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ISLAMIC BANK VS CONVENTIONAL BANK: THE DIFFERENCES OF MANAGEMENT COMMUNICATION TO STAKEHOLDERS USING INTERNET FINANCIAL REPORTING
Corresponding Author(s) : Taqiyah Dinda Insani
Humanities & Social Sciences Reviews,
Vol. 7 No. 4 (2019): July
Abstract
Purpose of the study: This study discusses the differences of Internet Financial Reporting Quality between Islamic Bank and Conventional Bank in Indonesia as a means of banking management communication with their stakeholders. The Internet Financial Reporting quality form assessed by four components based on Internet Financial Reporting Index, which are content, timeliness, technology and user support.
Methodology: This study used a quantitative approach with independent sample T-test. The hypothesis testing tool is assisted by SPSS 22 data processing software. The data of this study were collected from the official website for each bank institution, and for the sample that chooses this study used a purposive sampling technique.
Main Findings: : There is a significant difference at the 5% significance level between Internet Financial Reporting quality between the two, with the result that conventional bank has better quality than Islamic bank. On the contrary, in the technology and user support component, there are insignificant differences.
Applications of this study: The results of this study are useful for several parties involved. First for the stakeholders of the banking industry in Indonesia. Second for banks in Indonesia. Third for regulators, it is expected to be able to provide more detailed regulations. Finally, it gave an opportunity to other researchers for making some further study.
Novelty/Originality of this study: This research is the first study that comprehensively compares the quality of Internet Financial Reporting in Islamic and conventional banking institutions. This study also succeeded to find that in management communication to stakeholders using Internet Financial Reporting, Islamic Banks were able to compete with Conventional Banks.
Keywords
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- Ahmed, A. H., Burton, B. M., & Dunne, T. M. (2017). The determinants of corporate internet reporting in Egypt: an exploratory analysis. Journal of Accounting in Emerging Economies, 7(1), 35-60.https://doi.org/10.1108/JAEE-04-2015-0024 DOI: https://doi.org/10.1108/JAEE-04-2015-0024
- Alcaraz-Quiles, F. J., Navarro-Galera, A., & Ortiz-Rodriguez, D. (2015). Factors determining online sustainability reporting by local governments. International Review of Administrative Sciences, 81(1), 79-109.https://doi.org/10.1177/0020852314541564 DOI: https://doi.org/10.1177/0020852314541564
- Ariff, A. M., Bin-Ghanem, H. O., & Hashim, H. A. (2018). Corporate ownership, internet penetration and Internet Financial reporting: evidence from the Gulf Cooperation Council countries. Asian Journal of Business and Accounting, 11(1), 185-227. https://doi.org/10.22452/ajba.vol11no1.7 DOI: https://doi.org/10.22452/ajba.vol11no1.7
- Banking Licensing and Information Department. (2018a). Indonesia Banking Statistic September 2018. Jakarta.
- Banking Licensing and Information Department. (2018b). Sharia Banking Statistic September 2018. Jakarta.
- Bin-Ghanem, H., & Ariff, A. M. (2016). The effect of board of directors and audit committee effectiveness on internet financial reporting: Evidence from gulf co-operation council countries. Journal of Accounting in Emerging Economies, 6(4), 429-448. https://doi.org/10.1108/JAEE-07-2014-0037 DOI: https://doi.org/10.1108/JAEE-07-2014-0037
- Bonsón-Ponte, E., Escobar-RodrÃguez, T., & Flores-Munoz, F. (2006). Online transparency of the banking sector. Online Information Review, 30(6), 714-730. https://doi.org/10.1108/14684520610716180 DOI: https://doi.org/10.1108/14684520610716180
- Bowrin, A. R. (2015). Comprehensiveness of internet reporting by Caribbean companies. Journal of Accounting in Emerging Economies, 5(1), 2-34. https://doi.org/10.1108/JAEE-08-2011-0028 DOI: https://doi.org/10.1108/JAEE-08-2011-0028
- Brusca, I., & Montesinos, V. (2016). Implementing performance reporting in local government: A cross-countries comparison. Public Performance & Management Review, 39(3), 506-534.https://doi.org/10.1080/15309576.2015.1137768 DOI: https://doi.org/10.1080/15309576.2015.1137768
- Bushman, R. M., Piotroski, J. D., & Smith, A. J. (2004). What determines corporate transparency? Journal of Accounting Research, 42(2), 207-252.https://doi.org/10.1111/j.1475-679X.2004.00136.x DOI: https://doi.org/10.1111/j.1475-679X.2004.00136.x
- Dolinšek, T., & Lutar-Skerbinjek, A. (2018). Voluntary disclosure of financial information on the internet by large companies in slovenia. Kybernetes, 47(3), 458-473.https://doi.org/10.1108/K-08-2016-0220 DOI: https://doi.org/10.1108/K-08-2016-0220
- El-Diftar, D., Jones, E., Ragheb, M., & Soliman, M. (2017). Institutional investors and voluntary disclosure and transparency: the case of Egypt. Corporate Governance: The International Journal of Business in Society, 17(1), 134-151.https://doi.org/10.1108/CG-05-2016-0112 DOI: https://doi.org/10.1108/CG-05-2016-0112
- Gajewski, J.-F., & Li, L. (2015). Can Internet-based disclosure reduce information asymmetry? Advances in Accounting, 31(1), 115-124.https://doi.org/10.1016/j.adiac.2015.03.013 DOI: https://doi.org/10.1016/j.adiac.2015.03.013
- Guodo Liu, L. (2000). The emergence of business information resources and services on the Internet and its impact on business librarianship. Online Information Review, 24(3), 234-255.https://doi.org/10.1108/14684520010341317 DOI: https://doi.org/10.1108/14684520010341317
- Haddad, A. E., Sbeiti, W. M., & Qasim, A. (2017). Accounting legislation, corporate governance codes and disclosure in Jordan: a review. International Journal of Law and Management, 59(1), 147-176.https://doi.org/10.1108/IJLMA-07-2016-0064 DOI: https://doi.org/10.1108/IJLMA-07-2016-0064
- Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.https://doi.org/10.1016/0304-405X(76)90026-X DOI: https://doi.org/10.1016/0304-405X(76)90026-X
- Jones, M. J., & Xiao, J. Z. (2004). Financial reporting on the Internet by 2010: a consensus view. In Accounting Forum (Vol. 28, pp. 237-263). Taylor & Francis.https://doi.org/10.1016/j.accfor.2004.07.002 DOI: https://doi.org/10.1016/j.accfor.2004.07.002
- Keliwon, K. B., Shukor, Z. A., & Hassan, M. S. (2018). Internet financial reporting (IFR) disclosure position and firm value. Asian Journal of Accounting and Governance, 9, 111-122.https://doi.org/10.17576/AJAG-2018-09-10 DOI: https://doi.org/10.17576/AJAG-2018-09-10
- Marina, A., Wahjono, S. I., Sya'ban, M., & Zeni. (2019). ISLAMIC ACCOUNTING INFORMATION SYSTEM IN HOSPITAL, AN URGENT DESIRE. Humanities & Social Sciences Reviews, 7(3), 555-562.https://doi.org/10.18510/hssr.2019.7382 DOI: https://doi.org/10.18510/hssr.2019.7382
- Nassir Zadeh, F., Salehi, M., & Shabestari, H. (2018). The relationship between corporate governance mechanisms and internet financial reporting in Iran. Corporate Governance: The International Journal of Business in Society, 18(6), 1021-1041.https://doi.org/10.1108/CG-06-2017-0126 DOI: https://doi.org/10.1108/CG-06-2017-0126
- Olimov, S., Hamid, A., & Mufraini, M. A. (2017). Performance of Depositor Fund: A Lesson From Indonesian Islamic Banking System. Etikonomi, 16(1).https://doi.org/10.15408/etk.v16i1.4871 DOI: https://doi.org/10.15408/etk.v16i1.4871
- Otoritas Jasa Keuangan. (2017). Siaran Pers: Market Share Keuangan Syariah Capai 8 Persen. (Online)(Http://Ojk. Go. Id, Diakses 20 April 2019).
- Pervan, I., & Bartulović, M. (2017). Determinants of Internet Financial Reporting of Croatian Banks-Panel Analysis. In 8th International Conference" The Economies of Balkan and Eastern Europe Countries in the changed World".https://doi.org/10.18502/kss.v1i2.655 DOI: https://doi.org/10.18502/kss.v1i2.655
- Reitmaier, C., & Schultze, W. (2017). Enhanced business reporting: value relevance and determinants of valuation-related disclosures. Journal of Intellectual Capital, 18(4), 832-867.https://doi.org/10.1108/JIC-12-2016-0136 DOI: https://doi.org/10.1108/JIC-12-2016-0136
- Santoso, S. (2015). SPSS 20 Pengolah Data Statistik di Era Informasi - "SPSS 20 Data Processing Statistics in the Information Age." Edisi Pertama, PT Elex Media Komputindo, Jakarta.
- Serrano-Cinca, C., Fuertes-Callén, Y., & Gutiérrez-Nieto, B. (2007). Online reporting by banks: a structural modelling approach. Online Information Review, 31(3), 310-332.https://doi.org/10.1108/14684520710764096 DOI: https://doi.org/10.1108/14684520710764096
- van Esterik-Plasmeijer, P. W. J., & van Raaij, W. F. (2017). Banking system trust, bank trust, and bank loyalty. International Journal of Bank Marketing, 35(1), 97-111.https://doi.org/10.1108/IJBM-12-2015-0195 DOI: https://doi.org/10.1108/IJBM-12-2015-0195
- Yassin, M. M. (2017). The determinants of internet financial reporting in Jordan: financial versus corporate governance. International Journal of Business Information Systems, 25(4), 526-556.https://doi.org/10.1504/IJBIS.2017.10005621, https://doi.org/10.1504/IJBIS.2017.085176 DOI: https://doi.org/10.1504/IJBIS.2017.10005621
References
Ahmed, A. H., Burton, B. M., & Dunne, T. M. (2017). The determinants of corporate internet reporting in Egypt: an exploratory analysis. Journal of Accounting in Emerging Economies, 7(1), 35-60.https://doi.org/10.1108/JAEE-04-2015-0024 DOI: https://doi.org/10.1108/JAEE-04-2015-0024
Alcaraz-Quiles, F. J., Navarro-Galera, A., & Ortiz-Rodriguez, D. (2015). Factors determining online sustainability reporting by local governments. International Review of Administrative Sciences, 81(1), 79-109.https://doi.org/10.1177/0020852314541564 DOI: https://doi.org/10.1177/0020852314541564
Ariff, A. M., Bin-Ghanem, H. O., & Hashim, H. A. (2018). Corporate ownership, internet penetration and Internet Financial reporting: evidence from the Gulf Cooperation Council countries. Asian Journal of Business and Accounting, 11(1), 185-227. https://doi.org/10.22452/ajba.vol11no1.7 DOI: https://doi.org/10.22452/ajba.vol11no1.7
Banking Licensing and Information Department. (2018a). Indonesia Banking Statistic September 2018. Jakarta.
Banking Licensing and Information Department. (2018b). Sharia Banking Statistic September 2018. Jakarta.
Bin-Ghanem, H., & Ariff, A. M. (2016). The effect of board of directors and audit committee effectiveness on internet financial reporting: Evidence from gulf co-operation council countries. Journal of Accounting in Emerging Economies, 6(4), 429-448. https://doi.org/10.1108/JAEE-07-2014-0037 DOI: https://doi.org/10.1108/JAEE-07-2014-0037
Bonsón-Ponte, E., Escobar-RodrÃguez, T., & Flores-Munoz, F. (2006). Online transparency of the banking sector. Online Information Review, 30(6), 714-730. https://doi.org/10.1108/14684520610716180 DOI: https://doi.org/10.1108/14684520610716180
Bowrin, A. R. (2015). Comprehensiveness of internet reporting by Caribbean companies. Journal of Accounting in Emerging Economies, 5(1), 2-34. https://doi.org/10.1108/JAEE-08-2011-0028 DOI: https://doi.org/10.1108/JAEE-08-2011-0028
Brusca, I., & Montesinos, V. (2016). Implementing performance reporting in local government: A cross-countries comparison. Public Performance & Management Review, 39(3), 506-534.https://doi.org/10.1080/15309576.2015.1137768 DOI: https://doi.org/10.1080/15309576.2015.1137768
Bushman, R. M., Piotroski, J. D., & Smith, A. J. (2004). What determines corporate transparency? Journal of Accounting Research, 42(2), 207-252.https://doi.org/10.1111/j.1475-679X.2004.00136.x DOI: https://doi.org/10.1111/j.1475-679X.2004.00136.x
Dolinšek, T., & Lutar-Skerbinjek, A. (2018). Voluntary disclosure of financial information on the internet by large companies in slovenia. Kybernetes, 47(3), 458-473.https://doi.org/10.1108/K-08-2016-0220 DOI: https://doi.org/10.1108/K-08-2016-0220
El-Diftar, D., Jones, E., Ragheb, M., & Soliman, M. (2017). Institutional investors and voluntary disclosure and transparency: the case of Egypt. Corporate Governance: The International Journal of Business in Society, 17(1), 134-151.https://doi.org/10.1108/CG-05-2016-0112 DOI: https://doi.org/10.1108/CG-05-2016-0112
Gajewski, J.-F., & Li, L. (2015). Can Internet-based disclosure reduce information asymmetry? Advances in Accounting, 31(1), 115-124.https://doi.org/10.1016/j.adiac.2015.03.013 DOI: https://doi.org/10.1016/j.adiac.2015.03.013
Guodo Liu, L. (2000). The emergence of business information resources and services on the Internet and its impact on business librarianship. Online Information Review, 24(3), 234-255.https://doi.org/10.1108/14684520010341317 DOI: https://doi.org/10.1108/14684520010341317
Haddad, A. E., Sbeiti, W. M., & Qasim, A. (2017). Accounting legislation, corporate governance codes and disclosure in Jordan: a review. International Journal of Law and Management, 59(1), 147-176.https://doi.org/10.1108/IJLMA-07-2016-0064 DOI: https://doi.org/10.1108/IJLMA-07-2016-0064
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.https://doi.org/10.1016/0304-405X(76)90026-X DOI: https://doi.org/10.1016/0304-405X(76)90026-X
Jones, M. J., & Xiao, J. Z. (2004). Financial reporting on the Internet by 2010: a consensus view. In Accounting Forum (Vol. 28, pp. 237-263). Taylor & Francis.https://doi.org/10.1016/j.accfor.2004.07.002 DOI: https://doi.org/10.1016/j.accfor.2004.07.002
Keliwon, K. B., Shukor, Z. A., & Hassan, M. S. (2018). Internet financial reporting (IFR) disclosure position and firm value. Asian Journal of Accounting and Governance, 9, 111-122.https://doi.org/10.17576/AJAG-2018-09-10 DOI: https://doi.org/10.17576/AJAG-2018-09-10
Marina, A., Wahjono, S. I., Sya'ban, M., & Zeni. (2019). ISLAMIC ACCOUNTING INFORMATION SYSTEM IN HOSPITAL, AN URGENT DESIRE. Humanities & Social Sciences Reviews, 7(3), 555-562.https://doi.org/10.18510/hssr.2019.7382 DOI: https://doi.org/10.18510/hssr.2019.7382
Nassir Zadeh, F., Salehi, M., & Shabestari, H. (2018). The relationship between corporate governance mechanisms and internet financial reporting in Iran. Corporate Governance: The International Journal of Business in Society, 18(6), 1021-1041.https://doi.org/10.1108/CG-06-2017-0126 DOI: https://doi.org/10.1108/CG-06-2017-0126
Olimov, S., Hamid, A., & Mufraini, M. A. (2017). Performance of Depositor Fund: A Lesson From Indonesian Islamic Banking System. Etikonomi, 16(1).https://doi.org/10.15408/etk.v16i1.4871 DOI: https://doi.org/10.15408/etk.v16i1.4871
Otoritas Jasa Keuangan. (2017). Siaran Pers: Market Share Keuangan Syariah Capai 8 Persen. (Online)(Http://Ojk. Go. Id, Diakses 20 April 2019).
Pervan, I., & Bartulović, M. (2017). Determinants of Internet Financial Reporting of Croatian Banks-Panel Analysis. In 8th International Conference" The Economies of Balkan and Eastern Europe Countries in the changed World".https://doi.org/10.18502/kss.v1i2.655 DOI: https://doi.org/10.18502/kss.v1i2.655
Reitmaier, C., & Schultze, W. (2017). Enhanced business reporting: value relevance and determinants of valuation-related disclosures. Journal of Intellectual Capital, 18(4), 832-867.https://doi.org/10.1108/JIC-12-2016-0136 DOI: https://doi.org/10.1108/JIC-12-2016-0136
Santoso, S. (2015). SPSS 20 Pengolah Data Statistik di Era Informasi - "SPSS 20 Data Processing Statistics in the Information Age." Edisi Pertama, PT Elex Media Komputindo, Jakarta.
Serrano-Cinca, C., Fuertes-Callén, Y., & Gutiérrez-Nieto, B. (2007). Online reporting by banks: a structural modelling approach. Online Information Review, 31(3), 310-332.https://doi.org/10.1108/14684520710764096 DOI: https://doi.org/10.1108/14684520710764096
van Esterik-Plasmeijer, P. W. J., & van Raaij, W. F. (2017). Banking system trust, bank trust, and bank loyalty. International Journal of Bank Marketing, 35(1), 97-111.https://doi.org/10.1108/IJBM-12-2015-0195 DOI: https://doi.org/10.1108/IJBM-12-2015-0195
Yassin, M. M. (2017). The determinants of internet financial reporting in Jordan: financial versus corporate governance. International Journal of Business Information Systems, 25(4), 526-556.https://doi.org/10.1504/IJBIS.2017.10005621, https://doi.org/10.1504/IJBIS.2017.085176 DOI: https://doi.org/10.1504/IJBIS.2017.10005621