet i.Jtren€

beNeen women on bodd iowdd nnmcial

perfoMce ne$uFd

by ROE

md

ROS

in

lDmciat

dd

lrnufacluins

Adds,

R. 8.,

&

Fd€in"

Worldng Paper Se/ies

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dd

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Divdity oi

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dd

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ed

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Opportuitib.

N.w

Huizo$

in

Ma@senent.