Webinar PDIA

Rabu, 12 Juni 2024

Corporate Governance;
Philosophy, Concept &
future research

Prof. Niki Lukviarman, S.E., M.B.A., D.B.A., Ak., C.A.

Professor of Corporate Governance Universitas Andalas
@nikilukviarman
 CAKUPAN PEMBAHASAN
 Governance; the Journey
 Governance; the Board Model
 Governance; the Concept & Philosophy
 Governance; the System
 Governance; the Development
 Governance; the Theory
 Governance; the World View
 Governance; the So What
 Governance; the What
 Governance; Future Research
 Governance; the Why
 Governance; Concluding Thoughts
 Governance; the Control
 Isu governance populer di Indonesia di
01 penghujung abad ke-20  menyusul krisis
ekonomi pada pertengahan tahun 1997

Isu governance secara global menguat setelah

02 runtuhnya beberapa raksasa bisnis dunia 
Enron dan WorldCom di AS, HIH dan One-tel di
Australia permulaan abad ke 21

Isu governance semakin populer setelah

03 lembaga keuangan multilateral (World Bank &
Asian Development Bank)  mengklaim bahwa
krisis keuangan yang melanda berbagai negara
di Asia, antara lain disebabkan oleh buruknya
pelaksanaan Corporate Governance

ADB menyimpulkan; Indonesia negara yang

04 paling menderita dan paling lambat bangkit
dari dampak yang disebabkan oleh krisis
@nikilukviarman tersebut (ADB, 2000)
 Diikuti krisis politik serta berbagai
Di Indonesia, krisis masalah dalam negeri lainnya
ekonomi berkembang Suharto meletakkan jabatan
dan bersifat
multidimensi Diikuti lemahnya mekanisme
(Lukviarman, 2016) berbagai institusi penyangga sistem
perekonomian negara
Governance;
Rendahnya law enforcement sebagai
by design or
penjamin tegaknya aturan
accident? perundang-undangan dan
Penandatanganan berjalannya sistem yang ada
Letter of Intent (LOI)
Terjadi capital flights ke luar negeri
antara pemerintah RI
dalam jumlah besar, sehingga
dengan IMF 
secara teknis kondisi perekonomian
mengadopsi CG
Indonesia dapat dianggap
@nikilukviarman “bangkrut”
 Issues Concerning
Corporate Governance concept
Power & accountability
01
(Monk & Minows 1995)
02
Accountability to
shareholders (Blair 1995)
03 Mechanisms for controlling
managerial efficiency or
failure to maximize value
(Macey 1998)
@nikilukviarman  In 2020s, the issue about the concept remain similar
Control & coordination of
04
various self interested
stakeholders (OECD 1998)
Control mechanisms for
05
efficient operations (John &
Senbet 1998)
06 Accountability & performance
(Cadbury 1999)
 CG Watch Market Ranking & Scores 2010 to 2018
No Country 2010 2012 2014 2016 2018 **Direction of CG reform (2016)
*
1 Australia - - - 78 71 -
3 Singapore 67 69 64 67 59 Mostly sunny, but storms ahead?
2 Hong Kong 65 66 65 65 60 Action, reaction: the cycle of Hong Kong Life

5 Japan 57 55 60 63 54 Cultural change occurring, but rules still weak

4 Taiwan 55 53 56 60 56 The form is in, now need the substance
8 Thailand 55 58 58 58 55 Could be on the verge of something great, if…
5 Malaysia 52 55 58 56 58 Regulation improving, public governance failing
7 India 49 51 54 55 54 Forward movement, impeded by vested interests
9 Korea 45 49 49 52 46 Forward movement, impeded by vested interests
10 China 49 45 45 43 41 Failing further behind, but enforcement better
11 Philippines 37 41 40 38 37 New policy initiatives, but regulatory not support

12 Indonesia 40 37 39 36 34 Losing momentum after progress of recent years

* Ranking as the year 2020, ** Direction of CG Reform as the year of 2016

Source: Asian Corporate Governance Association (September 2016) @nikilukviarman
 CG Watch Market Score 2018 & 2020

Rising
Source: Asian Corporate Governance Association (September 2021)
market
@nikilukviarman Falling
 Market survey framework

Source: Asian Corporate Governance Association (September 2018)

@nikilukviarman
 The Asian Governance System
Independence
Shareholder and
Environment Concentrated ‘Insider
ownership boards’ Performance

Reliance on Incentives
family and state aligned with core
finance shareholders
Institutional Corporate
Context Context
Under-developed
Limited
& illiquid investment
disclosure
market

Limited market Inadequate

for corporate minority
Transparency
Capital Market control protection and
Liquidity Accountability

@nikilukviarman
McKinsey & Company (2001)
 WHAT IS GOVERNANCE PHILOSOPHY
Governance is also about the VALUES!

When people interacts in their social lives; there exist

Value Interactions  within groups or organization

Basically related to the law of nature

Balancing conflict of interests through

governance mechanisms (formal vs informal rules)
Governance system (i.e. through governance
mechanisms) will maintain the value interactions
Providing checks and balances mechanisms as the
backbone of corporate governance concepts
@nikilukviarman
 Moral & Philosophical Foundation
[I]n the great ‘chessboard’ of human society, every single
piece has a principle of motion of its own, altogether
different from that which the legislature might chuse to
impress upon it. If those two principles coincide and act in
the same direction, the game of human society will go on
easily and harmoniously, and is very likely to be happy
and successful. If they are opposite or different, the game
will go on miserably, and the society must be at all times
in the highest degree of disorder.

Adam Smith, The Theory of Moral Sentiments (1759, p. 234)

@nikilukviarman
 Filosofis:
The law of nature
(Adam Smith) Organisasi:
Structural functionalism
(Selznick;
Psikologis:
Burrel & Morgan)
Attitudinal differences/
opportunistic behavior Historical:
(Williamson) Property rights
(Adam Smith)
law & order
@nikilukviarman
(Berle & Means)
Public Sector Governance; the Tripod

@nikilukviarman
 Corporate Governance; the Tripod
(Indonesia berdasarkan UU PT 40/2007)

@nikilukviarman
 PSG and CG; the relationship

@nikilukviarman
 Stages in governance Debate

Pre- Post- The New OECD

1992: 1992: Corporate Principles
Internationalization
of Corporate
Convergence
an The
Governance: on Governance and
Corporate
American Cadbury OECD report Governance
principles Divergence
Debate Report
(UK)
(1998) (1999) issues

@nikilukviarman
 CG Development: first generation

Berle & Means (1932)….lawyers

 Memulai debat modern tentang konsepsi CG  kepemilikan
perusahaan yang menyebar (dispersed) mengarah kepada
pemisahan antara kepemilikan & kontrol

Jensen & Meckling (1976)….economists

 Pendekatan the Agency Theory dalam memahami fenomena
CG (i.e. agent vs. principals  conflict of interests)
Denis & McConnel (2003)

@nikilukviarman
 CG Development: first generation

Agency Theory  Jensen & Meckling (1976);

Korporasi merupakan Suatu kontrak (eksplisit & Konflik kepentingan

“serangkaian (nexus)” dari
kontrak antar berbagai pihak yang
berkepentingan (stakeholders)
dengan korporasi  dalam
bentuk hubungan kontraktual
(contractual relationships).
implisit) bersifat tidak
lengkap (incomplete in
nature)  disebabkan oleh
ketidakpastian (due to
uncertainty in the near future)
antara para stakeholders
 disebabkan
perbedaan sikap
(attitudinal differences)
antara para stakeholders

 peranan governance dalam mereduksi “potential conflicts of interests”

antar berbagai pihak yang terlibat dalam korporasi
@nikilukviarman
 CG Development: SECOND generation

Rafael La Porta, Florencio

Lopez-de-Silanes, Andrei
Shleifer (Harvard Memperkenalkan
University), and Robert W pendekatan “legal and
Vishny (University of finance” di dalam memahami
Implementasi CG di setiap
Chicago) the gang of four fenomena CG phenomenon
negara ditentukan oleh “legal
(Law and Finance, 1998). di seluruh dunia.
and regulatory framework”
dalam memproteksi
kepentingan stakeholders,
khususnya kepentingan pihak
Antithesis terhadap minoritas (minority owners)
Berle & Means (1932) dalam korporasi

Denis & McConnel (2003)

@nikilukviarman
 CG Development: SECOND generation

La Porta et al. (1998) menganut paham divergensi

terhadap sistem CG di berbagai belahan dunia

Central argument; setiap sistem CG seharusnya

memperhatikan interaksi antara berbagai faktor
internal dan eksternal dalam lingkungan dimana suatu
sistem beroperasi  konsisten dengan organisasi
sebagai open system
OECD (1999)

@nikilukviarman
 CG Development: SECOND generation

Market
structure Government
specification regulations
Mempengaruhi efektifitas
Interaksi implementasi CG
faktor internal ...sehingga menjadi dasar
bagi OECD (1999); dalam
& eksternal memperkenalkan
direfleksikan “no-one-size-fits-all
dalam bentuk; approach” terdapat
sistem CG di berbagai
Cultural &
Law & legal societal
negara
system values within
traditions the society
OECD (1999)
@nikilukviarman
 Governance: system approach

Closed system  organisasi menggunakan metafora mesin

(machine metaphor) --- Newtonian School

 traditional/conventional management system

Open system  organisasi menggunakan metafora organisme

(organism metaphor) ---Darwinian School

 contemporary/modern management system

Dari sudut pandang ekonomi & bisnis; konsepsi “open system”

berhubungan dengan evolution, struggle for survival and
natural selections.
@nikilukviarman
 Governance: the worldview

Organisasi sebagai “open system”

 exists in continuous exchange with its environment,

 emphasis on the environment in which organizations
exist,
 defines an organization in terms of interrelated
subsystems,
 to establish congruencies (alignments) between
different systems and to identify and eliminate
potential dysfunctions
@nikilukviarman
 Governance: the worldview

 Strategic (non-functional) issues within organization  fokus

terhadap berbagai isu strategis di tingkatan; Pemegang Saham
(via RUPS), Dewan Komisaris & Direksi (the governance tripod)

 Relates mostly on decision-management versus decision-control

issues (i.e. who control whom within an organization) 
decision-management merupakan domain “Direksi”, decision-
control merupakan domain “Dewan Komisaris”

@nikilukviarman
 Main Issues in
Contemporary governance
Corporate governance development…..
“Most often that responsibility is deemed
to be exercised through compliance with
regulations and so-called best practices.
…the responsibilities of boards go not
only beyond compliance, they extend to
all stakeholders (Shaw 2003)
@nikilukviarman
 MAKNA GOVERNANCE

Dari kata governor dan

“suatu situasi dan
memiliki kaitan erat
kondisi yang baik dan
dengan bahasa Perancis
berjalan sesuai dengan
kuno gouvernance yang
arah yang diharapkan
berarti “mengendalikan”
(good order) dan
dan “suatu keadaan yang
berada dalam kondisi
sedang dikendalikan”
terkendali (in control)”
(the state of being
governed)

Fahrar (2002)
@nikilukviarman
 “GOVERNANCE” VERSUS “MANAGEMENT”

Secara etimologis  ambiguitas antara

terminologi “manage” vs “govern”

Terminologi “governance”  dipahami

dalam konteks yang berhubungan dengan
regulasi & control

Tujuan  kemampuan konteks dimaksud di

dalam menjelaskan “proses” dari terminologi
“governance”
@nikilukviarman
 Management: Governance:
“doing things right” or “doing the right things right”
“manage the things
 mengerjakan sesuatu  mengerjakan sesuatu yang
dengan/secara benar benar secara benar
 Secara implisit berhubungan
dengan moral issues
@nikilukviarman
 Governance versus management
Main Issue Corporate Governance Corporate Management

Fokus Lingkungan Eksternal Lingkungan Internal

Menggunakan asumsi Menggunakan asumsi organisasi

Pendekatan
organisasi sebagai suatu sebagai suatu sistem tertutup
Sistem
sistem terbuka (open system) (closed system)

Berhubungan dengan isu Berhubungan dengan isu yang

Orientasi yang berorientasi strategis berorientasi pekerjaan (task
(strategy oriented) oriented)

Berhubungan dengan
Konsepsi Berhubungan dengan konsepsi
konsepsi “where the
Organisasi “getting the organization is there”
organization is going”
@nikilukviarman
 “GOVERNANCE” VERSUS “MANAGEMENT”

Governance-pekerjaan Dewan Komisaris

(BOD) sebagai the governing body

Manajemen-pekerjaan Direksi (tim

manajemen) sebagai the managerial authority

@nikilukviarman
 “GOVERNANCE” VERSUS “MANAGEMENT”

Menegaskan bahwa;
 Direksi dari suatu korporasi
Management runs (management) bertanggung jawab
the business; the di dalam menjalankan
boards ensures that it operasional bisnis
is being well run and  Dewan Komisaris (governance)
in the right direction bertanggung jawab dalam
(Tricker, 2009) ‘memastikan’ bahwa operasional
korporasi berjalan secara baik
dengan ‘arah yang benar’

@nikilukviarman
 GOVERNANCE VS MANAGEMENT DOMAIN

@nikilukviarman
 Signifikansi peranan Corporate Governance
untuk kestabilan dan kesejateraaan masyarakat

“Corporate governance is concerned with holding the

balance between economic and social goals and
between individual and communal goals. The
governance framework is there to encourage the efficient
use of resources and equally to require accountability for
the stewardship of those resources. The aim is to align as
nearly as possible the interests of individuals,
corporations and society”
Sir Adrian Cadbury (2002)

@nikilukviarman
 Why Governance?

The existence of sophisticated management techniques

01
development  still corporate collapses

02 Problems  trust! (soft structure??)

Low trust  creates “hidden agendas, politics,

03 interpersonal conflict, interdepartemental rivalries, win-
lose thinking, defensive and protective communication”
Covey (2006)
@nikilukviarman
 Why is CG Importance?

Setiap organisasi The entire economy

memiliki tujuan  to suffers when trust is
create & enhancing broken
the value

....however, the value Effective governance can

diminishes when it does instill confidence, and
not have the trust of its thus trust, in our
stakeholders organization and markets

Kim & Nofsinger (2004)

@nikilukviarman
 BUILDING The ability to establish, grow, extend,
and restore trust with all
TRUST! stakeholders –customers, business
partners, investors, and coworkers-
is the key leadership competency of
the new global economy

“...for most people, trust is hidden from

view  they have no idea how present
and pervasive impact of trust...”

Covey (2006)
@nikilukviarman
 Terdapat perbedaan nyata dan diterima umum bahwa konteks CG
memiliki perbedaan antar negara dan senantiasa mengalami
perubahan  konsepsi CG bersifat dinamis

Tidak terdapat satu model CG yang spesifik dan sesuai (best

suited) untuk diterapkan di setiap perusahaan dan lintas Negara 
beda dengan akuntansi (convergence via IFRS)

Untuk komparasi  para ahli membagi sistem

governance berdasarkan bentuk sumber
pembiayaan yang paling dominan

Sistem governance dapat dibedakan  bercirikan

dominasi pasar (market-dominated) atau dominasi
perbankan (bank-dominated)
@nikilukviarman
 Sistem governance
01 02
berorientasi pasar 
ditemukan pada berbagai
negara Anglo-Saxon (US &
UK) yang dicirikan oleh
dominannya peran pasar
modal dalam perekonomian
negara tersebut.
Pada sistem berorientasi
pasar  inti sistem
pengendalian korporasi
yang dikenal juga
dengan istilah ‘the
outsider control system’.
@nikilukviarman
Sistem governance berorientasi
perbankan atau bank oriented atau
bank dominated  ditemukan pada
berbagai negara Eropa daratan
(continental European) serta Jepang
(peranan pasar sebagai perangkat
pengendalian korporasi nyaris
tidak signifikan).
Disebut the insider control
system untuk mendeskripsikan
sistem yang dicirikan oleh
relatif stabil & terkonsentrasinya
struktur kepemilikan korporasi
oleh sekelompok pemegang
saham di suatu negara
 COPORATE GOVERNANCE;
KARAKTERISTIK INDONESIA
Beberapa penelitian memperlihatkan bahwa
Indonesia menggunakan sistem Coporate
Governance mengikuti pola Continental
European model dan bukan termasuk kategori
market-dominated system.

@nikilukviarman
Dasar Klaim?

01 Indonesia mengadopsi tradisi hukum French Civil-Law tradition 

ditemukan/digunakan oleh berbagai negara kontinental Eropa

02 Menggunakan sistem dewan dua tingkat (two-tier board systems) 

Dewan Komisaris dan Direksi , sebagaimana dinyatakan dalam UU
No.. 40 tahun 2007 tentang Perseroan Terbatas

03
Perusahaan di Indonesia (bahkan yang sudah go public)  didominasi
oleh struktur kepemilikan yang terkonsentrasi (the dominance
concentrated ownership structures)

04 Menggunakan sumber pembiayaan korporasi yang secara dominan

berasal dari pembiayaan eksternal  melalui lembaga perbankan
(heavy reliance on external sources of financing)

@nikilukviarman
 CORPORATE GOVERNANCE & CONTROL

Memberikan
penekanan pada
peranan BOD Two-tier Board
(Dewan system; Fungsi utama
Komisaris) via pemisahan board governance; But…who will
board (formal) antara ratifikasi & control the
governance decision taking monitoring berbagai controller
vs decision keputusan korporasi
control (BOD)? (who
 decision control control whom
@nikilukviarman
within the
corporation?)
 CORPORATE GOVERNANCE & CONTROL

Perlu Elemen Berhubungan dengan

mempertimbangkan pengendalian yang isu one-size-does-not-
efektifitas mekanisme efektif di suatu fits-all approach di
pengendalian  negara belum tentu dalam memahami
given certain (may not necessarily), fenomena CG di dalam
characteristics of CG efektif untuk negara implementasinya
system and structure lainnya

@nikilukviarman
 BOARD GOVERNANCE; THE TYPES

@nikilukviarman
 Characteristic of Two-tier Boards
TT board model has two layers that separate the executive
function of the management board from the monitoring
function of the supervisory board,

The supervisory board (the upper layer of TT board) is entirely

composed of non-executive supervisory directors which secures
an independent composition of the board,

TT board provide a formal separation of CEO and

chairman roles  decision management and decision
control are formally separated.
Pic (1995), Demb & Neubauer (1992), Maasen (2002)
@nikilukviarman
@nikilukviarman
 TWO-TIER BOARD & INDONESIA

@nikilukviarman
 INDONESIA UU PT 40/2007 &
ANGGARAN DASAR PERUSAHAAN

Power of Supervisory Board over Board of management (pasal 106)  suspended from the
office (temporary), but the final permanent & decision still in the hands of RUPS/AGMS
@nikilukviarman
GOVERNANCE; THE BOARD MODEL
THE ANGLO-SAXON MODEL (1)
 US, UK, Canada, Australia, Internal governance mechanisms
New Zealand  board of directors
(commonwealth countries  employee compensation
around the world)
External mechanisms
Shareholder value  market for corporate
maximization control
 monitoring by financial
“Outsider” model – institutions
arms length investor  competition in product and
input market
Short term financial Reliance on legal mechanisms
performance key to protect shareholder rights

@nikilukviarman
 UNITARY (ONE) TIER BOARD; THE U.S.

Elected Chief Executive Officer (CEO) will be ex-officio as the

Chairman of the Board  CEO Duality position
@nikilukviarman
 Notes to the U.S. Model
Member of Board of Director will be dominated by independent or
outside directors
Capital Market Authority (SEC) put a mandatory condition that
public company should have; (a) audit committee, (b) nominating
committee, and (c) remunerating committee.
Shareholder as the owner of a company only have two condition in
expressing their complain or unsatisfaction  through complaining
in the Annual General Meeting (VOICE) or selling their shares
through the market (EXIT)
The US “rule-based”  the question; is this legal?
Legal statute and mandatory rules are very tight in supporting sound
governance implementation  regulator have to make sure that a
company “comply” with regulation
@nikilukviarman
 UNITARY (ONE) TIER BOARD; THE U.K.

Splitting the role of Chief Executive Officer (CEO)

@nikilukviarman
and Chairman of the Board formally
 Notes to the U.K. Model
The U.K. model adopted by the commonwealth countries around the
world  the common law system and the case law-based regulation
The U.K. “principle-based”  the question; is this right?
Principle of governance that will be guide by the code of good
corporate governance principle or good practice not the rule of law
The company should report whether they are comply or in accordance
to the governance principle  comply or explain approach to
corporate governance
The governance guidelines in every commonwealth countries should
have; (a) independent non-executive atau outside directors, (b) audit
committee, (c) remuneration committee, (d) nomination committee, (e)
high levels of transparency and accountability.
@nikilukviarman
THE CONTINENTAL EUROPEAN MODEL (2)
 DUAL (TWO) TIER BOARD;
COMMON CONTINENTAL-EUROPEAN

@nikilukviarman
 Notes on Continental European
Adopted by the Continental European countries  France, Germany, Italy,
Spain, Portugal, Luxembourg etc.
Based on the civil law tradition  governance in Continental European are “rule-
based”
The tendency of having small and illiquid financial market  the role of the the
market for corporate control as part of control mechanism do not work in this market
For that reason  most companies obtained their financial needs by relying on
banking industries or leveraged financing
Investors in most countries in continental european  characterized by
ownership concentration on family based, such as found in Italy and France
Within the model of continental european  exist different model of board
governance, such as co-determination rule in Germany

@nikilukviarman
 DUAL (TWO) TIER BOARD;
CO-DETERMINATION GERMANY-MODEL

@nikilukviarman
 Relevance of Board Committees
The establishment of board committees can bring more focus to the
board’s oversight function by (1) giving proper authority and
responsibilities, and by (2) demanding accountability for these
committees.
Listing standards of national stock exchanges (e.g. the U.S. model
such as NYSE) require that listed companies form at least three
board committees that must include (1) audit, (2) compensation,
and (3) nomination committees.

Public companies often, in addition to these three mandatory

committees, have governance and other committees such as
finance, IT, and disclosure.
@nikilukviarman
 Governance System

Governance Structure
Elements of
Corporate Governance Mechanisms

Governance
Governance Outcomes
Framework
Internal & external
factors that impede

@nikilukviarman  How to develop our own governance models?

@nikilukviarman
 CG Mechanisms; the breakdown

@nikilukviarman
@nikilukviarman
 01 Company Law (UU PT 40/2007)

02 Securities Law (POJK No.5/2016)

03 Listing Rules  BEI rules/regulations

Accounting Standards
CORPORATE
04

Bankruptcy and Insolvency Laws

GOVERNANCE
05

Competition or Anti-trust Laws

SYSTEM,
06

Important of Courts (judicial redress)

NEEDS:
07

08 Market Institutions and Practices

09 Codes of Good Governance (Best Practices)

10 Mechanisms for Addressing

@nikilukviarman Investors/Minority Shareholder Expectation
 No Single Universal Theory

Development of corporate governance is;

 a global occurrence, and
 a complex area including legal, cultural, ownership,
and structural differences

Thus, some theories might be more appropriate and

relevant to some countries than others towards
divergence

Or, more relevant at different times depending on what

stage an individual country, or group of countries
@nikilukviarman
 Major Theories of CG
01 Agency Theory (AT)  disciplines contributing
to the study of CG 
02 Transaction Cost Economics (TCE) financial economics,
law, accountancy,
03 Stewardship Theory (ST)
management studies,
04 Resource Dependence Theory (RDT) organizational
behavior, sociology,
05 Managerial and Class Hegemony (MCH) politics, philosophy

06 Psychological and Organizational Perspectives (POP)

07 The Societal Perspective; Stakeholder Theory (SPST)

Tricker (2009)
@nikilukviarman
 Popular Theory on CG

Agency theory (AT)  Stewardship theory (ST)

top managers are “hire  suggests that executives
hands” who may very tend to be more motivated
likely be more interested to act in the best interests of
in their personal welfare the corporation than in their
than that of shareholders own self-interests

@nikilukviarman
 Economic-Based Theory
Agency Theory
“Agency theory is directed at the ubiquitous agency relationship, in which
one party (the principal) delegates work to another (the agent), who
performs the work” (Eisenhardt, 1989, p.58)

Transaction Cost Theory

“The corporate governance problem of transaction cost economics is... not
the protection of ownership rights of shareholders, rather the effective and
efficient accomplishment of transactions by firms in their cultural and political
environment” (Wieland, 2005, p.81).

Contracting Theory
“Firm-as-contract theorists argue that participants agree to cooperate with
each other within organizations (i.e. through contracts), rather than simply
deal with each other through the market, to minimize the costs of search,
coordination, insecurity, etc.” (Donaldson and Preston, 1995, p.78).
@nikilukviarman
 Management-oriented Theory
Stewardship Theory
“A steward protects and maximizes shareholders’ wealth through firm
performance, because, by so doing, the steward’s utility functions are
maximized” (Davis, Schoorman and Donaldson, 1997, p.25)

Stakeholder Theory
“Stakeholder theory attempts to address the question of which groups of
stakeholders deserve or require management’s attention” (Sundaram and
Inkpen, 2004a, p.352)

Resource Dependency Theory

“Resource dependency theorists provide some focus on the appointment of
representatives of interdependent organizations as a means for gaining access to
resources critical to firm success” (Johnson, Daily and Ellstrand 1996, p.410)
@nikilukviarman
 “Good” Governance definitions differ from culture
01 to culture (the divergence perspective) in
comparison to accounting convergence issues
(IFRS)
Some
Basic
There are no international recognized standards or
Questions 02
benchmarks.....how to compare the practice?

What are the tangible benefits of adopting

03 governance practices? How “Good” is
“Good” (Governance)?

@nikilukviarman
 The benefits of sound corporate governance
are longer term, whereas the costs of
01
corporate governance are incurred in the
short term
The
“so what” Executives who are focused on short-term
02 results may see only the costs and not the
on benefits
Governance
Consequently, management tends to be
03 skeptical of incurring these costs and tends to
do no more than is legally required

@nikilukviarman
 Hati hati terhadap penggunaan referensi dari negara lain (US atau UK/berbeda
konteks)  penggunaan terminologi “Board of Director” memiliki arti yang
berbeda antara negara berbasiskan Civil Law dan Common Law

Peranan yang ”sangat besar dan dominan” dari Rapat Umum Pemegang
Saham (RUPS) dibandingkan dengan Dewan Komisaris di Indonesia (UU PT
40/2007) berbeda antara negara berbasiskan Civil Law dan Common Law

Sesuai dengan perkembangan generasi kedua CG  terdapat indikasi

menguatnya konsentrasi kepemilikan, bahkan di negara maju melalui
investor institusi (institutional investors) seperti California Pension and
Retirement System (CALPERS) di U.S.

Penggunaan variable Dewan Komisaris dan/atau Direksi berhubungan dengan

kepemilikan saham yang diberikan sebagai tujuan “sense of ownership” pada
negara lain  berbeda dengan Indonesia, karena mereka terlebih dahulu
memiliki saham (sebelum diangkat menjadi Direksi/Komisaris)

@nikilukviarman
@nikilukviarman Source; Brennan & Solomon (2009)
 DOES CORPORATE GOVERNANCE MATTERS?
Implementation of sound CG practices does not come without a cost

Elementary level  changes requires enhanced accountability and

transparency in various aspects of the administration of company

Requires change in the mindset, especially in jurisdiction where “family

company” dominates within an environment of shareholder passivism

Effective CG does contribute positively to the development

of financial markets (attracting capital or capital retention)

Increasing evidence that sound corporate governance plays an

important role in the investment decisions of major institutions

The “premium” for sound CG is often reflected in the price of

securities of companies
@nikilukviarman
 “Sound corporate governance is not an end in itself. It is a
means to create market confidence and business
integrity, which in turn is essential for companies that
need access to equity capital for long term
investment. Access to equity capital is particularly
important for future oriented growth companies and to
balance any increase in leveraging”
(OECD, G 20 Turkey 2015)

@nikilukviarman
 GOVERNANCE; THE CRITICAL POINT!
Compliance on regulation, procedure and protocol  necessary
but not sufficient

Sufficiency derives from the substance of “sound governance

implementation”

Leadership  decisiveness & resoluteness

Decision making  have to do with (business) ethics,

especially in the condition where exist potential moral hazard
as a result of conflict of interest

Governance as a balancing mechanisms!

@nikilukviarman
 GOVERNANCE; THE CRITICAL POINT!
The governing body must govern; that is, it must provide leadership and
strategy and must focus on the 'big picture'.

Governance is about planning the framework for work and ensuring it is

done  it is distinct from management (organizing the work) and
operations (doing the work).

As far as possible, the governing body should therefore

steer clear from making managerial decisions and
getting involved in the day-to-day implementation of
strategy.
The lines between governance, management and
operations are easily blurred, as they are of course closely
inter-related.
@nikilukviarman
 GOVERNANCE; THE CRITICAL POINT!
“…secara substansi konsep governance tidak
hanya berhubungan dengan prosedur dan
aturan main melalui suatu protocol, tetapi lebih
jauh mencakup berbagai hal yang berhubungan
dengan leadership dan proses decision-making
di dalam suatu organisasi”
(Lukviarman, 2016, p. 21)

@nikilukviarman
@nikilukviarman 93
Professor Niki Lukviarman
S.E. (Andalas), M.B.A. (Philippines), D.B.A. (Curtin), Ak. (Reg.16714), C.A. (D.11-7546),
Professor of Corporate Governance Universitas Andalas Padang
Mobile + 62 812 6628 541, Email lukviarman@gmail.com, nikilukviarman@eb.unand.ac.id