2018 proceedings€¦ · rita kusumawati & rosady irham determinants of financial performance...

2018PROCEEDINGS

23 APRIL 2018

FEDERAL HOTEL, KUALA LUMPUR

GLOBAL MULTIDISCIPLINARY RESEARCH CONFERENCE (GMRC)


2018PROCEEDINGS


23 APRIL 2018

FEDERAL HOTEL, KUALA LUMPUR

PROCEEDINGS2018 Global Multidisciplinary Research Conference (GMRC)

Published by MNNF PublisherCopyright © 2018 by MNNF Publisher

All rights reserved. No part of this publication may be reproduced, stored in a retrievalsystem, or transmitted in any form or any means, electronic, mechanical,photocopying, recording or otherwise, without prior permission, in writing, from thepublisher.

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Perpustakaan Negara Malaysia

Contents

Impact of Selected Socio-demographic Variables onAttitude of Primary Caregivers towards Persons withMental IllnessShibu Dharmarajan & Jasseer Jabbar

The Cox Model Analysis of the Influence of Socio-Economic Factors on the Mortality Risk of the Elderly inChinaNing Kang & Chaochao Wu

The Effect of Capital Structure and Profitability to FirmValue with Managerial Ownership as a VariableModerationRita Kusumawati & Rosady Irham

Determinants of Financial Performance of ShariaCommercial Banks in IndonesiaAlien Akmalia

Analysis Determinants of Disclosure Level of IslamicSocial Reporting (ISR) among Indonesia Sharia BanksLela Hindasah

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Take Over Process (Money Transfer) Micro FinancingBank Syariah (Empirical Study at PT. Bank SyariahMandiri Kendal Branch)KMT Lasmiatun

Integrating the Communication into Quality of Lifeamongst Academician Sandwich GenerationMumtaz Ahmad, Aini Hayati Musa, Noor Hasvenda Abd Rahim,Masilah Mohamad & Nabilah Abdul Shukur

The Determinants of Job Stress that Influence Quality ofLife among Working AdultsMumtaz Ahmad, Aini Hayati Musa, Noor Hasvenda Abd Rahim,Masilah Mohamad & Nabilah Abdul Shukur

Internet Privacy Challenge for Facebook Users inMalaysiaJamaliah Mohd Taib & Hajah Makiah Tussaripah Jamil

Multiple Steps Tuning Control Strategies of DistillationColumnNasser Mohamed Ramli, Ummu Athirah Elias& Haslinda Zabiri

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Proceedings: Global Multidisciplinary Research Conference

23 April 2018, Kuala Lumpur

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Impact of Selected Socio-demographic Variables on Attitude of Primary Caregivers

towards Persons with Mental Illness

Shibu Dharmarajan1 & Jasseer Jabbar²

1Department of Management – Leadership & Entrepreneurship, Assumption University of Thailand

2Department of Psychology, University of Kerala, India

[email protected]

ABSTRACT The role of caregivers is unavoidable in the treatment and rehabilitation of mental patients. Carefully handling the mental patients is an important skill of the caregiver. To develop professional skills on them, today, many of the institutions works in those areas are organizing psycho-education for the primary caregivers to create a positive attitude towards mental patients and the mental health programs. In this circumstance, it is essential that to understand the current attitude of primary caregivers toward mental patients. This study examines the influence of certain socio-demographic variables such as gender, place of residence, age, and religion on attitude of primary caregivers towards the persons with mental illness. Purposive sampling method is adopted to collect the data for this study. The sample consisted of two hundred (N=200) primary caregivers from the Mental Health Centre, Trivandrum (India). In order to measure the attitude of primary caregivers, “An Index of Attitude towards Mental patient” scale is utilized. The t-test, One-Way ANOVA, and post hoc comparison: Duncan’s test was employed to test the tenability of hypotheses. The findings revealed that female caregivers are more positive in their attitude towards the mental patients than male caregivers. In contrary of common perception, the young care givers are found to have a more positive attitude towards the mental patients than older caregivers. No statistical significance is noted in the case of place of residence, and religions of the caregivers on their attitude towards the target group. Keyworks: Socio-demographic variable, Attitude, Primary caregivers, and mental illness.

1. INTRODUCTION

Adverse attitude towards mental patients are found in all societies in the world. Our current

views of abnormal behavior have been shaped by the prevailing attitudes of past times and the advances of the sciences. Each has contributed to the growth and often stagnation of the other. Gradually important strides were made towards changing the attitude of the general public towards the persons with mental illness. Clifford Beers (1876-1943) was a pioneer in the US mental hygiene movement, which stressed the need for change in the attitude and treatment towards mental patients. In general, the attitude of public about mental illness is far more negative than professionals (Nunnally, 1961). The mentally ill are regarded with distress, fear and dislike. People are threatened by mentally ill’s unpredictability. A small but significant tendency was found for more educated people being less negative in their attitude. Research on attitude towards mental patients is essential to enhance the quality of life of the unsound minds. Unfortunately, little is known about the knowledge and attitude of the caregivers towards mental patients in India.

Many centuries ago people had negative attitudes towards insanity and mentally ill. Many mental patients even not received good treatment because of unnecessary suffering and higher costs. Specific beliefs and absence of a perceived need for care are the major reasons for not offering care. This paved the way to increase the condition worsen to get care of the family also.

mailto:[email protected]



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Care givers attitudes are the important factor in the relapse stage of mental patients because the caregiver’s negative attitude directly affects the patients improvement in treatment.

Ojanen (1992) conducted a study on attitudes towards mental patients. The study reported that the caregivers’ supportive behaviors help the patients to reduce their disorder to a great extent. Mittal, Corrigan, Sherman, Chekrui, Han, Reaves, & Sullivan (2014), also noted from some comparative studies on attitude of healthcare professionals and caregivers to mental patients with general public have found few differences in standard stigma measures such as desire for social distance and endorsement of negative stereotypes.

The primary caregiver is the one who plays a key role in the care and treatment of mental patients. They are not only giving the physical care, but the love and emotional care are also a crucial element in the prognosis of their treatment and recovery. Few studies reported that health care professionals, whether it is psychiatrists or caregivers, had more positive views than the public regarding prognosis, psychiatric treatment and patients’ civil rights (Lauber & Rossler, 2007; Nordt, Rossler, & Lauber, 2006). Whereas the negative views of caregivers usually create a repellent effect on psychiatric treatment and prognosis for recovery. Caldwell and Jorm (2000); Hugo (2001); Jorm Korten, Jacomb, Christensen, & Henderson (1999); Magliano, Fiorillo, De Rosa, Malangone, & Maj (2004); Nordt et.al (2006) found that mental health providers adopt more negative attitudes than the general public in that they stereotype persons with mental illness and desire greater social distance.

2. LITERATURE REVIEW

The following review materials are collected in the present study may substantiate the

importance of this study. For example, Neupane, Dhakal, Thapa, Bhandari, & Miishra (2016) conducted a cross-sectional study in Nepal to find the attitude of the caregivers towards mentally ill people. The result of the study revealed that the sexes of the caregivers, educational status, marital status, caregivers relation with patients were correlated with attitude toward the mentally ill. In contrast, of the above study Onyebuchukwu, Idowu, Emerrenwa, & Kunle (2016) reported that age and sex are not good predictors of attitude towards mental illness. On the other hand, this study showed that general health, self-efficacy and social supports are good predictors of attitude to mental illness among caregivers of psychiatric patients.

Poreddi, Birudu, Thimmaiah, & Math (2015) conducted a cross-sectional survey at a tertiary care centre in Karnataka (India). Based on the result, they suggested that there is an urgent need to educate and change the attitude of caregivers through mental health literacy programs specially designed for these people. A similar finding is also found by Shinde in 2014, cited that, in western Maharashtra, many of the primary caregivers are unaware about the nature of many mental illnesses and they believe medical intervention is the most import aspect of the mental patients than the primary care of the family. He concluded that psycho-educational programs for the relatives of patients are crucial to change this type of attitude.

Sun, Fan, Nie, Zang, Huang, He, & Rosenheck (2014) reported that the primary caregivers need more extensive training to support and care the mental patients and they needed to avoid the social distance from the mentally ill. They also reported social stigma and negative attitudes towards mentally ill people are very common in China.

In a 2012 study by de Sousa, Marques, Curral, & Queiros apprise that the family members of people with mental illness in Portugal expressed positively, little stigmatizing attitude towards persons with schizophrenia. They conducted a survey of 40 family members of family members with schizophrenia. Based on the empirical evidences they argued that probably as a result of their familiarity with the severity of the mental disorder and an adequate attribution process and low level of perceived dangerousness may motivate them to create a positive attitude.

Malliori, Chioti, & Konstantoppoulou (2010) conducted a study on the extra care burden in co morbid mental-somatic illness. Caregivers play a fundamental role in the lives of mental patients with whom they have an independent relationship. Hosseni & Sheykmounesi (2010) examined the evaluations of mental health studies in caregivers of patients with chronic psychiatric disorders. The result of the study cited that there is a gender difference in the attitude of caregivers towards the patients. Kam-Shing (2010) also emphasized about the vital role of primary caregivers in the treatment of persons with mental illness.

Buizza, Pioli, Ponteri, Vittorielli, Corradi, Minicuci, & Rossi (2005) developed a study on community attitude towards mental illness and socio-demographic characteristics. The purpose



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of the study was to assess the association between socio-demographic factors and community attitude towards mentally ill people. The result of the study indicated to promote the intervention focused strategies to improve the general attitude of the caregivers towards the mentally ill people.

Based on the above recent and relevant information, it is visible that the unique role of primary caregivers in fostering the recovery and well-being among persons with mental illness. Considering these ideas in mind, the present study is arranged to find the attitude of primary caregivers towards mentally ill persons.

3. OBJECTIVES OF THE STUDY

The present study intended to measure the attitude of the primary caregivers towards the persons with mental illness.

4. HYPOTHESES The following hypotheses were formulated for the current investigation H1. There is a significant difference between male and female caregivers with respect to

the variable attitude towards the person with mental illness. H2. There is a significant difference between the age groups of caregivers with respect to

the variable attitude towards persons with mental illness. H3. There is a significant difference among the religious groups of caregivers with respect

to the variable attitude towards persons with mental illness. H4. There is a significant difference between caregivers residing in urban and rural areas

with respect to the variable attitude towards the person with mental illness.

5. METHODOLOGY 5.1 Sample

As the study population under the study is a very typical group, so the present study followed a purposive sampling technique. A sample of 200 primary caregivers (M = 92; F= 108) belongs to different socio-demographic strata selected from the Government Mental Health Centre, Trivandrum in the state of Kerala, India. 5.2 Tools

Personal Data Sheet - In order to obtain socio-demographic information, a personal data sheet was prepared by the researchers. This includes information regarding sex, age, educational status, religion, place of residence, employment status, and monthly income. Subjects were requested to fill the personal data sheet without omitting any of the questions.

An Index of Attitude towards Mental Patients - To measure the attitude of primary caregivers towards persons with mental illness, “An Index of Attitude towards Mental Patients” (Jasseer, 2011) was used. Cronbach’s Alpha coefficient was calculated and it is found to be within an acceptable range of 0.78 and above. 5.3 Procedure

The research assistants personally met the caregivers at the mental health center and collected the data. After creating a rapport with the caregivers and then they distributed the survey questionnaire and asked them to read the instructions carefully and select their responses according to their choices. Confidentiality of the information gathered was assured. After scoring the data, it was sent for statistical analysis. As the data represents a normal distribution, One-way ANOVA, t-test, and a post hoc comparison (Duncan’s) test were employed to test the tenability of the hypotheses.



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6. RESULT AND DISCUSSION The present study is aimed to understand the attitude of the caregivers towards persons with mental illness. Data on these variables were collected by the administration of appropriate tools and the results were interpreted in relation to the hypotheses framed in the study. The information gathered were consolidated, coded and subjected to appropriate statistical analysis with the help of a computer. The data obtained was processed and analyzed using the statistical techniques, viz. ANOVA and t-Test. The result of the study is presented in the following tables and discussed with substantial evidences. 6.1 Attitude and Gender

The difference between male and female caregivers in the study variables were analyzed using t-test and the results are given in the table1.

Table 1: Results of t-test of the variables based on gender

Variable

Gender N Mean SD t-value Sig (2 tailed)

Attitude

Male 108

81.37 10.36 4.29

Female 92 87.49 9.80 4.27 0.00**

** p<0.01 (2 tailed)

From the table 1, mean value of attitude is found to be 87.49 (N=92) for females and 81.37

(N=108) for males. The t-value is found to be 4.27 and it is statistically significant also. The significant difference can be interpreted as the attitude of the male and female caregivers towards the mentally ill people are varying.

Based on this information, it can be argued that females are more positive in their attitude towards the persons with mental illness than males. This may due to that females be found themselves more caring and adjusting with the persons with mental illness. Neupane, et.al (2016) obtained a similar result in their study to find out the caregivers’ attitude towards people with mental illness and perceived stigma. They reported that females showed more positive attitude towards the people with mental illness. But some other literature showed that the gender difference is inconsistent in the case of predictions of attitude towards mentally ill persons. In a study of changing attitude to mental illness among community health volunteers in south-western Nigeria, found that female sex was not a predictor of poor attitude towards mental illness (Abayomi, Adelufosi, & Olajide, 2013).

A study from India by Salve, Goswami, Sagar, Nongkynnh, & Sreenivas (2013) also reported the same argument like above regarding the sex difference in attitude towards mental patients. They conducted their study in South Delhi on perception and attitude towards mental illness. But just opposite to the view of the above authors, Bener & Ghuloum (2011) in their study related to the gender differences in the knowledge, attitude, and practice towards mental health illness in a rapidly developing Arab society, observed that men had better knowledge, beliefs, and attitude than women towards the mentally ill people. Evans-Lacko, Henderson, & Thornicroft (2013) from their study aimed to find out the public knowledge, attitudes and behavior regarding people with mental illness in England, emphasized that females are more positive in their attitude towards the persons with mental illness than males . In the light of the above studies this difference can be attributed as the gender is a complex construct towards attitude and which is determined by a set of values, cultural beliefs, and practices between the nations. On the basis of the result, it can be said that our hypothesis (H1) related to attitude and gender is accepted.



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6.2 Attitude and Age

Table 2: Results of the One-way ANOVA of the variables based on age Variables Sum of

squares df Mean

square F Sig

Attitude

Between groups

Within groups

Total

1859.91

2

929.96

9.05

0.00**

20236.24

197

102.72

22096.16

199

**p<0.01

Table 3: Multiple comparisons on the means of subgroups based on age (Duncan’s test)

Subset for alpha = 0.05 Age N 1 2

Above 50 yrs

71

81.06

31 – 49 yrs

74

83.78

Up to 30 yrs

55

88.76

Sig .013 .100

As the data is more than two groups, One-way ANOVA is used for analysis. The subjects

were divided into three groups based on the ages. The result obtained from One-way ANOVA shows that the F value of the attitude and age is found to be 9.05 and it is statistically significant as well ( F= 9.05; p<0.01). From the results it is inferred that age is a vital determinant of the attitude of caregivers towards the persons with mental illness.

Exploring the differences among the age groups in the caregivers’ attitude toward the persons with mental illness, the age is grouped viz. age 50 and above, 31 to 49 yrs, up to 30 yrs have obtained the score such as 81.06 (N=71), 83.78 (N=74), and 88.76 (N=55) respectively. From the above result it can also be noticed that age level up to 30 scored the highest value, and the lowest value is obtained by the age level of 50 yrs and above. But the age level between 31 to 49 yrs and age level of 50 yrs and above have a marginal difference only. It is also found to be statistically significant.

The result is expected as when the age increases the positive attitude of the caregivers towards the persons with mental illness may increase. But contradictory to the previous notions, in the present study, it shows an inverse relation with age and attitude of the participants, such as the age decreases the positive attitude of the caregivers towards mental patients increases.

This may be due to the sympathy of the youngsters towards the mental patients. Activities of individuals are influenced by their age, and it is a very important biological factor in determining the perception and attitude of individuals towards social issues. In a study by Ewalds-Kvist, Hogberg, & Lutzen (2013) found that there is an impact of the ages on the attitude of people towards mental illness. They conducted the study in Sweden and stated that as the age increases in the relatives of mental patients, their ideology towards community mental health decreased. Jang, Chiriboga, & Okazaki (2009) reported that there is an age group difference in Korean American adults regarding the attitude towards mental health services. In their study, the older adult sample possessed more negative attitude towards mental illness and they believe that having a mentally ill person in the family brings shame on the whole family. Their attitude towards the service to mentally ill people also found negative. These are the ample evidences to support our findings. Here also our hypothesis related to attitude and different age groups are justified and accepted (H2).



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6.3 Attitude and Religion

Table 4: Results of One-way ANOVA of the variable based on religion Variable Sum of

squares df Mean

square F Sig

Attitude

Between groups

Within groups

Total

571.18

2

285.59

2.614

0.076

21524.98

197

109.26

22096.16

199

From the results (Table 4) we can generalize that there is no significant difference between

the subjects were categorized on the basis of religion (Hindu/Christian/ Islam). This shows that religious beliefs or faith of the caregivers hasn't been influenced by their views on the persons with mental illness. The only factor that affects the attitude may be the severity of the illness as far as the primary caregivers in the sample are concerned. The above results showed that our hypothesis related religion (H3) is rejected 6.4 Attitude and Place of Residence

Table 5: Result of t-test of attitude on place of residence Variable Place of

residence N Mean SD t-value

Attitude

Urban

63

82.52

9.19

-1.52

Rural

137

84.95

11.04

The details of the t-test are given in the table 5 reveals that mean value for the variable

attitude was found to be 82.52 for caregivers reside in urban and 84.95 for caregivers coming from rural areas. Further, it confirms that, the t-value is -1.52, and which is not significant. Hence it is evident from the result that place of residence, whether they are from urban or rural, is not a good indicator to influence the attitude of the caregivers towards the persons with mental illness. In the case of attitude and place of residence also not significantly related, so our hypothesis related to attitude and place of residence (H4) is also rejected.

7. CONCLUSION

Psycho education to the family members and patients is part of psychiatric management. To embark effective psycho education, one needs to know the attitude of the primary caregivers towards the patients. The findings of the present study revealed that there are a gender and age differences in the attitude of the primary caregivers. Females found they are more positive, well cared, and highly adjusted with treatment programs for their relatives with mental illness. Contradictory to our previous impressions, youngsters were found to be more positive in their attitude towards the persons with mental illness. Their sympathetic nature may be motivated them to provide more attention and care to those weaker groups.

Knowing the attitude of family members help to sort out and correct the negative and unhealthy attitude if these exist on them. This correction would result in lesser amounts of expressing emotions and better social support from the part of the family members. Moreover, this would shed some light to the areas of Information Education Communication (IEC) programs in India. We firmly believe that the content of IEC would include the facts to correct negative belief, feelings, and behavior of family members towards the persons with mental illness. Furthermore, the present study can share some knowledge to all mental health professionals to facilitate the participation of family members in the treatment and rehabilitation programs for the persons with mental illness.



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As cited the benefits of the study, the limitations also needed to be discussed. The major hindrance to the study was a lack of resources. The researchers could collect samples only from one district in the province of Kerala and this limits the scope of the study. The target groups, economic, and educational status were also lower, so we couldn’t study the impact of these variables on attitude. Therefore we recommend to the social researchers to conduct further studies using more variables and advanced statistical analysis to collaborate the findings of the study. References Abayomi, O., Adelufosi, A., & Olajide, A. (2013). Changing attitude to mental illness among community

mental health volunteers in south-western Nigeria. International Journal of Social Psychiatry, 59 (6),

609-612 Bener, A., & Ghuloum, S. (2011). Gender difference in the knowledge, attitude and practice towards

mental health illness in a rapidly developing Arab society. International Journal of Social Psychiatry, Volume: 57, Issue: 5, 480-486

Buzzia, C., Pioli, R., Ponteri, M., Vittorielli, M., Corradi, A., Minicuci, N., & Rossi, G. (2005). Community attitude towards mental illness and socio demographic characteristics. Epidemiology psychiatric society, 14 (3), 154-162

Caldwell, T.M., & Jorm, A.F. (2000). Mental health nurses’ beliefs about interventions for schizophrenia and depression: a comparison with psychiatrists and the public. Aust N Z J Psychiatry, 34, 602-611

de Sousa, S., Marques, A., Curral, R., & Queiros, C. (2012). Stigmatizing Attitudes in relatives of people with schizophrenia: a study using Attribution Questionnaire AQ-27. Trends in Psychiatry and Psychotherapy. vol.34 no. 4

Evans-Lacko, S., Henderson, C., & Thornicroft, G. (2013). Public knowledge, attitudes and behavior regarding people with mental illness in England 2009 – 2012, The British Journal of Psychiatry, Volume: 202, Issue: 55, 51-57

Ewalds-Kvist, B., Hogberg, T., & Lutzen, K. (2013). Impact of gender and age on attitudes towards mental illness in Sweden. Nordic Journal of Psychiatry, Volume: 67, Issue: 5

Hosseini, S.H., Sheykhmounesi, F., & Shahmohammadi, S. (2010). Evaluation of mental health status in caregivers of patients with chronic psychiatric disorders, Journal of biological science, 13, 325-329

Hugo, M. (2001). Mental health professionals’ attitudes towards people who have experienced a mental health disorder. Journal of Psychiatric and Mental Health Nursing, Volume 8, Issue 5, 419-425

Jang, Y., Chiriboga, D.A., & Okazaki, S. (2009). Attitudes toward mental health services: Age-group differences in Korean American Adults. Journal of Aging & Mental Health, Volume: 13, Issue: 1, 127 – 134.

Jasseer, J. (2011) An Index of Attitude towards Mental Patients. A Manual for Attitude Test, Department

of Psychology, University of Kerala, India. Jorm, A.F., Korten, A. E., Jacomb, P.A., Christensen, H., & Henderson, S. (1999). Attitudes towards

people with mental disorder: a survey of the Australian public and health professionals. Australian and New Zealand Journal of Psychiatry, 33(1), 77-83

Kam-Shing-Yip. (2010). Family care giving of clients with mental illness in the people’s Republic of China, Journal of Psychosocial Rehabilitation, 10 (1), 35-42

Lauber, C. & Rossler, W. (2007). Stigma towards people with mental illness in developing countries in Asia. International Review of Psychiatry, Volume 19, Issue 2

Magliano, L., Fiorillo, A., De Rosa, C., Malangone, C., & Maj. M. (2004). Beliefs about schizophrenia in Italy: a comparative nationwide survey of the general public, mental health professionals, and patients’ relatives. Canadian Journal of Psychiatry, 49(5), 322-330.

Malliori, M.M., Chioti, V., & Konstantoppoulou, K. (2010). Extra care burden in co morbid mental somatic illness. Journal of current opinion in psychiatry, 23(4), 299-404

Mittal, D., Corrigan, P., Sherman, M.D., Chekrui, L., Han, X., Reaves, C., & Sullivan, G. (2014). Healthcare providers’ attitudes toward persons with schizophrenia. Psychiatric Rehabilitation journal, 37(4), 297-303

Neupane, D., Dhakal, S., Thapa, S., Bhandari, P.M., & Miishra, S.R. (2016). Caregivers’ Attitude towards People with Mental Illness and Perceived Stigma: A Cross-Sectional Study in Tertiary Hospital in Nepal. PloS One, 11(6)

Nordt, C., Rossler, W., & Lauber, C. (2006). Attitudes of Mental Health Professionals toward People with Schizophrenia and Major Depression. Schizophrenia Bulletin, v.32 (4)

Nunnally, J.C. (1961). Popular conception of Mental Health: Their Development and Change, New York; Rine Hart and Winston.

Ojanen, M. (1992). Attitudes towards Mental Patients. Journal of Social Psychiatry; 38(2),

120-130.



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Onyebuchukwu, I.J., Idowu, E. K., Emerrenwa, A.B.C., & Kunle (2016). Psychological and demographic Factors as Predictors of Attitude Towards Mental Illness by Caregivers in Federal Neuropsychiatric Hospital Aro Abeokuta. Rehabilitation Sciences, Vol.1, No.1, 1-8.

Poreddi,V., Birudu, R., Thimmaiah, R., & Math, S.B. (2015). Mental health literacy among caregiversof persons with mental illness: A descriptive survey. Journal of Neurosciences in Rural Practice, Vol. 6, Issue: 3, 355-360

Salve, H., Goswami, K., Sagar, R., Nongkynnh, B., & Sreenivas, V. (2013). Perception and Attitude towards Mental Illness in an Urban Community in South Delhi – A community Based Study. Indian Journal of Psychological Medicine, 35(2), 154-158

Shinde, M.B. (2014). Knowledge, Attitudes and Practices among Caregivers of Patients with Schizophrenia in Western Maharashtra. International Journal of Science and Research (IJSR) 3 (5)

516 – 522 Sun, B., Fan, N., Nie, S., Zang, M., Huang, X., He, H., & Rosenheck, R.A. (2014). Attitudes, towards

people with mental illness among psychiatrists, psychiatric nurses, involved family members and the general population in a large city in Guangzhou, China, International Journal of Mental Health Systems

8:26



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The Cox Model Analysis of the Influence of Socio-Economic Factors on the Mortality Risk of

the Elderly in China

Ning Kang & Chaochao Wu

Yiheyuan Road Haidian District Beijing PRC 100871

[email protected]

ABSTRACT Based on the panel data from the Chinese Longitudinal Healthy Longevity Survey in 2011 and 2014, we use the Cox proportional hazard model to analyze the impact of socio-economic factors on the risk of death among the elderly in this article. The results of the analysis show that the gender, marital status, education, type of urban and rural areas of residence, and self-rated health status have a significant impact on the risk of death among the elderly. But the source of income, whether there is a pension or not, has no significant effect on the risk of death among the elderly. We believe that the mechanism of socio-economic impact on the risk of death among the elderly is very complicated and there is an interaction. We should strive to obtain more relevant factors in the later research and analyze its mechanism of action. Keywords: Mortality risk; Socio-economic factors; Elderly; Health.

1. INTRODUCTION

After China entered an aging society, the severe ageing situation not only brought challenges to social and economic development, but also brought us deeper thoughts on the health of the elderly. With the aging of China's elderly population, longevity does not necessarily mean that health is gradually accepted by people. Therefore, we should pay more attention to how to extend the life expectancy of the elderly population while studying how to increase the average life expectancy of the population. According to previous scholars' research, socio-economic factors will significantly affect the health and death patterns of the elderly. Most scholars have found that gender, educational level, ethnicity, and other factors are related to the level of mortality. However, there are still some differences in other social and economic factors, such as the source of economic income and the types of urban and rural areas where people live. My research will analyze the content of these controversial socio-economic factors using the data from the follow-up survey on the factors affecting the Chinese Longitudinal Healthy Longevity Survey.

2. DATA SOURCES AND METHODS

2.1 Sources of data

The data from this paper is derived from the Chinese Longitudinal Healthy Longevity Survey, which is organized by Peking University’s Research Center for Healthy Aging and Development and the National Development Institute. The survey covered 23 of the 31 provinces in China, covering a total population of 985 million in the baseline survey in 1998. In 2010, the total population was 1.156 billion, accounting for approximately 85% of the country's total population. There have been seven follow-up investigations including the 1998 baseline survey. This paper uses panel data composed of the latest two data from the 2011 and 2014 follow-up surveys for




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analysis. The sample size of the investigation in 2011 was 9,765. As of 2014, the number of deaths before the follow-up investigation was 2,879, and the number of lost followers was 820.

2.2 Definition of Variables

In my research, variables are divided into four groups: demographic variables, socioeconomic status variables, health variables, and support variables. Demographic variables are gender, marital status and whether they live with their families. Marital status is defined as 1 for marriage and living with spouse. Other conditions (divorce, unmarried, widowed, separated) are defined as 0; whether to live with family members will be defined as zero for living alone and living in an institution for the aged.

The Social and Economic Status variables include the level of education, the type of urban and rural residence, the main source of income, and having a pension or not. Among them, the education level variable defines uneducated as 0, at least one year of education is defined as 1; the main source of income is divided into salary or pension, family funding, and other (national or other outside family funding).

Health variables include self-care ability and health self-evaluation. In the Ability of Daily Life (ADL), the six indexes of going to the toilet, eating, dressing, grooming, walking, and bathing in the daily life ability scale are assigned, and the values are assigned to 1, 2 and 3 according to the severity. Representatives do not need help, some need help, and can't do it completely. In this paper, they are constructed as discrete dichotomous variables: If the surveyed elderly has any value of one index other than 1, it is determined to be incapacitated. The health self-evaluation will be good, good, and generally marked as "better" is defined as 1, will be bad, very bad, no ability to answer as "bad", defined as 0.

The support section includes whether there is financial support, emotional support and life care support, all handled as dichotomous variables. Due to the lack of certain information in some variables, 8209 cases were eventually reserved for analysis. The specific variable assignment description is shown in Table 1.

Table 1 Distribution of model variables n=8209

VARIABLES DISCRIPTION PROPORTION(%)

Demographic variables Gender 0=Male 45.54 1=Female 54.46 Marital status 0=Others 63.22

1=marriage and living with spouse

36.78

Whether live with families 0=No 18.74 1=Yes 81.26 Social and Economic Status variables Level of education 0=Uneducated 58.76 1=Educated 41.24 Residential community type 0=Rural 47.96 1=Urban 52.04 Main source of income 0=Others 11.49

1=Salary or pension 29.25

2=Family funding 59.04 Have pension or not 0=No 81.72 1=Yes 18.28 Health variables

Completely self-care 0=No 25.33

1=Yes 74.67 Health self-evaluation 0=Bad 21.56 1=Good 78.44 Support variables Financial supprot 0=No 38.38 1=Yes 61.62 Life care support 0=No 4.97 1=Yes 95.03 Emotional support 0=No 2.00 1=Yes 98.00



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2.3 Research Methods

This paper uses the basic methods of Cox risk regression and the proportional hazard model to study the effects of social and economic factors on the mortality risk of the elderly. P < 0.05 was considered statistically significant.

3. RESULTS ANALYSIS AND DISCUSSION

First, I put each group of variables into the model, and roughly understand the impact of each group of variables on the mortality risk of the elderly. The results are shown in Table 2.

Table 2 Effect of Individual Variables on Risk of Death in Elderly People

VARIABLES

Demographic Variables

Exp（β）

SES variables

Exp（β）

Health variables

Exp（β）

Support variables

Exp（β）

Gender(0=Male) 1.627*** \ \ \

Marital status（0=Others） .569*** \ \ \

Whether live with families（0=No） 1.131* \ \ \

Level of education（0= Uneducated） \ .597*** \ \

Main source of income（0=Others） \ \ \

1= Salary or pension \ .961 \ \

2= Family funding \ 1.313*** \ \

Have pension or not(0=No) \ 1.128 \ \

Residential community type

（0=Rural） \ 1.052 \ \

Completely self-care(0=No) \ \ .917* \

Health self-evaluation(0=Bad) \ \ 1.388*** \

Financial support（0=No） \ \ \ 1.196***

Life care support（0=No） \ \ \ 1.164

Emotional support（0=No） \ \ \ 1.172

*=p<0.05; **=p<0.01; ***=p<0.001

The model estimation results show that the gender, marital status, and whether they lived

with family members had a significant effect on the risk of death of the elderly among the models that included only demographic variables. Among them, the death risk of female seniors was 1.627 times that of men. This is inconsistent with the results of other relevant studies and will be further analyzed later. It is worth noting that the risk of death for married and elderly people living with a partner is only 0.569 times that of other marital status. This shows that the risk of death of elderly people who live with a partner is only half that of other circumstances. In the socio-economic variables section, whether or not only education has been received and the main source of income for the family has a significant effect on the risk of death from the elderly. The education risk of elderly people is 0.597 times higher than that of elder-educated older people. This is consistent with the results of related studies, that receiving education will reduce the risk of death. In addition, the main source of income is elderly people whose other family supplies (children, grandchildren, etc.) are at significantly higher risk of death than other sources of income. This may be due to the fact that the quality of life of elderly people without wages and pension guarantees is relatively poorer than that of self-sufficiency. In terms of health variables, whether life is completely self-care and self-evaluation health has a significant impact on the risk of death. Among them, the self-care variable, and the risk of death for elderly people who can take care of themselves completely are less than the elderly who can't completely take care of themselves. This also shows that self-care ability can be a good measure of the health status of the elderly. However, in the self-evaluation health variables, the risk of death for self-assessed and well-being old people was 1.388 times that of poorly self-evaluated, which may be due to the inaccurate evaluation of self-health by the elderly. We will continue discussion on this issue later. In the support section, whether or not there is an economic support variable has a significant impact on the risk of death, and the risk of death for elderly people with family financial support is 1.196 times that without economic support for older people, which is in part consistent with the main sources of income above. It may also be due to the fact that the elderly who are not economically self-sufficient have a lower quality of



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life than self-sufficient elderly people. From the above analysis results, it can be seen that each group of variables is significant in explaining the risk of death in the elderly. Relatively speaking, demographic variables are more explanatory of the risk of death in the elderly.

In order to further analyze the impact of social and economic factors on the mortality risk of the elderly, each group of variables was added as control variables to the Cox proportional hazards model until all the variables were added to the model. The results are shown in Table 3. It is not difficult to see that the effects of gender, marital status, whether or not to receive education, the type of residential community, and self-evaluation of health status have relatively stable effects on the risk of death of the elderly. Whether living with a family member is less stable, and under the condition of controlling the support variable, whether or not living with a family member has no significant effect on the risk of death. This shows that if you live with your family, it may be due to your family’s related economic, emotional, and caring support. In other words, what we saw earlier that the risk of death with family members is higher than the fact that living alone or living in a nursing home may include other support from the family. As more factors in the model are controlled, whether or not living with family members has no significant effect on the risk of death from the elderly. The urban-rural differences in the current place of residence have a significant effect on the risk of death of the elderly. The risk of death among the urban elderly is slightly higher than that of the rural elderly. The author believes this may be due to the fact that older people in urban areas have better medical resources and living conditions. However, according to previous studies, the prevalence of cancer and chronic diseases in urban areas is higher than in rural areas, which may be one of the reasons for the higher risk of death among the elderly in urban areas. In terms of self-evaluation health, models 3 and 4 still show that the self-evaluation of elderly people with higher risk of death than self-evaluation is relatively poor, which may be related to the inaccurate evaluation of their own health by the elderly. Some people usually pay more attention to their health status. Older people may think that their health level is not good enough in evaluation, and they pay more attention to their health status in daily life, such as paying attention to healthy diet and timely medical treatment. Others, who are accustomed to neglecting their own health, may feel that their health status may be considered better but they are not. After controlling a series of variables, the impact of economic support on the risk of death is different from that in the previous article, which shows that elderly people who have financial support have a lower risk of death. This may be due to whether there is an interaction between economic support and income sources and pensions.

Table3 Cox proportional hazards model estimation results

Variables Model1

Exp（β）

Model2

Exp（β）

Model3

Exp（β）

Model4

Exp（β）

Demographic Variables Gender(0=Male) 1.627*** 1.442*** 1.476*** 1.493***

Marital status（0=Others） .569*** .581*** .593*** .591***

Whether live with families（0=No） 1.131* 1.128* 1.118* 1.104

SES Variables

Level of education（0= Uneducated） \ .768*** .768*** .768***

Main source of income（0=Others）

1= Salary or pension \ .947 .943 1.357

2= Family funding \ 1.086 1.125 1.504*

Have pension or not(0=No) \ 1.119 1.123 1.052

Residential community type（0=Rural） \ 1.087* 1.087* 1.092*

Health Variables

Completely self-care(0=No) \ \ .997 .994

Health self-evaluation(0=Bad) \ \ 1.424*** 1.399*** Support Variables

Financial support（0=No） \ \ \ .691*

Life care support（0=No） \ \ \ 1.094

Emotional support（0=No） \ \ \ 1.217* *=p<0.05; **=p<0.01; ***=p<0.001



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4. SUMMARY

This article compares several models and analyzes the impact of social and economic factors on the mortality risk of older people. The results of the study show that whether education and the type of urban and rural dwelling have a significant impact on the risk of death for the elderly, and the main sources of economic income have little effect on mortality risk. In terms of education, we learned from other scholars that people who have received education pay more attention to their health status and their risk of death is relatively low. However, in this data, only the number of years of education is investigated. In future studies, it should be combined with other data to analyze whether the education level is related to the risk of death. The risk of death is higher in urban middle-aged and elderly people who have better medical conditions, which may be related to poorer environmental quality in cities. In recent years, some studies have found that 13% to 37% of diseases worldwide can be avoided through the improvement of environmental quality. In terms of demographic variables, gender and marital status have a significant and stable effect on the risk of death for the elderly. In terms of gender, females have a higher risk of death than men. Considering that some related studies confirm that the female elderly have a higher index of vulnerability and suicide than men, and this trend becomes more pronounced with age, the vulnerability index is also closely related to the risk of death. Therefore, this can also explain the reason why female seniors have a higher death risk than men. In terms of marital status, the results fully confirmed the hypothesis of the role of marriage protection, that is, marriage has a protective effect on the health status of the elderly. Finally, through the analysis of multiple models, it is shown that the mechanism of social and economic factors affecting the risk of death of the elderly is very complicated. In the subsequent studies, more relevant factors should be sought and the mechanism of action should be analyzed.

References

Adler, N. E., & Ostrove, J. M. (1999). Socioeconomic status and health: what we know and what we don't. Annals of the New York Academy of Sciences, 896(1), 3-15.

Giles, L. C., & Andrews, G. R. (2005). Effect of social networks on 10 year survival in very old australians: the australian longitudinal study of aging. J Epidemiol Community Health, 59(7), 574-579.

Prüss-Ustün, A., Bonjour, S., & Corvalán, C. (2008). The impact of the environment on health by country: a meta-synthesis. Environmental Health, 7(1), 7.

GU Danan, & LIU Yuzhi. (2006). Comparative Study on the Health Status and Death Risk of Aged Aged Persons and Old People in China. Population Research, 30(5), 49-56.

LIU Guiping. (2004). Analysis of Social and Economic Factors of Death Risk among old people. Chinese Journal of Population Science (S1).

LUO Yanan. (2014). The Effect of Social Support on the Mortality Risk of the Chinese Elderly by Cox Model Analysis. South China Population, 8457(3), 62-70.

ZENG Xian-xin. (2007). The Effects of Social-Economic Status on the Mortality Hazard of Chinese Elderly. Population & Economics(5), 53-58.



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The Effect of Capital Structure and Profitability to Firm Value with Managerial Ownership as a

Variable Moderation

Rita Kusumawati & Rosady Irham

Department of Management, Universitas Muhammadiyah Yogyakarta Jalan Brawijaya Tamantirto Kasihan Bantul, Yogyakarta, Indonesia

[email protected]

ABSTRACT This study aims to examine the influence of capital structure and profitability on firm value with a managerial ownership as a variable moderation.The population in this research is the manufacturing companies listed on the Indonesia Stock Exchange (IDX) in period 2013 up to 2016. Data collected by purposive sampling method and the sampling results obtained are 96 sampel. The analysis technique used Moderated Regression Analysis (MRA) or interaction test.The result show that the capital structure as measured by DER has a positive and significant effect on firm value, profitability as measured by ROA has a positive and significant on firm value, the capital structure which moderated by managerial ownership has a negative and significant effect on firm value and profitability which moderated by managerial ownership has a negative and significant effect on firm value.

Keywords: Capital Structure, Profitability, Managerial Ownership, Firms Value

1. INTRODUCTION

Firm value is the value given by the stock market to the performance of the company (Tarjo, 2005). Firm value is very important for investors as one of reference to make investments to the company . Firm value which is formed through the indicator of market value of the stock, is determined by several factors such as: the size of the company, the company's growth rate, profitablity, debt policy, corporate liquidity position, managerial ownership and capital structure (Agnes, 2013); dividend policy and investment decisions (Hermastuti, 2014).

Capital structure is one factor that can affect the firm value. Modligiani-Miller's (MM) theory with taxes explains that adding debt in the proportion of the firm's capital structure will increase the value of the firm. The enhancement of the firm’s value is due to the tax savings of interest paid and the reduction of agency costs. Some researches related to capital structure to firm value include the research conducted by Haruman (2008); Wijaya et al. (2010); Hermuningsih (2012); Abrian (2014); Moniaga (2013); Primary and Wirawati (2016); Agnes (2013); Chaidir (2015) and Anjarwati, et.all (2016) Those research proved that the capital structure has positive and significantly influence to firm value. On the contrary, there were other studies that showed contradictive results such as Wirajaya and Goddess (2013) and Hoque, dkk (2014), Ju Chen and Yu Chen (2011) and Munandar and Kusumawati (2017). The research proved that captal structure had negative effect to firm value.

Profitability generated by the company can also affect the firm value. Profitability is the ability of a company to generate profits. A high level of profitability indicates the company is performing well and has prospects in the future. This became a good signal and responded positively by investors to invest in the company. The more investors are interested in buying shares of the company, the more stock price increase as well as firm value. Pratama and Wirawati (2016), Putra and Wirawati (2013), Utami (2011) and Ju Chen and Yu Chen (2011) in his research proved that profitability has a positive and significant effect on firm value. The results of this




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study differ from the research conducted by Chaidir (2015) and Moniaga (2013) in his research explains that profitability does not significantly affect the firm value.

2. THE THEORY AND HYPOTHESIS DEVELOPMENT 2.1 Firm value

According to Husnan (2008), the firm value is the price paid by the prospective buyer when the company is sold. The firm value is the investor's assessment of the company's success and its performance as reflected in the stock market price. The value of a company which is formed through a stock market indicator indicates can be seen as a good investment opportunities. The existence of these investment opportunities can provide a positive signal to investors about the prosperity that will be obtained by investors and future prospects so that this can increase the firm value 2.2 Capital Structure

Capital structure is a comparison or balance of long-term debt with its equity. The determination of efficient capital structure also affects the company's performance to achieve its goals (Riyanto, 2001). The MM theory (Modligiani-Miller) in the 1950s assumed that firm value was not affected by the capital structure, assuming the capital market was perfect, no tax effects and bankruptcy effects, so the company's funding decision became irrelevant as an investment consideration, or the addition of debt and capital alone will not have an impact on the welfare of shareholders. The theory of MM without taxes is considered as unrealistic and then in 1963 MM put the tax factor into his theory. Taxes paid to the government, which means cash outflow. Debts can be used to save taxes, because interest can be used as a tax deduction. By incorporating the elements of the tax, then the addition of debt will increase the firm value where the increase in value is due to the tax savings of interest paid

Trade-off theory also explains that policy-making on capital structure involves trade-offs between risks and returns. The addition of debt made seems to be risky decision but it also give greater rate of return.

Signal is an action performed by the manager of the company and delivered to investors about how management views the prospect of the company. If the manager considers that the company has good prospects in the future, the manager would make the stock price in the market to increase, and he can do so by signaling to investors that is by using a larger debt. With this, it is expected that investors can catch the signal, signals that the company has good prospects in the future.

Hanafi (2013) are explained in the Agency theory approach, that capital structure designed to reduce the presence of conflict between various interest groups. For instance the conflicts between shareholders with the Manager about. the concept of free-cash flow. When the company saw no longer attractive investment decision, the company will hand out free-cash flow to shareholders to invest it myself. However there is a tendency that those resources would like to be controlled by its own managers. Debt can be used as a way to resolve a agency conflict.

2.3 Profitability

According to Sartono (2001), profitability defined as the ability of the company in obtaining profit in relation to sales, total assets and own capital. Profitability of a company is very important for investors, because profitability is one of the considerations in investing because investors think a company that has a high profitability will provide a large return as well 2.4 Managerial Ownership

Managerial ownership is the percentage of ownership of shares in the company by the management (Adnyana Putra and Wirawati, 2013). The structure of ownership in the company has a different impact on how management actions take risks (Chun and Lee, 2017). According to Darmawati and Rahayu (2004), the core of this agency relationship is the separation between



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the controls as the agent and the ownership as the principal. Investors have an expectation that investor wealth and investor prosperity will increase by delegating management authority to the manager 2.5 The Effect of Capital Structure on Firm Value

Capital structure is the company's funding structure which obtained from the sum of debt

and equity. Signaling Theory describe how a corporate manager look at the prospect of the company and gives its signal to investors or shareholders. If the manager has enough confidence that the company has good prospects, then the manager can use a larger debt in the capital structure of the company, which later this action can be considered a reliable signal. Investors are expected to capture the positive signal so that investors will be interested and have an interest to participate in owning and buying the company. Surely this will increase the stock price in the market. In addition, in MM theory which explains that by considering taxes as well as in trade-off theory, firm value is also determined by the capital structure. The higher the proportion of debt will increase the proportion of capital structure which will also increase the firm value. This is also supported by research conducted by Moniaga (2013), Chaidir (2015) research and Pratama and Wirawati research (2016), Agnes (2013) and Chaidir (2015), explaining that the capital structure has a positive and significant impact on firm value. In this study, the proposed hypothesis is: H1: Capital structure has a positive and significant impact on firm value . 2.6 The Effect of Profitability on Firm Value

According to Dewi and Wirajaya (2013), profitability is the ability of a company in generating

profit over a certain period. Profitability will increase the firm value as reflected by the increase in stock prices in the market. The higher level of profitability of a company shows the company's performance is better and gives a signal for the future growth prospects of the company. This of course will attract investors to invest by owning or buying the company. More and more investors are interested in buying shares of the company then a positive impact on increasing stock prices and will eventually increase the firm value. So, the greater the profitability of a company the greater the firm value. From the results of research conducted by Pratama and Wirawati (2016), Putra and Wirawati (2013), Ju Chen and Yu Chen (2011) and Utami (2011) explained that profitability has a positive and significant effect on firm value. Hence the hypothesis proposed in this research are:

H2: Profitability has a positive and significant effect on the firm value 2.7 The Effect of Capital Structure on Corporate Value with Managerial Ownership as a moderating variable.

Agency theory explains one of the actions that can be done to resolve the agency conflict

among various interest groups that exist is by increasing the ownership of shares by the management. In addition, capital structure is also considered as a way to overcome the conflict of interest. Management as a shareholder will strive to increase the firm value as by increasing the debt in its capital structure. Based on MM theory and trade-off which is also supported by Signalling that with increasing debt in capital structure the company will increase its firm value and also will give positive signal to investor. This will certainly attract investors to have the company is due to the increased level of prosperity to be obtained by investors and this will also increase the firm value. Hence the hypothesis proposed in this research are:

H3: Capital structure moderated by managerial ownership has a positive and significant

impact on firm value



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2.8 The Effect of Profitability on Corporate Value with Managerial Ownership as a moderating variable

According to Rahayu (2010), the structure of ownership is believed to affect the way the

company in achieving the objectives of a company, namely to achieve maximum profit, prosper the stock and maximize the company's value. The higher managerial ownership in the company is expected to raise the firm value in which management will make maximum efforts to the interests of the shareholders. This is true because the management as a shareholder will also get a big return if the company also get a greater profit. When a company earns a big profit it will give a positive signal to investors and investors will be interested to have a company that will also affect the stock price in the market. Anindyati (2011) also supported by research of Putra and Wirawati (2013) explains that the ROA proxy financial performance have a positive and significant influence to firm value with managerial ownership as moderating variable. Hence the hypothesis proposed in this research are:

: H4: Profitability moderated by managerial ownership has a positive and significant impact on

firm value 3. RESEARCH METHODS

The object in this research is the manufacturing companies listed on the Indonesia stock

exchange (IDX) in the period 2013-2015. The sample selected through purposive sampling method, based on some criteria there are obtained samples as much as 96 samples. The data collected by documentation method from the website Indonesia stock exchange (idx) www.idx.co.id. 3.1 Data Measurement Firm Value

Firm value is the level of performance and success of the company which is reflected through indicator of the stock prices in the market. Firm value can be seen by calculating Price to Book Value (PBV) (Pratama and Wirawati, 2016), which is the value of stock market over the value of the book. In this study, firm value is measured by PBV with the following formula PBV = (Market Price per Share) / (Book Value per Share) Capital Structure

Capital Structure is the amount of balance between debts with equity. Capital structure can be measured by using financial ratio i.e: debt ratio. Capital structure in this research is measured by debt to equity ratio (DER) with the following formula (Primary and Wirawati, 2016): DER = (Total Debt) / (Total Equity) Profitability

Profitability is the ability of the company in generating profit from activities performed during a given period. Profitability can be measured by the Return on Asset (ROA) ratio.This ratio measures the extent to which the capabilities of the company in generating net income based on the level of asset owned. ROA in this research are formulated as follows (Hanafi and Halim, 2012): ROA = (Net Profit) / (Total Assets)

Managerial Ownership

Managerial ownership is the sum of share ownership by the management based on the entire share capital of the managed company (Agnes, 2103). Managerial ownership in this study is measured by managerial ownership (MOWN) (Pratama and Wirawati, 2016). The MOWN formula is as follows: MOWN = (Total Share of Managers and Board of Directors) / (Total Shares Outstanding) X100%



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3.2 Data Analysis Techniques This research used moderated regression analysis (MRA) to analyze the interaction

(multiplication of two or more variables) or the effect of moderating variables (Ghozali, 2011). Previously, a classical assumption test has been performed which includes normality test, multicollinearity test, heterokedastisity test and autocorrelation test. The regression equation is as follows:

PBV = α + β1 DER + β2 ROA + e PBV = α + β1 DER + β2 MOWN + β3 DER * MOWN + e PBV = α + β1 ROA + b2 MOWN + β3 ROA * MOWN + e

Description: PBV = Firm value, α = Constant, β = Coefficient DER = Capital Structure; ROA = Profitability, MOWN = Managerial Ownership, DER * MOWN = Interaction with capital structure of managerial Ownership, ROA * MOWN = Interactions with Managerial Ownership, Profitability e = residual errors 4. THE RESULTS OF THE RESEARCH AND THE DISCUSSION 4.1 A Classic Assumption Test

Before analyzing the data in advance the classical assumption test. The results of the classic

assumption test show not all assumptions are met. Therefore, the data on the dependent and independent variables is transformed into a natural logarithmic form (Ghazali, 2011). After the transformation of data in the form of natural logarithm, all data meet the classical assumption test Normality, Multicolinearity, Heterocedasticity, and Autocorrelation. 4.2 Regression analysis and hypothesis testing

Test results conducted presented on table 1, table 2, and table 3 and the obtained results the equation as follows:

PBV = 3.017737 + 0.319915 DER + 0.882035 ROA PBV = -0.512472 - 0.613942 DER - 0.150505 MOWN - 0.143821 DER*MOWN PBV = 1.209591 + 0.345134 ROA - 0.248687 MOWN - 0.081555 ROA*MOWN

Table 1 Multiple Linear regression analysis results of Model 1

Variable 'S Std Error. t-Statistics Prob.

C 3.017737 0.224565 13.43814 0.0000

LOG (DER) 0.319915 0.072332 4.422881 0.0000

LOG (ROA) 0.882035 0.070028 12.59546 0.0000

R-squared 0.638800 Mean dependent var 0.297216

Adjusted R-squared 0.630948 Until dependent var 1.127280

Table 2 Test results of MRA DER * MOWN Model 2


C -0.512472 0.232652 -2.202743 0.0301

LOG (DER) -0.613942 0.179120 -3.427543 0.0009

LOG (MOWN) -0.150505 0.036322 -4.143685 0.0001

LOG (DER) * LOG (MOWN) -0.143821 0.029419 -4.888776 0.0000



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Table 3 Test results of MRA ROA * MOWN Model 3


C 1.209591 0.400669 3.018928 0.0033

LOG (ROA) 0.345134 0.140694 2.453081 0.0161

LOG (MOWN) -0.248687 0.057411 -4.331672 0.0000

LOG (ROA) * LOG (MOWN) -0.081555 0.021653 -3.766445 0.0003

5. DISCUSSION

The results of the first hypothesis testing showed that the value of coefficient of DER is 0.319915.It indicates that capital structure has the same direction to the firm value. Level of significance DER 0.0000 indicating that p < 0.05, so hypothesis 1 in this study accepted, which means that the capital structure has a positive and significant impact on firm value. Thus, the greater the capital structure of the firm the greater the firm value. The results of this study are in accordance with MM theory with tax and signal theory where capital structure influences firm value. Companies with high debt get a tax savings from interest paid so that the firm value is high. Investors also capture positive signals for companies that have high debt. The company is considered to have confidence in the company's growth in the future. This research is consistent with research conducted by Moniaga (2013), Pratama and Wirawati (2016), Agnes (2013) and Chaidir (2015) which proves that DER's proportioned capital structure has positive and significant impact on firm value

The results of testing the second hypothesis shows the value of the coefficient of ROA of 0.882035. The coefficient value indicates that profitability has a positive effect on firm value. ROA has a significance level of 0.0000 indicating that p <0.05. This means that hypothesis 2 in this study is accepted. Profitability has positive and significant effect to firm value. So, the higher the profitability of the company then the higher the firm value. This research is consistent with research conducted by Primary and Wirawati (2016), Putra and Wirawati (2013), Utami (2011) and Ju Chen and Yu Chen (2011) explains that profitability has positive and significant effect to firm value.

The result of the third hypothesis test shows that the interaction test between capital structure and managerial ownership has a significance level of 0.0000 (p> 0,05), but has negative influence based on coefficient value = -0.143821. These results indicate that firms that use large debts in the capital structure with the support of managerial ownership in the firm will lower the firm value. The negative direction indicates that investors are worried and assume that this increase in debt increases the risk and only management actions are not in line with the interests of shareholders. This is also explained by Hamidah, et al, (2015), when managerial as shareholder should try to increase shareholder value there is a possibility that managerial have personal goals that will compete with the interest to maximize shareholder value and there will be negative influence even with managerial ownership.

The result of the fourth hypothesis test shows the interaction test result between the profitability variable with managerial ownership of 0.0003 and the moderating variable has negative direction seen from the coefficient value = -0.081555. Managerial ownership variables can moderate the relationship between profitability to firm value with negative direction. This negative influence indicates a concern of investors with opportunistic management actions that tend to make decisions for their own interests. The results of this study support Chun and Lee's (2017) research which states that ownership by a large number of companies (management) will have an effect on the actions and encouragement that a company's management gets to take on its own interests to take on more risks when there is an opportunity growth better. 6. CONCLUSIONS

Based on the results of the analysis that has been done can be concluded: (1) Capital

structure has positive and significant effect to firm value, (2) Profitability have positive and significant effect to firm value, (3) Managerial ownership moderate influence of capital structure to firm value (4) Profitability moderated by managerial ownership has a negative and significant effect on firm value



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7. RECOMENDATIONS

Based on the experience of researchers in conducting this research, then provided suggestions for further research are: 1. Research can then multiply the number of sample enterprises, so it could happen the

diversity research and the number of samples. 2. Further Research can change the proxy variable for some research research. so obtained

results and different meaning adapted to the circumstances.

8. THE LIMITATIONS OF THE RESEARCH

The limitations in this study are: (1) measuring instrument or a single proxy for each variable tested, (2) the variables used, sample research only 96 sanple and time limited observations.

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Darmawati, Deni, Khomsiyah & Rica Title Rahayu. (2004). "The Relationship Of Corporate Governance And Company Performance." Denpasar. National Accounting Symposium VII.

Hamida, H., Ahmad, G. N., & Clifford, R. (2015). "The Effect Of Intellectual Capital, Capital S Tructure And M Anagerial O Wnership T Oward F Irm V Alue Of M Anufacturing S Ector C Ompanies Listed In I Ndonesia S Tock E Xchange (IDX) Period 2010-2014 " . JRMSI Management Science Research Journal-Indonesia, 6(2), 558-578.

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Investment Decisions Of Firms, Journal Of Accounting Research And Science Vol 3 No. 4.1 -14 Hoque, J., Hossain, A., & Hossain, K. (2014). "The Impact Of Capital Structure Policy On The Value Of

The Firm – A Study On Some Selected Corporate Manufacturing Firms Under The Dhaka Stock Exchange". Ecoforum Journal, 3(2), 9.

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Sartono A,. (2001). Financial Management Theory and Application. The Fourth Edition. First Printing. BPFE-Yogyakarta: Yogyakarta.

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Determinants of Financial Performance of Sharia Commercial Banks in Indonesia

Alien Akmalia

Department of Management, Universitas Muhammadiyah Yogyakarta. Jalan Brawijaya,

Tamantirto, Kasihan, Bantul, Yogyakarta, Indonesia

[email protected]

ABSTRACT

This research aims to analyze the effect of Capital Adequacy Ratio (CAR), Non Performing Finance (NPF), Financing to deposit ratio (FDR), Operational Efficiency Ratio (BOPO), Good Corporate Governance (GCG) on Return on Equity (ROE) as a proxy financial performance of sharia commercial banks. The data used in this research was a secondary data from financial report during 2012-2016 that has been published in Indonesian Stock Exchange (IDX). Purposive sampling was chosen as the sampling technique in this research. This research used 11 sharia commercial banks as a sample with 54 observations. The analysis technique used multiple regression analysis with E-views program. The result of this research showed that NPF, BOPO and CAR have negative and significant effect on ROE. Meanwhile, FDR, GCG and SIZE have no significant effect on ROE. Keywords: Capital Adequacy Ratio (CAR), Non Performing Finance (NPF), Operational Efficiency Ratio (BOPO), Good Corporate Governance (GCG), Return on Equity (ROE)

1. BACKGROUND

The development of sharia banks in Indonesia is very rapid and has excellent prospects. The existence of sharia banks in Indonesia began with the founding of Bank Muamalat Indonesia in early 1990 (Farrashita, 2016). Based on the Law of the Republic of Indonesia No. 10 of 1998 concerning Banking Article 1 paragraph (3, it is stated that: Commercial Bank is a bank conducting business activities conventionally and or based on sharia principles which in its activities provide services in the financial traffic. The focus of this research is on sharia commercial banks, which in their operation are still oriented to seek profit (profit oriented). One of the ratios that can be used as a proxy for financial performance is Return on Equity (ROE). Return on Equity (ROE) shows the ability of banks to manage available capital to obtain net income (Pramudhito, 2014). Bank Indonesia Regulation no. 6/10 / PBI / 2004 set the standard amount of Return on Equity (ROE) which is 5% - 12.5%. The higher level of Return on Equity (ROE) indicates that the rate of return received by the Bank is higher. This will have a positive impact on the Bank's capital management. According to Kuncoro and Suhardjono (2002), the higher the return the better because it means that the dividends distributed or re-invested as retained earning are also greater.

Profitability as an indicator of a bank's financial performance can be influenced by several factors. Based on Bank Indonesia Circular Letter Number 7/56 / DPbs dated December 9, 2005, the financial ratios contained in the quarterly financial statements of sharia banks include capital, productive assets, profitability, liquidity and compliance aspects. Ratios used for capital appraisal such as Capital Adequacy Ratio (CAR) are used by taking into account credit risk / fund distribution as well as taking into account market risk and fixed assets to capital. Furthermore, the aspects of productive assets include Non performing Financing (NPF). The rentability assessment is measured using Return on Equity (ROE) and Operational Cost on Operating Bebamn (BOPO), while liquidity is measured using Financing to Deposit Ratio (FDR). Several factors that may affect profitability in this research are Capital Adequacy Ratio (CAR),




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Non Performing Finance (NPF), Financing to Deposit Ratio (FDR), Operational Efficiency Ratio (BOPO), and Good Corporate Governance (GCG).

According to Lukitasari (2014), capital adequacy is a banking regulation that sets a framework on how banks and depositors should handle their capital. The ratio that can be used to measure capital adequacy for sharia commercial banks is by using Capital Adequacy Ratio (CAR). Some research results have been conducted including: Fadjar et al (2013) and Syriac et al (2016) which show the results that CAR has an influence on Profitability, while the research results of Zulifiah and Susilowibowo (2014) showed a not significant influence between CAR and Bank Profitability.

Non Performing Financing (NPF) is a non-performing financing ratio that measures the failure rate of credit repayment or financing by a bank as a creditor. The higher the NPF value indicates the worsening of the quality of bank credit that causes the number of problem loans to be greater. Supportive researches include Sulistianingrum (2013), Adyani and Sampurno (2011) and Setiawan (2009). Whereas, the results of research by Ramadan (2013), Wibowo and Syaichu (2013) and Sabir (2012) showed different results. Non Performing Financing has no significant effect on bank profitability.

High FDR scores indicate that funds disbursed to third party funds are also high. With the high funds channeled to third party funds, then the income or profitability of banks will also increase. Some studies that support this include: Sulistianingrum (2013), Prasanjaya and Ramantha (2013), Rahman et al (2012), and Sabir et al (2012). The results are different with the results of research conducted by Almumani (2013), and Adyani and Sampurno (2011) which show that FDR has no significant effect on the profitability of sharia banking.

Based on Bank Indonesia Circular Letter No. 3/30 / DPNP dated December 14, 2001, the operational income is the sum of margin revenue and profit sharing and subtracted by third party funds, which result is then added with other operating income. Operational costs are the costs used in activities during a bank run which aims to assist bank activities and earn revenue. The BOPO variable is related to the efficiency of management burden which is one of the factors that can be used to improve bank profitability. The higher the BOPO, the lower the profitability of the bank will be, because the high BOPO indicates that the bank is increasingly inefficient in managing its fund. Some research that support them are those conducted by Ramadan (2013), Wibowo and Syaichu (2013), Prasanjaya and Ramantha (2013), and Sabir et al (2012). In contrast to Ghozali’s research (2007), it shows that BOPO has a significant positive effect on Profitability. While the research by Almumani (2013) and Hanimas and Tarmizi (2009) show that BOPO results have no significant effect on banking profitability.

Good Corporate Governance is a concept of good governance practices within an institution, which includes the principles of transparency, accountability, responsibility, independence, and fairness that need to be implemented by an institution (Tobing et al., 2013). Shleifer and Vishny (1997) state that corporate governance, a concept based on agency theory, is expected to serve as a tool to give investors confidence that they will receive a return on the funds they have invested. In other words, corporate governance is expected to reduce or decrease agency costs so as to improve profitability obtained by the company. Pratiwi’s research (2016) shows the result that GCG has a significant negative effect on ROE. Purba’s Research (2011) shows that GCG implementation has a significant effect on ROE. It is in contrast with the research conducted by Syam and Nadja (2012) who see the effect of quality of GCG implementation on financial performance at seven sharia commercial banks in Indonesia. The results show that the quality of GCG implementation has no significant effect on ROA.

The size of a company is determined by the scale of the company seen from the total assets of the company at the end of the year. The use of total assets as a proxy from SIZE is caused by the total asset which is considered more stable when compared to using total sales which is greatly influenced by demand and supply. According to Paulocci (2016) and Hanifa (2015,) SIZE significantly affects profitability, while Ali (2011) states that SIZE has no effect on profitability.

Based on several explanations and the numerous studies that show different results, it makes research on this topic still interesting to be conducted. Therefore, the researcher conducted a test on determinant of financial performance at sharia banks in Indonesia.



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2. THEORETICAL BACKGROUND AND HYPOTHESIS FORMULATION 2.1 The effect of Capital Adequacy Ratio (CAR) on Return on Equity (ROE)

According to Hutagalung, et al (2013), the CAR is the financial ratios associated with

banking capital where the capital of a bank will affect the ability of a bank in efficiently running its activities. This capital adequacy ratio is an indicator of the bank's ability to cover its derivative assets as a result of bank losses caused by risky assets (Dendawijaya, 2003). In addition, capital is also useful in maintaining public confidence in the bank's performance. According to Rafelia (2013), the higher the CAR, the higher the capital itself to fund productive assets, and the lower the cost of funds (interest funds) issued by banks. Based on Bank Indonesia Regulation Number 14/18 / PBI / 2012, Capital Adequacy Ratio has a minimum value of 8%.

Based on the above explanation, the proposed hypothesis is: H1: CAR has a significant positive effect on ROE 2.2 The effect of Non Performing Finance (NPF) on Return on Equity (ROE)

Muhammad (2004) states that fund-raising activities may pose a risk of loss. The risk of loss

can emerge from the problematic financing faced by the bank. Non Performing Financing (NPF) is the ratio used to measure the risk to credit disbursed by comparing problem financing with the amount of financing disbursed. Based on Bank Indonesia Regulation Number 6/10 / pbi / 2004 dated 12 April 2004 concerning Commercial Bank Rating System of Commercial Banks, higher Non Performing Loan (above 5%) means that the bank is not healthy. The larger NPF will cause the income received by banks to decrease, so if the income received decreases, it will decrease profitability (Purbaningsih, 2014). According to Pertiwi (2012), the high NPF shows that the bank is unprofessional in managing its financing, thus indicating that the level of risk of financing at the bank is quite high in line with the NPF it faces. The largest revenue in banks is from the financing sector, so if the problematic financing that occurs in sharia banks is higher, the income received by the bank will decrease and will ultimately impact on the decreased profit received by the bank. Several other supporting research results include Sulistianingrum (2013), Adyani and Sampurno (2011) and Setiawan (2009)

Based on the above explanation, the hypothesis proposed in this study are: H2: NPF has a significant negative effect on ROE 2.3 The effect of Financing to Deposit Ratio (FDR) on Return on Equity (ROE)

FDR measures the bank's ability to repay the withdrawal of funds by depositors by relying

on credit or financing given as liquidity. According to Kashmir (2009), Financing to Deposit Ratio (FDR) reflects the ability of banks to channel their funds to those in need of capital. The higher FDR indicates that the bank's liquidity ability is lower. This is because the amount of funds needed for financing becomes lower. Bank Indonesia sets the ideal FDR rate ranging from 78% to 100%.

Research conducted by Irhamsyah (2010) Sulistianingrum (2013), Prasanjaya and Ramantha (2013), Rahman et al. (2012), and Sabir et al. (2012) indicate that FDR has a significant positive effect on ROE. The higher the funds disbursed by the Bank in the form of financing, the higher the ability of banks in providing loans that will affect the increase in bank revenue so that the benefits obtained by Islamic banks will increase. On the other hand, if the financing disbursed by banks is low, it indicates that the bank's liquidity level is too high so it gives pressure on bank income in the form of high unemployed cash (Rahim, 2008).

Based on the above explanation, the hypothesis proposed in this study is: H3: FDR has a significant positive effect on ROE



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2.4 The Effect of Operational Efficiency Ratio (BOPO) on Return on Equity (ROE)

According to Dendawijaya (2003, the Operational Efficiency Ratio (OER) is used to measure the level of efficiency and ability of the Bank in conducting its operations. The high cost will cause the profit received by the Bank smaller. The smaller BOPO value indicates the more efficient the operational costs incurred by the Bank concerned. In contrast, the higher BOPO value indicates that banks are considered inefficient in controlling their operational costs. The existence of cost efficiency will result in optimal level of profit, more competitive cost, increased amount of funds distributed, improvement of service to customer, and increased security and health of bank (Kuncoro 2002). Bank Indonesia stipulates that the ratio of BOPO does not exceed 90% or more exactly 92%. Therefore, management is required to streamline the bank's operational costs as an effort to improve bank profitability. Some of the supporting studies are conducted by Ramadan (2013), Wibowo and Syaichu (2013), Prasanjaya and Ramantha (2013), and Sabir et al (2012).

Based on the above explanation, the proposed hypothesis is as follows: H4: BOPO has a significant negative effect on ROE. 2.5 The effect of GCG on Return on Equity (ROE)

Company management is the business wheel that drives the company in search of profit. In addition, the fundamental thing held by shareholders when they will invest in a company is to get maximum profit. One way for a company / bank to gain maximum profit is to implement good governance. Application of GCG principles as a whole is necessary to achieve that success. According to Surya and Yustiavandana (2008), the implementation of GCG plays an important role, as a suggestion to measure the company's performance well. Implementation of GCG mechanism basically has a purpose to give progress to the performance of a company, one of which is profitability of company. Thus, the implementation of GCG principles can improve the profitability of the company due to the success of the performance achieved.

Black, et al (2003) have conducted research which shows the result that the implementation of Good Corporate Governance (GCG) has a strong and robust relationship to the profitability of companies in South Korea and Russia. These results confirms the finding that companies that implement Good Corporate Governance (GCG) will perform better, both financially and in market value.

Based on the description and previous research that had been done, the hypothesis 3 proposed in this study is: H5 = The quality of GCG implementation has a positive effect on ROA ratio. 2.6 The effect of SIZE on Return on Equity (ROE)

Large banks will have a larger total asset. The size of a company is determined by the scale

of the company seen from the total assets of the company at the end of the year. The total assets will be used for the bank's survival. If the activities of banks can be managed properly, the profitability obtained by banks will also increase. This hypothesis is in accordance with research conducted by Paulocci (2016) and Hanifa (2015) which indicates that SIZE has a significant effect on the profitability of the bank.

Based on the above explanation, the sixth hypothesis proposed in this study is as follows: H6: SIZE has a significant positive effect on ROE

3. RESEARCH METHOD 3.1 Population and Sample

This research is a quantitative research. According to Anshori and Iswati (2009) in Widyaningrum (2015), quantitative research is a structured study and quantifies data to be generalizable. According to Sekaran (2000), the population is the sum of the entire group of



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individuals, events that attract the attention of researchers to be investigated. The object of this study was sharia commercial banks in Indonesia. The population that became the object of observation in this study consisted of all banks registered in Indonesia Banking Directory period 2012 to 2016. The sampling process used purposive sampling technique. Purposive sampling is the process of sampling from the population based on certain criteria (Jogiyanto, 2007). The criteria used may be certain considerations or certain quota. The criteria used in this study are as follows: 1. Sharia bank is a sharia commercial Bank in the period 2012 – 2016 2. The sharia Islamic bank shall prepare the financial statements for the period 2012-2016

and they have been published in Bank Indonesia 3. Applying GCG as measured using composite values 4. Have complete data needed in research

The data used in this research was obtained from Directory of Indonesian Banking from

2012 until 2016.

3.2 Variables and Variables Measurement The independent variable is the variable that becomes the cause of or the affected

dependent variable, while the dependent variable is the variable whose value is influenced by the independent variable (Farrashita, 2016). The independent variables used in this study consist of Capital Adequacy Ratio (CAR), Non Performing Finance (NPF), Financing to deposit ratio (FDR), Operational Efficiency Ratio (BOPO) and Good Corporate Governance (GCG), while the independent variable is Return on Equity (ROE). The measurement of each proxy will be presented in table 1 as follows:

Table 1. Variables Measurement

No. Variable Notation Measurement

1 Capital Adequacy Ratio

CAR 𝐶𝐴𝑅 =

𝐶𝑜𝑟𝑒 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 + 𝐶𝑜𝑚𝑝𝑙𝑒𝑚𝑒𝑛𝑡𝑎𝑟𝑦

𝐴𝑇𝑀𝑅

2 Non Performing Finance

NPF 𝑁𝑃𝐹 =

𝑇ℎ𝑒 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑡𝑟𝑜𝑢𝑏𝑙𝑒𝑑 𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑛𝑔

𝑇ℎ𝑒 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑛𝑔

3 Financing to deposit ratio

FDR 𝐹𝐷𝑅 =

𝑇ℎ𝑒 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑔𝑖𝑣𝑒𝑛 𝑓𝑢𝑛𝑑

𝑇𝑜𝑡𝑎𝑙 𝐹𝑢𝑛𝑑 𝑓𝑟𝑜𝑚 𝑡ℎ𝑖𝑟𝑑 𝑝𝑎𝑟𝑡𝑦

4 Operational Efficiency Ratio

BOPO 𝐵𝑂𝑃𝑂 =

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝑐𝑜𝑠𝑡

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒

5 Good Corporate Governance

GCG The composite value of GCG Self-assessment of companies measured and grouped into five levels are: a. The Composite Value of GCG Self-assessment <1.5 indicates excellent condition b. The Composite Value of GCG Self-assessment 1.5 - 2.5 indicates good condition c. The Composite Value of GCG Self-assessment 2.5 - 3.5 indicates fairly good condition d. The Composite Value of GCG Self-assessment 3.5 - 4.5 indicates not so good condition e. The Composite Value of GCG Self-assessment 4.5 - 5 indicates the condition is not good

6 SIZE SIZE SIZE = Ln Total Asset

7 Return on Equity

ROE 𝑅𝑂𝐸 =

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒

𝐸𝑞𝑢𝑖𝑡𝑦 𝐼𝑛𝑐𝑜𝑚𝑒𝑋 100%

4. The Data Analysis

This research will analyze the effect of Capital Adequacy Ratio (CAR), Non Performing

Finance (NPF), Financing to deposit ratio (FDR), Operational Efficiency Ratio (BOPO) and Good Corporate Governance (GCG) to Return on Equity (ROE). The analysis instrument used in this research is multiple linear regression using eviews program. According to Gujarati



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(1995), the Ordinary Least Square Method (OLS) has some very interesting statistical natures that make it a very powerful method of regression analysis. The regression model is as follows:

ROE = a + b CAR + b NPF + b FDR + b BOPO + b GCG + b SIZE + e

Clues: a : Constants b : Regression Coefficient ROE : Return on Equity CAR : Capital Adequacy Ratio NPF : Non Performing Finance FDR : Finance Deposit Ratio BOPO : Operational Efficiency Ratio GCG : Good Corporate Governance SIZE : Firm Size e : Error 4.1 Classic Assumption Test

Normality Test

The Normality test aims to test whether in the regression model the intruder or residual variable has a normal distribution (Ghozali, 2013). In this study, testing of data normality will use the Kolmogorov Smirnov test. If the probability value is greater than α = 5% or 0.05 it can be concluded that the residuals in the regression model follow the normal distribution.

Table 2. Normality Test

Probability α Conclusion

0.933887 0.05 Residual follows normal pattern of distribution

Source: processed data

Based on Table 2 it can be concluded that regression model passes normality test.

Autocorrelation test

The autocorrelation test aims to test whether in linear regression model there is a correlation between the confounding error in period t with the intruder error in period t-1 (previously (Ghozali, 2013) .If the value of d count is greater than du Durbin-Watson table and less than 4 - DU (Du <d <4 - Du), it can be said that the regression model used is free from autocorrelation problems.

Table 3. Autocorrelation test

DU Value DW Value 4-DU Value Conclusion

1.76942 1.902632 2.23058 Passes autocorrelation test

Source: Processed data

Based on Table 3 it can be seen that Du Value <d <4 - Du, 1.76942 <1.902632 <2.23058 so it can be concluded that the regression model used is free from autocorrelation problems.

Multicollinearity test

Multicollinearity test aims to test whether in the regression model found the existence of correlation between independent variables (Ghozali, 2013). If the VIF value of each independent variable is less than 10 (VIF <10), it can be concluded that the regression model is free from multicollinearity problems.



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Table 4. Multicollinearity test

Independent variable VIF Value Conclusion

CAR 3.298328 Free from multicollinearity

NPF 2.523862 Free from multicollinearity

FDR 2.288819 Free from multicollinearity

BOPO 2.105027 Free from multicollinearity

GCG 1.750726 Free from multicollinearity

SIZE 1.589612 Free from multicollinearity

Source: processed data

Based on Table 4. above the VIF value is less than 10 (VIF <10) so it can be concluded that the regression model passes the multicollinearity test.

Heteroscedasticity test The heteroscedasticity test aims to test whether in the regression model a variance

inequality occurs from one observation to another (Ghozali, 2013). In this research gletjser test will be used.

Table 5. Heterocedasticity test

Probability α Conclusion

0.0747 0.05 Free from heterocedasticity problems


Based on table 5, it can be seen that the probability value of 0.0747(7.47%) is greater than the value of α 0.05 (5%). This shows that the regression model passes the heteroscedasticity test.

Coefficients Determination

Table 7 shows the coefficient of determination of 0.720891 or 72.0891%, so it can be concluded that CAR, NPF, FDR, BOPO, GCG and SIZE variables can explain the ROE variable of 72.0891%. In addition, from table 7 it can be seen that simultaneously CAR, NPF, FDR, BOPO, GCG and SIZE variables significantly affect the ROE variable.

Table 7. Coefficient of Determination

Coefficient of Determination

F Significance

0.720891 22.95409 0.000000


Hypothesis testing (t Test)

The following will present the results of multiple linear regression testing. Independent variables that will be tested in this research consist of CAR, NPF, FDR, BOPO, GCG, and SIZE, while the dependent variable is ROE. Test results are presented in table 2 below:



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Tabel 8 Estimated coefficients for ROE

Independent Variabel

Dependent Variable (ROE)

t-statistic Prob

Constant 1.656638 0.1046

CAR -2.742365 0.0087*

NPF -5.446437 0.0000*

FDR 0.696552 0.4897

BOPO -4.037293 0.0002*

GCG -0.851878 0.3988

SIZE 1.613620 0.1136

Adjusted R-Squared F Statistic

0.720891 22.95409


5. RESULTS AND DISCUSSION 5.1 The effect of CAR on ROE

Based on the results of the first hypothesis testing, it can be seen from table 2 that the CAR has a negative and significant effect on ROE. These results can be interpreted that if the capital adequacy (CAR) owned by the bank is high but not used effectively, it can reduce the profitability obtained by the bank. The results of this test are not in accordance with the proposed hypothesis, so the first hypothesis is rejected. This study indicates that the size of the bank's capital adequacy is not necessarily the cause of the bank's profits. Banks that have large capital but cannot use their capital effectively to generate profits, the capital will not have a significant effect on the profitability of the bank (Sumarlin, 2016). The results of this study support the research conducted by Irhamsyah (2010) which states that CAR has a significant negative effect on ROE. These results indicate that the higher CAR collected by sharia commercial bank will actually make the ROE decline further. These results also support the results of the empirical studies by Farrasita (2016) and Hanimas and Tarmidzi (2009) on sharia banking in Malaysia which show that capital variables have a significant negative effect on the profitability of sharia banks. This is because Islamic banking in Malaysia cannot focus on increasing the power of equity to increase profitability. 5.2 The effect of NPF on ROE

Based on table 2 it can be seen that NPF variable has a significant negative effect on ROE. The results of this study support the hypothesis proposed in this study, which states that the higher the NPF will lower the ROE obtained by sharia commercial bank. According to Arthesa and Edia (2009) in Adyani and Sampurno (2011), the higher the NPF ratio, the greater the threat of credit / financing. The higher bad credit in credit management / financing of the bank will lower the bank's income level. These results are also in line with those described by Pertiwi (2012) explaining that the high NPF indicating that the bank is not professional in managing its financing, so this indicates that the level of risk of financing at the bank is quite high in line with the NPF it faces. The largest revenue in banks is from the financing sector, so if the problematic financing that occurs in sharia banks is higher, the income received by the bank will decrease and will ultimately impact on the decreased profit received by the bank. The results of this study are supported by research conducted by Sulistianingrum (2013), Adyani and Sampurno (2011) and Setiawan (2009). 5.3 The effect of FDR on ROE

The results of statistical tests show that the FDR variable has no significant effect on ROE. The results of this test are not in accordance with the hypothesis proposed in this study, so the third hypothesis is rejected. This means that the high level of FDR will not affect the amount of profitability obtained by the company. The high financing provided by the banks does not guarantee the high profit earned by banks due to bad financing and the financing provided is



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not managed well (Sumarlin, 2016). These results support the research conducted by Grace (2012). In his research, it shows that the FDR variable has a positive and insignificant effect on ROE. These results indicate that larger FDRs in one period are uncertain resulting in greater earnings by the bank. The results of this study are also supported by the research of Almumani (2013) conducted in Jordan related to the effect of FDR on the profitability of the bank which shows insignificant results. 5.4 The effect of BOPO on ROE

Based on table 2, the results of this study indicate that the Operational Efficiency Ratio (BOPO) has a significant negative effect on ROE. This means that if the operational cost of operating income is small, it will increase profitability and make the bank’s profitability increase due to operating income used to finance the operational costs of small banks. According to Kuncoro (2002), the smaller value of BOPO shows the more efficient the operational costs incurred by the bank concerned. In contrast, the higher BOPO value indicates that banks are considered inefficient in controlling their operational costs. The existence of cost efficiency will result in the optimal level of profit, more competitive cost, the addition of the amount of funds disbursed, increased service to customers, as well as increased security and health of banks. This result is in accordance with the hypothesis proposed in this study, so hypothesis four is accepted. The results of this study support the research of Rafelia and Ardiyanto (2013) and Farrasita (2016) which shows BOPO that variables have a negative and significant impact on ROE. 5.5 The effect of GCG on ROE

Table 2 shows that GCG variable has no significant effect on company profitability. This result does not support the hypothesis in this study, so hypothesis five is rejected. This is because the implementation of Good Corporate Governance is obligatory for banks, in accordance with PBI No.8 / 14 / PBI / 2006 which states that every bank is required to implement GCG, including self-assessment and report on GCG implementation. In addition, the high and low profitability is not only influenced by GCG factor but influenced by many factors, so the high GCG does not affect the level of profitability of the Bank. 5.6 The effect of SIZE on ROE

Based on the test results, it indicates that the SIZE variable has no significant effect on ROE. This result does not support the sixth hypothesis in this study, so the sixth hypothesis is rejected. The size of a large company that is proxied with total assets owned by the company does not affect the profitability of the company. This is possible because assets owned by the bank are not obtained by using their own capital (retained earnings) but obtained from debt, so that the size of the assets owned will not affect the level of profitability of the company. This result is in accordance with the research conducted by Ali (2011) which states that SIZE has no effect on profitability. 6. CONCLUSION:

Based on the results of the analysis that has been done, it can be concluded that: 1. Variables NPF and BOPO proved to significantly affect the profitability of sharia commercial

banksproxyed by using ROE 2. CAR, FDR, GCG, and SIZE variables are not proven to significantly affect the company’s

profitability level



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Indonesia. Jurnal Aplikasi Manajemen, (online). Vol. 11. No. 1. (www.jurnaljam.ub.ac.id) Iirhamsyah, Anwar. 2010. Analisis Pengaruh Capital Adequacy Ratio (CAR), Biaya Operasional terhadap

Pendapatan Operasional (BOPO), dan Financing to Deposit Ratio terhadap Return on Equity (ROE). Jakarta: Universitas Islam Negeri Syarif Hidayatullah.

Jogiyanto. 2007. Metodologi Penelitian Bisnis: Salah Kaprah dan Pengalaman – Pengalaman. Edisi 2007. Penerbit BPFE. Yogyakarta.

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Sektor Perbankan yang Terdaftar di Bursa Efek Indonesia. Dinamika Akuntansi Keuangan dan Perbankan. Vol. 3. No. 2

Muhammad. 2004. Manajemen Dana Bank Syariah. Yogyakarta: Ekonisia. Paolucci, Elisa M. G. 2016. “The Determinants of Bank Profitability: Empirical Evidence from European

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Pratiwi, Angrum. 2016. Pengaruh Kualitas Penerapan Good Corporate Governance (GCG) terhadap Kinerja Keuangan pada Bank Umum Syariah di Indonesia (Periode 2010 – 2015). Al-Tijary Jurnal Ekonomi dan Bisnis Islam. Vol. 2. No.1.

Pertiwi, Dhian Dayinta. 2012. Pengaruh CAR, BOPO, NPF dan FDR terhadap Return on Asset (ROA) Bank Umum Syariah. Semarang: Universitas Diponegoro.

Pramudhito R.A. Sasongko. 2014. Analisis Pengaruh CAR, NPF, BOPO, FDR, dan NCOM Terhadap Profitabilitas Bank Umum Syariah di Indonesia. Semarang: UNDIP

Purbaningsih, Yoppy Palupi. 2014, The Effect of Liquidity Risk and Non Performing Financing (NPF) Ratio to Commercial Sharia Bank Profitability in Indonesia. International Proceedings of Economics Development and Research. Online. Vol. 73.12.

Rafelia, Thyas dan Moh. Didik Ardiyanto. 2013. Pengaruh CAR, FDR, NPF dan BOPO terhadap ROE Bank Syariah Mandiri Periode Desember 2008-Agustus 2012. Semarang: Diponegoro Journal of Accounting.

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Analysis Determinants of Disclosure Level of Islamic Social Reporting (ISR) among Indonesia

Sharia Banks

Lela Hindasah

Jl Brawijaya, Kasihan, Bantul, Yogyakarta,

Universitas Muhammadiyah

[email protected]

ABSTRACT This study aims to identify factor that may influence a level of Islamic Social Reporting (ISR) disclosure. ISR is a social responsibility disclosure index that has specific indicators on ethical principles of Islam. In this study sample used are sharia Banks in Indonesia. Factors which were used in this study include profitability, size, age and Good Corporate Governance. The results show that profitability and size of the sharia Bank have a significant influence on a level ISR disclosure. Where as, age of the bank and Good Corporate Governance have no significant influence on a level of ISR disclosure. Keywords: Islamic Social Reporting, Profitability, size, age, Good Corporate Governance

1. INTRODUCTION

Corporate Social Responsibility (CSR) is increasingly becoming an important issue in the business world. One of the keys to this change is the issue of the importance of harmoniousrelationshipsbetweenstakeholdersand companies. Companies not only seek to gain profit from their business, but also maintain harmony with the surrounding social environment. CSR is one form of corporate responsibility for economic development as an effort to improve the quality of people's lives and the environment. CSR shows a company’s commitment not only to the interests of stakeholders in a broad sense, but also the interests of the company alone (Yusuf, 2017). Corporate Social Responsibility (CSR) is a concept that has engendered considerable interest in the world in recent years. Various CSR definitions have been developed in the literature. The European Commission has defined CSR as "a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on voluntary basis" (Mosaid, 2012).

Corporate Social Responsibility (CSR) is generally defined as the company's commitment to not only seek to profit from its business, but also to maintain harmony with the social environment around its place of business, through efforts that lead to the improvement of the lives of local communities in all of its aspects. CSR is not only found in conventional economics, but it also develops in sharia economy. Haniffa (2002) stated that so far, the measurement of CSR disclosure in sharia banking still refers to Global Reporting Initiative Index (GRI). Whereas, there has been many discussions on Islamic Social Reporting in accordance with the principles of sharia. Sharia economic researchers today are using the Islamic Social Reporting Index (ISR) to measure the CSR of Islamic financial institutions. The ISR index contains standard CSR items defined by AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions).

In the context of Islam, the first and the major objectives of Islamic financial institutions are Sharia principles (Haniffa, 2002). The concept of Islamic Social Responsibility (ISR) is based on a relationship of responsibility to Allah SWT, to man and responsibility to the natural world. Every individual is obliged to make all activities of his life as a perfect form of devotion to God,



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on the other hand, man is mandated to govern this nature so as to improve human relationships with humans and human relationships with other creatures of Allah, such as animals, plants and nature. Based on that, humans have 2 main tasks to be a devoted servant to Allah SWT and become a just caliph, and are able to sustain human life and the surrounding nature.

In Indonesia the CSR report has already begun to be implemented in several regulations such as in Law no. 25 Year 2007 on Investment and Law No.40 of 2007 on Public Company. Both of these laws firmly require that to implement a company that practices good corporate governance principles or Good Corporate Governance (referred to as "GCG") it must also care about the social and environmental interests of the company performing the duties and CSR is a form of company's responsibility to its environment for social care and environmental responsibility by not ignoring the ability of the company. In implementing this obligation, companies should pay attention and respect the cultural tradition of the community around the location of business activities. CSR is a concept that the company is having a responsibility to consumers, employees, shareholders, community and environment in all aspects of company operations. Implementation of CSR will impact on the sustainability of the company. In carrying out its activities, a company must base its decision not merely (Ginting, 2007).

The development of CSR in Indonesia has increased both in quantity and quality compared to previous years. The reporting of CSR of a voluntary company becomes mandatory by Law Number 40 Year 2007 regarding Limited Liability Company which states that annual report must contain some information, one of which is report on the implementation of social responsibility and environment. Whereas, in Sharia social reporting Islamic Social Reporting (ISR) is still voluntary, so the reporting of CSR of each Sharia company is not the same. Unequal reporting is due to the absence of Sharia standards on the reporting of Islamic CSR (Maulida, 2014).

Sharia Financial Institutions should be a financial institution in running CSR programs based on Islamic values to prosper the community and preserve the surrounding natural environment. Implementation of I-CSR Sharia financial institutions become a form of accountability of the khalifah function to Allah SWT as well as the responsibility of fellow human beings and responsibility to the natural surroundings. Implementation of CSR in Islamic financial institutions is a comprehensive part in fulfilling the adherence to the principles of sharia to achieve the vision of economic development of the people, not only to fulfill the obligations mandated by the Act (Yusuf, 2017). Haniffa (2002) suggested that Islamic Social Reporting (ISR) was needed for the Muslim community with the objectives of demonstrating accountability to Allah and the community and to increase transparency of business activities by providing relevant information in conformance to the spiritual needs of the Muslim decision-makers.

Othman and Thani (2010) attempted to measure the extent of Islamic Social Reporting (ISR) as practiced by Sharia-approved listed companies in their annual reports in Malaysia as they were expected to be more accountable in terms of reporting their activities in conformance with sharia (Islamic laws). Haniffa and Hudaib (2007) argue that Islamic have an ethical identity and “are expected to be more socially responsible than their conventional counterparts”. In their study, Haniffa and Hudaib (2007) attempted to evaluate the level of ethical identity by opposing “communicated” to “ideal” “ethical identity”.

Some research that examine the factors that affect the ISR have already been conducted, one of them is a study by Otman et.al (2009). The result of the research shows that size, profitability and board composition influence a company to provision of Islamic social reporting. Industry type, however, is not an important determinant to the provision of Islamic social reporting. Fauzi’s (2015) research shows that the bank size and financial performance are significant factors and positively associate towards the Sharia responsibility disclosure. The study also finds that there is a significant negative association between ownership status and the Sharia responsibility disclosure. In Indonesia, the determinant ISR study showed different results, for example in studies conducted by Sembiring (2006), Khoirudin (2013), and Maulida (2014).

In general, the purpose of this study is to examine factors affecting Islamic Social Responsibility in Sharia banks in Indonesia.



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2. LITERATURE REVIEW

2.1 Islamic Social Responsibility

Financial reporting was used by corporations as a means of communicating information to

their stakeholders, such as the individual investors, institutional investors and financial analysts. This group used the annual report as their primary influence in decision-making (Othman and Thani, 2010). CSR disclosure plays an important role in society because it provides information in demonstrating the organization’s ethical accountability to its stakeholders to aid them in their decision making (Hasan, 2010). From the Islamic perspective, the concept of accountability would be defined as a perceived relationship between individuals and firms, with God. This was an extension of the basic Islamic concept of tawhid which meant “unity with God‟ (Maali et al., (2006).

Maali et al. (2006), define Islamic banks as those banks that claim to follow Islamic Sharia in their business transactions. Sharia requires transactions to be lawful (halal) and prohibits transactions involving interest and those involving speculation. It also requires Muslims to pay the religious tax Zakah. The research by Haniffa and Hudaib (2007) highlights important lack on information regarding four dimensions: commitments to society, disclosure of corporate vision and mission, contribution to and management of Zaka, charity and benevolent loans, and information regarding top management. Haniffa and Hudaib (2002) suggested that a full disclosure in the annual report of relevant and reliable information would assist the Muslim stakeholders to make both economic and religious decisions, as well as assist management in fulfilling their accountability to Allah SWT and the society.

Implementation of ISR by Islamic finance institutions shall be based on the main principles outlined in the Qur'an and Assunnah. The principles of CSR implementation of Sharia Financial Institutions are (Yusuf, 2017): 1. Tawhid

For the organizers of Islamic financial institutions business, belief in God makes a person conduct business in accordance with the values that have been outlined by Allah SWT, responsible for what is cultivated and always have a positive impact and do good deed to the environment.

2. Caliph principle Implementation of the principle of caliph in the concept of ISR sharia financial institutions requires sharia financial institutions to maximize the function and role of Islamic financial institutions to improve and empower the growth of stakeholder economics. Every profit is derived from being justified according to Islam. Profits are set aside for good to society.

3. Justice principle Implementation of ISRs in sharia financial institutions must be fully imbued by justice values to reduce the economic gap between the rich and the poor. Implementation of the ISR program makes justice a key principle for achieving the welfare of all stakeholders

4. Shaqwah principle The principle of brotherhood should be the background of each ISR implementation. Helping each other becomes strength to promote economic growth, prosperity and sustainability without harming each other.

5. Maslahah realization principle The realization of maslahah is the business goal of sharia financial institutions. Therefore, all ISR implementations in business administration of sharia financial institution should revolve around halal products which have been outlined by Islam and leave all the forbidden products prohibited by Islam. All these principles are carried out with a single goal of perfect devotion to Allah SWT.

2.2 Good Corporate Governance

These Principles build on four essential articulated by the OECD (Organization for Economic Co-operation and Development) Business Sector Advisory Group. The four principles of corporate governance articulated in the Millstein Report -- fairness, transparency, accountability and responsibility (Gregory and Simms, 1999); Giring (2007).



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1. Fairness: The OECD Principles expand on the concept of “fairness” with two separate principles. (1) “The corporate governance framework should protect shareholders’ rights.” (2) “The corporate governance framework should ensure the equitable treatment of all shareholders. This principle provides protection against minority interests especially minority shareholders to be able to have fair treatment. This fact has been accommodated in the provisions of Law no and the right of minority shareholders to be able to propose an AGMS through a court of law if the majority shareholders do not enforce it. This principle requires each board of commissioners and commissioners to be more concerned with the interests of the company than the personal interest, so that all activities dealing with conflict of interest must voluntarily give up personal interests.

2. Transparency: “The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation. Existing accurate and auditable information by independent third parties is a report to shareholders so that they can know the progress and decline of the company. This principle also requires accurate reports of financial, management and management changes and shares which may result in a shift of ownership and other forms of action by the board of directors and commissioners in carrying out their respective duties on a regular and ongoing basis.

3. Accountability: “The corporate governance framework should ensure the strategic guidance of the company, the effective monitoring of management by the board, and the board’s accountability to the company and the shareholders.” This principle requires corporate directors to be responsible for the successful management of the company to realize the goals of the company. The Board of Commissioners is responsible for carrying out supervisory duties to the Board of Directors in connection with its duties. The position of the Board of Directors and the Board of Commissioners that have the obligations and responsibilities must be developed with great dedication by prioritizing the interests of the company so that all can be accountable to the shareholders of the company.

4. Responsibility: “responsibility” to mean that: “The corporate governance framework should recognize the rights of stakeholders as established by law and encourage active co-operation between corporations and stakeholders in creating wealth, jobs, and the sustainability of financially sound enterprises.” This principle confirms the fiduciary duty concept of corporate management to better comply with the rules outlined in managing the company. Regulations set by the government as well as the interests of other parties (stakeholders) affect the sustainability of the company. Directors must respond to the continuity of the company with various

2.3 Framework and Hypotheses

Large companies may have potential conflicts between management and the stakeholders.

To reduce these conflicts, larger companies tend to disclose more information voluntarily. In addition, larger companies would also likely to have more activities compared to small companies and therefore, disclose more information (Othman, et al, 2009). Larger companies engage in more activities, cause greater impact on the environment, and have more shareholders who may be interested in corporate social programs. Besides, financial reports provide an efficient tool in communicating corporate social information.

Company size is the identification of the size of a company, whether it is large or small. Larger companies engage in more activities, causing greater impact. The larger the size of a company, the more capital invested so that large resources and funds within the company tend to have a wider demand for its corporate reporting information (Maulida et al, 2014). Haniffa and Cooke (2005) have also proven that company size measured by measuring total assets has a significant positive effect on ISR disclosure rates.

This is in line with stakeholder theory. Large companies usually have more and more complex activities, greater impact on society, more shareholders, and get more attention from the public. Therefore, large companies get more pressure to show their social responsibility (Cowen et al., 1987). Branco (2008), argued that social responsibility activities and disclosure are a way of enhancing corporate reputation.



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H1 There is a positive relationship between company’s size and the level ISR The relationship between profitability and social disclosure can be associated with agency

theory. Increased profits will make the company disclose wider social information. High profit margins will encourage managers to provide more detailed information to convince investors and stakeholders that the profits earned are not only used for their own sake. This will reduce agency problem.

From the Islamic perspective, a company should be willing to provide full disclosure regardless whether it is making profit or otherwise (Haniffa, 2002). Management has the freedom and flexibility to undertake and reveal more extensive social responsibility programs to shareholders. Profitable companies disclose social information to demonstrate their contribution to society (legitimatize their existence) (Haniffa and Cooke, 2005) H2 There is a positive relationship between profitability and the level of ISR

The company's age is seen from how long the company has existed. Long existing

companies will be trusted by investors rather than newly established companies. The older the age of a company, the more experience it has in managing the business, so it will be able to provide complete information including ISR conducted by the company. Long-existing companies are likely to reveal more information in annual reports than younger companies.

This can be attributed to the theory of organizational legitimacy. According to this theory, the legitimacy of the organization can be seen as something that is given to the company and the society that the company wants or sought from the community. Legitimacy theory encourages companies to ensure that their activities and performance are acceptable to the public. Therefore, the older a company, the more social information it reveals as a form of responsibility to be accepted by society.Bayoud et al. (2012) The quantitative findings reveal that there is a positive relationship between company age and industry type and the level of CSR H3. There is a positive relationship between age and the level of ISR

Based on GCG principles, one that is closely related to the implementation of CSR is the

principle of responsibility. The principle of responsibility prioritizes the interests of stakeholders. Stakeholders of a company can be defined as the parties concerned about the existence of the company. These include employees, customers, consumers, suppliers, communities, and the environment, as well as the government as regulators. With this concept, the company should pay more attention to the social and environmental dimension to the stakeholders to improve the welfare and the sustainability of the environment for the sake of the company's sustainability because the financial condition alone is not enough to guarantee the company's value to grow sustainably (Ginting, 2007). Claims against companies to provide transparant information, accountable organizations, and good corporate governance force companies to provide information about their social activities. H4 There is a positive relationship between Good Corporate Governance and the level of ISR Framework of this study



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3. RESEARCH METHOD Population used in this research were all sharia banks in the Indonesia. While firms taken

as sample were selected based on the following specific criteria: 1. Any bank had issued the report of Good Corporate Governance for the period of 2011-

2015 2. Any firm had issued its financial reports for the observation period of 2011-2015 Data

sources used there were annual reports, firms’ webs.

Operational definition of each variable in this research are as follows:- Islamic social Responsibility. The approach to scoring items is essentially dichotomous in that an item in the research instrument scores one if disclosed and zero if it is not. To examine the extent of ISR among the sharia bank, an Islamic social reporting index is developed. The development of the index is adapted from Othman and Thani (2009) with some modifications to suit the context of this study. Othman and Thani (2009) developed the Islamic reports based on five themes: finance and investment, product, employees, society and environment. Corporate social disclosure index. The approach to scoring items is essentially dichotomous in that an item in the research instrument scores one if disclosed and zero if it is not (Othman, 2009). Firm Size is measured by using natural logarithm of total asset. Age is measured by age of the firm. Profitability is measured by the ratio of Net income/total assets. Corporate Governance The measurement of GCG is based on the self-assessment of bank GCG implementation report. Its maximum score is 5. The lower the index of GDG, the better its implementation. So that, GCG in this research was measured by 5-scale index of GCG. The relationship between the four factors and ISR is determined by the following model.

ISR = α + β1SIZE + β2PROFIT + β3AGE + β4GCG + ε 4. DISCUSSION OF RESULTS 4.1 Descriptive statistics

Table 1 provides the descriptive statistics of the sample of this study. The survey covered 51 sharia Bank in Indonesia. . The table shows the minimum (Min), maximum (Max) and mean values for company characteristics; company size which is represented by Ln total assets, profitability which is represented by ROA and AGE of the sharia Bank for the year 2011 to 2015

Table 1 Descriptive Statistic

Variable Minimum Maximum Mean Std Deviation

ISR 0,29 0.77 0,4922 0,14562 SIZE 13,37 18,07 15,6316 1,28199

ROA -0,20 0,06 0,0098 0,03367 AGE 1 22 5,8824 5,21784 GCG 1 4 2,8825 0,76092

4.2 Classic assumption a. Normality Test

Table 2 Normality test Value

N 51 Mean 0,0000 Std deviation 0,06099

Most extreme differences absolute positive negative

0,110 0,082 -0,110

Test statistic 0,110 Asymp sig (2-tailled) 0,175



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Normality test was performed using Kolmogorov-Smirnov (K-S). The equations had a significance level of more than 5% which mean that the residual data was distributed normally. b. Multicollinearity Test

The correlation analysis among the independent variables ISR was computed to determine whether there is a multicollinearity problem by using variance inflation factor (VIF) and tolerance statistic. Table 3 shows the collinearity statistics for all variables. The results show that none of the tolerances are less than 0.2 and none of the VIF was greater than 10. Such results indicate that there is no problem of multicollinearity between profitability, size of bank and age of bank.

Table 3 Multicollinearrity test Variable Tolerance VIF

ROA 0,906 1,104 SIZE 0,346 2,888 AGE 0,352 1,838 GCG 0,980 1,021

c. Heteroskidastity Test

Using Glejser Test, there was no heteroskidastity. It was shown from the significance of the probability that was more than 5% of the level of confidence. It can be concluded that the regression model didn’t contain heteroskidastity.

Table 4 Heteroskidastity test Variable B t sig

contant 0,107 0,931 0,360 SIZE 0,023 1,313 0,200 ROA -1,195 -1,233 0,228 AGE -0,002 -0,589 0,561 GCG 0,004 0,225 0,823

Note: Dependent variable ABSRES

d. Autocorrelation Test

Autocorrelation Test uses Durbin-Watson Test (DW test). The DW value of equation was 1.660. These values were compared to table values using a significance value of 5%, with a number of sample of 51 and a number of independent variable of 4 (k=4). The Durbin table became higher than the upper limit (du) and less than 4-du. Thus, it can be concluded that there was neither positive autocorrelation nor negative one. 4.3 Hypothesis test

Table 5 Hypothesis test Model B t sig

Constant -1,192 -6,639 0,000 SIZE 0,110 8,971 0,000 ROA -0,755 -2,610 0,012 AGE -0,002 -0,705 0,484 GCG -0,007 -0,034 0,595

Note: Dependent variable ISR

According to this research result, it is shown that size of the bank has positive and significant

effect on the ISR. This is accordance with (Branco, 2008), size has a significant positive effect on Islamic Social Responsibility. Larger companies are more susceptible to scrutiny from stakeholder groups since they are highly visible to external groups and more vulnerable to adverse reactions among them; and larger companies, on average, are more diversified across geographical and product markets and more diverse stakeholder groups. It is also more likely that larger, more visible companies will consider social responsibility activities and disclosure as a way of enhancing corporate reputation. This is accordance with Fauzi (2015) showed that bank’s size is the significant factors and positively associate towards the Sharia responsibility disclosure.



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ROA has a significant negative effect on Islamic Social Responsibility. This is different with previous research. If the company has high profit, the company does not report the issue that may disturb the information about company’s financial success. In the contrast, when the level of corporate profitability is low, the company will hope the users of financial statement find out the company’s performance in a good condition. Therefore, the investor will keep to invest to the company. The result of the research different with Fauzi’s (2015) result showed that financial performance are the significant factors and positively associate towards the Sharia responsibility disclosure.

Age has no significant effect on the level of ISR. This is not in accordance with Bayoud (2012) the quantitative findings reveal that there is a positive relationship between company age and industry type and the level of CSR. This is not according the legitimacy theory. Legitimacy theory encourages companies to ensure that their activities and performance are acceptable to the public. It is caused of probably In Indonesia the CSR report must be implemented not only old company but also new company.

GCG has no significant effect on the level of ISR. Claims against companies to provide transparant information, accountable organizations, and good corporate governance do not force companies to provide information about their social activities.

5. SUMMARY AND CONCLUSION

The main objective of this study is to examine whether there is any relationship between company’s characteristics such as size, profitability, age and GCG and ISR. It is hypothesized that ISR in the annual report is significantly associated with company’s size (H1), profitability (H2). While the Age (H4) and GCG are found to be insignificant. The finding of the current study is consistent with the findings of some prior studies. For example, Branco (2008) and Fauzi (2005) who found that firm size to be significantly associated with the level of disclosure. In contrast, profitability, the finding is not consistent with Haniffa (2002) and Haniffa and Cooke (2005) who found firm has significant positive effect to level of disclosure. The results of this study could be due to several reasons. If the company has high profit, the company does not report the issue that may disturb the information about company’s financial success. In the contrast, when the level of corporate profitability is low, the company will hope the users of financial statement find out the company’s performance in a good condition. Therefore, the investor will keep to invest to the company. The result of age is found to be insignificant is in contrast with some prior studies in Bayoud et al. (2012) that there is a positive relationship between company age and the level of CSR. GCG has insignificant effect on level ISR.

This study has few limitations. First, this study focused on annual reports in measuring the extent of the Islamic information disclosure practices by the selected companies. Secondly, the interpretation of some ISR’s item in coding process is very subjective. It is very difficult to find the correct wording to explain the required item of ISR.

References Bayoud, N.S., Kavanagh, M., Slaughter, G (2012), Factors Influencing Levels of Corporate Social

Responsibility Disclosure: International Journal of Economics and Finance, Vol. 4, No. 4; April Branco M.C., Rodrigue L.M (2008), Influencing Social Responsibility Disclosure by Portuguese

Companies,, Journal of Business Ethics 83:685–701

Cowen, S., Ferrari, L. dan L. Parker. 1987. “The Impact of Corporate Characteristics on Social Accounting Disclosure: A Topology and Frequency Based Analysis”. Accounting, Organisations and Society. Vol. 12 No.2: 111-122.

Fauzia, N.A., Painob H, Roslic, M.H (2015) Factors influence the compliance level of Shariah Responsibility Disclosure (SRD) in Malaysian Islamic Banks, International Conference on Accounting Studies (ICAS) 17-20 August 2015

Fauzi, N.A, Painob, H., Roslic, M.H., (2015) Factors influence the compliance level of Shariah Responsibility Disclosure (SRD) in Malaysian Islamic Banks, International Conference on Accounting Studies (ICAS) 2015 17-20 August

Ginting, J., (2007), Tinjauan Yuridis Terhadap Corporate Social Responsibility (CSR) dalam Good Corporate Governance (GCG), Lex Jurnalica Vol.5 No. 1, Desember

Gray, R., Owen, D., & Maunders, K. (1987). Corporate Social Reporting: Accounting and Accountability. London: Prentice Hall.



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Gregory, Holly J, Simms Marsha E, “Corporate Governance: What It Is And Why It Matters”, 9 Th International Anti-Corruption Conference, Durban, South Africa, 10-15 October 1999

Haniffa a, T.E. Cooke b, (2005), The impact of culture and governance on corporate social reporting, Journal of Accounting and Public Policy 24 (2005) 391–430

Haniffa, Ri, Hudaib, M, (2007), Exploring the Ethical Identity of Islamic Bank via Communication in annual Reports, Journal of Business ethics 76:97–116

Harahap., S.S (2002), The Disclosure Of Islamic Values - Annual Report The Analysis Of Bank Muamalat Indonesia's Annual Report., IQTISAD Journal of Islamic Economics Vol. 3, No. 1, Muharram pp. 35-45

Hassan, A., Sofyan S.H.,(2010)., Exploring corporate social responsibility disclosure: the case of Islamic banks, International Journal of Islamic and Middle Eastern Finance and Management Vol. 3 No. 3, pp.

203-227 Khoirudin,A (2013), Corporate Governance dan Pengungkapan Islamic Social Reporting Pada Perbankan

Syariah di Indonesia, Accounting Analysis Journal, AAJ 2 (2), http://journal.unnes.ac.id /sju/index.php/aaj

Mosaid, F.E ., Boutti, R (2012), Relationship between Corporate Social Responsibility and Financial Performance in Islamic Banking Research Journal of Finance and Accounting, Vol 3, No 10, p 2222-2847

Maali, B., Napier M.C., (2006) Social reporting by Islamic banks, Abacus, vol 42, no 2, Maulida, A.P., Yulianto, A., Asrori., (2014), Analisis Faktor – Faktor yang Mempengaruhi Pengungkapan

Islamic Social Reporting (ISR), SNA 17 Rahman, A.A., and Bukair, A.A (2013), The Influence of the Shariah Supervision Board on Corporate

Social Responsibility Disclosure by Islamic Banks of Gulf Co-Operation Council Countries, Asian Journal of Business and Accounting 6(2)

Sembiring, E.S (2006), Karakteristik perusahaan dan pengungkapan tanggung jawab social: study empiris pada perusahaan yang tercatat di Bursa Efek Indonesia, Jurnal Maksi, Januari

Sofyan Syafri Harahap (2002), The Disclosure Of Islamic Values - Annual Report The Analysis Of Bank Muamalat Indonesia's Annual Report, IQTISAD Journal of Islamic Economics Vol. 3, No. 1,

Muharram 1423 H/Maret 2002 pp. 35-45 Yusuf MY, (2017), Islamic Corporate Social Responsibility, Kencana, Indonesia Othman, R., Thani A.M., (2010), Islamic Social Reporting Of Listed Companies In Malaysia, International

Business & Economics Research Journal – April Volume 9, Number 4

Othman, R.A., Thani, Md., Ghani, E.K (2009), Determinants of Islamic Social Reporting Among Top Shariah-Approved Companies in Bursa Malaysia, Research Journal of Internatıonal Studıes - Issue 12, 4-20

http://journal.unnes.ac.id/



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Take Over Process (Money Transfer) Micro Financing Bank Syariah (Empirical Study at PT.

Bank Syariah Mandiri Kendal Branch)

KMT Lasmiatun

UNWAHAS – Semarang- Indonesia

[email protected]

ABSTRACT Bank Syariah Mandiri (BSM) is one of the private banks in Indonesia which also contributes to the development of retail business. BSM per September 2017 posted growth of micro financing by 17.9% to Rp 4.63 trillion from December 2016 position of Rp 3.67 trillion and Bank Kendari Kendari micro financing from January to March 2017 showed that 38% of total outstanding 23.4 Billion is a take-over customer from another financial institution. Akad Qardh wal Murabaha take over process in terms of Islamic law, the factors that led to the take over and the legal consequences of the contract of Qardh wal Murabaha in the process of take over micro financing in BSM Kendal Branch. The process of transfer of debt / Micro Financing BSM based on Fatwa DSN-MUI Number: 31 / DSN-MUI / VI / 2002 on Debt Transfer. Keyworks: Take Over, Qardh wal Murabaha, Micro Financing.

1. INTRODUCTION

Financing is a facility provided by Bank Syariah to the public who need to use the funds that

have been collected by Bank Syariah from society with surplus fund. In financing the community there are 3 (three) important instruments used by Sharia Bank, namely bai 'al murabahah, musharaka and mudharabah. Article 1313 of the Civil Code provides the definition of the treaty as follows: "A covenant is an act whereby one or more persons commit themselves to one or more persons." A contract or agreement must meet the requirements of the covenant agreement, namely agreement, a lawful cause as provided for in article 1320 of the Civil Code. With the fulfillment of the four conditions of validity of the agreement, then a treaty becomes lawful and legally binding for the parties who make it. Financing is one source of bank income, therefore banks as financiers or credits compete openly in offering financing services. Banks not only provide various facilities and rewards to attract and get customers, but now banks use various competing strategies in financing. One strategy is to take over the financing of attracting customers or other bank debtors who have a good track record of financing. This is done by offering some advantages from other banks, such as better service and more profitable customers. Article 1313 of the Civil Code provides the definition of the treaty as follows: "A covenant is an act whereby one or more persons commit themselves to one or more persons." A contract or agreement must meet the requirements of the covenant agreement, namely agreement, a lawful cause as provided for in article 1320 of the Civil Code. With the fulfillment of the four conditions of validity of the agreement, then a treaty becomes lawful and legally binding for the parties who make it. Financing is one source of bank income, therefore banks as financiers or credits compete openly in offering financing services. Banks not only provide various facilities and rewards to attract and get customers, but now banks use various competing strategies in financing. One strategy is to take over the financing of attracting customers or other bank debtors who have a good track record of financing. This is done by offering some advantages from other banks, such as better service and more profitable customers. Bank Syariah Mandiri as one of the private banks in Indonesia also applies the



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same principles in attracting prospective customers that is by way of switching financing or take over financing by persuading prospective customers who become customers of other banks with a smooth predicate in the payment of financing to become customers of Bank Syariah Mandiri. Financing within a sharia bank is conducted under the principle of cooperation through a system of profit sharing, so that customers are not charged interest on loans as in commercial banks. For some customers, the profit-sharing system makes it easier to grow their business and does not require complex requirements like those of other products, making them more attractive to them and the reason for taking over financing. Another common reason is that top ups are not approved by the previous financial institution, which requires customers to choose alternatives to take over in order to obtain additional capital. The occurrence of take over is also more inclined to the business aspect that is competition seeking customers.

BSM per September 2017 recorded a growth of micro financing by 17.9% to Rp4.63 trillion from December 2016 position of Rp3.67 trillion. The positive growth of micro financing was also followed by a well-maintained non-performing financing (NPF) figure, with the position of September 2017 at 4.63% down considerably from September 2016 of 3.52% .BSM targets the growth of retail financing including micro in the range of 10% -12% with continuous efforts in improving the system and improving the quality of financing. From the data of micro financing of Bank Syariah Mandiri (BSM) Kendal Branch from January to March 2017 indicates that 30% of total outstanding 23.4 Billion is take over customer from other financial institution.

From the opinion of sharia economic experts that the real debt is a form of debt receivable muamalah ta'awun (relief) to other parties to meet their needs. Basically the Qardh wal Murabaha contract consists of the Qardh and al Murabahah contracts. This is when viewed from the understanding according to the sharia economic experts above are 2 different contracts that the goal akad Qardh for non-commercial / ta'awun (help) while akad al Murabahah for commercial / profit. This is according to interesting authors to review and researched because two different contracts purpose can be used as a contract for the purpose of transfer of debt (take over) ie with the akad Qardh wal Murabaha. Based on the above description, it can be formulated problems as follows: 1. How does the legal review of the Qardh wal Murabaha contract in the process of taking

over micro financing in PT. Bank Syariah Mandiri? 2. How the factors causing the take-over of micro financing in PT. Bank Syariah Mandiri

Kendal Branch? 3. What is the legal effect of the Qardh wal Murabaha contract in the process of taking over

micro financing at PT. Bank Syariah Mandiri Kendal Branch. 2. LITERATURE REVIEW. 2.1 Akad Take Over (Money Distribution) Micro Financing Bank Syariah

Take Over is a term used in the banking world where a third party gives credit / financing to

a debtor / customer with the objective of paying off the debtor’s credit / credit to the initial creditor and granting the new credit to the debtor so that the third-party’s position replaces the position early lender. This debt transition event is identical to the Subrogation event pursuant to Article 1400 of the Civil Code, which states that subrogation is the transfer of a creditor’s right to a third party paying to the creditor, may occur by consent or by law. In civil law the agreement on the transfer of rights and obligations can be found in its provisions in article 16 of the law on mortgages, which states as follows: “The transfer of the mortgage enters into force for a third party on the date of listing”. The provisions indicate explicitly and clearly, that the mortgage rights may be switched or transferred, in the case of a transfer of debt update agreement. Take over in Indonesian dictionary means taking over. Meanwhile, according to Ahmad Antoni K. Young, take over is a takeover or within the scope of a company is a change in the interests of control of a company.



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2.2 Take Over Provisions in Accordance with the Fatwa of the National Syari'ah Council (DSN) - The Ultimate Assembly 'Indonesia (MUI)

In the process of take over (Financing of Debt) financing in sharia banking must comply with

the general provisions referred to the National Sharia Council Fatwa (DSN) - Majelis Ulama 'Indonesia (MUI) Number 31 / DSN-MUI / VI / 2002, among others: a. Debt transfer is the transfer of customer debt from conventional bank / financial institution

to sharia bank / financial institution. b. Al-Qardh is a loan agreement from LKS to customers provided that the customer is obliged

to return the principal of the loan it receives to the LKS on time and by way of agreed return.

c. The Customer is a prospective LKS customer who has credit (debt) to a Conventional Financial Institution (LKK) for the purchase of assets, which wants to transfer it to LKS.

d. Assets are assets of clients purchased through credit from LKK and have not paid off creditors.

In the process of take over (Financing of Debt) financing in sharia banking must comply with

the general provisions referred to the National Sharia Council Fatwa (DSN) - Majelis Ulama 'Indonesia (MUI) Number 31 / DSN-MUI / VI / 2002, among others: a. Debt transfer is the transfer of customer debt from conventional bank / financial institution

to sharia bank / financial institution; b. Al-Qardh is a loan agreement from LKS to customers provided that the customer is obliged

to return the principal of the loan it receives to the LKS on time and by way of agreed return.

c. The Customer is a prospective LKS customer who has credit (debt) to a Conventional Financial Institution (LKK) for the purchase of assets, which wants to transfer it to LKS.

Assets are assets of clients purchased through credit from LKK and have not paid off

creditors. Besides, it must also be in accordance with the terms of the contract which has been determined by the National Sharia (DSN) - Majelis Ulama 'Indonesia (MUI) by 4 (four) alternative contracts, among others: Alternative I 1. LKS provides qardh to customers. With qardh, the customer repays the loan (debt); and

thus, the assets purchased with the credit belong to the customer in full (لك م تام ال .(ال2. The Customer sells the asset referred to number 1 to the LKS, and with the proceeds of

the customer's sales repay qardh LKS. 3. LKS sells murabaha assets that have been owned to the customer, with payment in

installments. 4. Fatwa DSN number: 19 / DSN-MUI / IV / 2001 on al-Qardh and Fatwa DSN number: 04 /

DSN-MUI / IV / 2000 concerning Murabahah shall also apply in the implementation of Financing of Debt Redemption referred to this alternative I.

Alternative II 1. LKS purchases a portion of the client's assets, with the permission of LKK, so that, there

will be al-milk shirkahs between the LKS and the customer against the asset. 2. The portion of the assets purchased by the LKS as referred to number 1 is the asset that

is equal to the customer's debt (sisacicilan) to LKK. 3. LKS sells murabaha part of the asset that belongs to him to the customer, with payment

in installments. 4. Fatwa DSN number: 04 / DSN-MUI / IV / 2000 concerning Murabahah shall also apply in

the implementation of Debt Securities Financing referred to in this alternative II. Alternative III 1. In the management of obtaining full ownership of the assets, the customer may make an

Ijarah contract with the LKS, in accordance with DSN-MUI DS0-MUI number09 / DSN-MUI / IV / 2002.

2. If necessary, LKS can assist with customer liability by using the principle of al-Qardhsesuai Fatwa DSN-MUI number 19 / DSN-MUI / IV / 2001.



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3. Ijarah Contract as referred to in number 1 shall not be required with (should be separate from) pengalalangan as intended number 2.

4. The amount of the Ijarah service fee as referred to in item1 must not be based on the amount of bail-off given by LKS to the customer as referred to number 2.

Alternative IV 1. LKS provides qardh to customers. With qardh, the customer repays the loan (debt); and

as such, the assets purchased with such credit belong to the customer in full (لك م تام ال .((ال2. The Customer sells the referred asset of number 1 to the LKS, and with the proceeds of

the sale the customer pays the qardh LKS. 3. LKS leases the assets that have become his property to customers, with the al-Ijarah al-

Muntahiyah bi al-Tamlik agreement. 4. Fatwa DSN number: 19 / DSN-MUI / IV / 2001 on al-Qardh and Fatwa DSN Number: 27 /

DSN-MUI / III / 2002 on al-Ijarah al-Muntahiyah bi al-Tamlik also applies in the implementation of Financing of Transfer Debt as referred to in this alternative IV. If either party does not fulfill its obligations or if a dispute arises between the parties concerned, the settlement is made through the Syariah Arbitration Board after no agreement has been reached through the deliberation.

3. RESEARCH METHODS

This research is an analytical descriptive, that is a data analysis based on general law theory applied to explain about another set of data. The approach used in the research is empirical juridical that is an approach method used to solve the object of research by examining secondary data to primary data in the field, because the law which in fact made and determined by humans who live in society. This study is based on normative law science, but not a review of the norms system in legislation, but observes how the reactions and interactions that occur when the norm system works in society. This research is also often referred to as law in action research. 3.1 Data Source

This research uses primary data and secondary data. Primary data is data obtained directly from the source. The secondary data has a very wide scope, covering personal letters, diaries, books, and official documents issued by the Government. In this study the secondary data used, namely:

a. Primary legal materials, namely in relation to Laws, Government Regulations, Civil Code and Regulations relating to Credit / Micro Financing of Bank Syariah Mandiri (BSM) Branch Kendal.

b. Secondary law materials, namely materials that provide explanations about primary legal materials, in the form of research results, articles, reference books, other media information.

c. Tertiary legal materials, namely supporting legal materials that provide guidance and explanation of secondary legal materials, in the form of legal dictionary, general dictionary, and journals.

3.2 Data Collecting Technique

a. Library research (library research): Library study is collecting data by conducting a review to library materials or secondary data covering primary, secondary and tertiary law materials.

b. Interview: Interviews are conversations with a specific purpose. The conversation was conducted by two parties, namely the interviewer (interviewer) who asked questions and interviewees (interviewee) who provide answers to the question. This technique is used as an instrument to obtain data directly with the speakers to be clearer issues to be discussed are Branch Manager, Micro Banking Manager, Staff & Customer PT. Bank Syariah Mandiri Kendal Branch. While the type of interview guidelines used by the authors is the type of interview guidelines are not structured, namely the interview



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guide that contains only the outline of questions to be asked. This interview was conducted to ask directly to PT. Bank Syariah Mandiri Kendal Branch to the implementation process take over, as well as to the parties who take the take-over agreement between the recipients of the facility with the recipient of new facilities. This question will then be directed to the procedures undertaken in proposing the transfer, as well as how the transfer of rights and duties arose. Framework questions that have freedom in delivery, so the direction of the interview lies in the hands of interviewers.

c. Documentation: Documentation method is a technique of data collection that is not directly addressed to the subject of research, but through the document, that is by collecting existing data related to the research, as a complement to the results of the interview.

d. Observation: The compiled format contains items about events or attributes described will occur. In relation to data collection, this method will be done with direct observation of activities that occur in research objects such as by observing how the implementation process take over on microfinance in PT. Bank Syariah Mandiri Kendal Branch.

4. DATA ANALYSIS

Attempts to search data systematically record interviews and other results to improve the

understanding of the researchers about the case studied and present it as a finding for others. As for improving the understanding, the analysis by trying to find meaning. To analyze the data that have been obtained from the research, the authors use qualitative description analysis that is the analysis that manifest not in the form of numbers but in the form of field and descriptive description. The way of discussion that is used to analyze this matter by using inductive fikir pattern that is departing from facts or events that are empirical then the study is studied and analyzed so that it can be made a general conclusion and generalization. Then analysis existing data, then with such an analysis results of analysis related to the review of Islamic law on the akad of Qardh wal Murabaha in take over on BSM microfinance in relevance to the fatwa of the National Shari'ah Council. 31 / DSN-MUI / VI / 2002 on debt transfer, Factors causing take over micro financing at PT. Bank Syariah Mandiri Kendal Branch, As a result of law of akad Qardh wal Murabaha in take over micro financing at PT. Bank Syariah Mandiri Kendal Branch and Implementation of Qardh wal Murabaha contract in take over micro financing at PT. Bank Syariah Mandiri Kendal Branch. 5. DISCUSSION 5,1 Take Over Process (Redemption of Debt) Micro Financing of Bank Mandiri Syariah Kendal Branch

The process of take over (diversion of debt) of micro financing in BSM Kendal Branch started

from the negotiation between the customer with Micro Financing Sales (MFS) / Micro Marketing Executor (PMM) to take over the financing. In the negotiation, Micro Financing Sales (MFS) also explains to prospective customers some terms and conditions applicable at BSM. After the agreement, the prospective customer submits a letter of request for micro financing to BSM by explaining the condition of the financing that will be in take over. After the prospective customer is checked for quality through Bank Indonesia's information system, BI Checking with good payment quality, then BSM, represented by Micro Financing Analyst (MFA) and Micro Banking Manager (MBM) conducting residential, customer and business guarantee surveys customers.

The bank must monitor the use of funds by requesting evidence of repayment at the previous bank. In addition, it also monitors the process of issuing collateral from the previous bank and requested a letter of introduction to the roya / abolition of the mortgage at the previous bank and reinstallation of new mortgages in the National Land Agency (BPN) through BSM partner notary.



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5.2 Legal Review Akad Qardh Wal Murabaha in Take Over Process Micro Financing Pt Bank Syariah Mandiri Kendal Branch

The process of transferring rights and liabilities (take over) at a glance almost similar to the

transaction of debt diversion (hiwalah) that is in the case of subjects, objects, and agreement statement in the transaction. However, the takeover facility provided by BSM Kendal Branch here uses the Qardh wal Murabaha contract. This is guided by the Fatwa DSN-MUI Number: 31 / DSN-MUI / VI / 2002 on Debt Transfer. Before using the Qardh wal Murabahah contract the process of taking over financing in BSM uses the Hawalah wal Ujroh, Hawalah wal Murabahah, Qardh and now switched to Qardh wal Murabaha.

Qardh is to give (esteem) property to others without expecting a reward, to be returned with the same substitute and can be billed or reissued whenever it fosters the will. The point is that muqridh gives qardh to muqtaridh without expecting rewards, but muqtaridh must return with the same substitute to muqridh. Muqridh may also request or charge at any time to muqtaridh by agreement.

The need for additional working capital to increase its business or due to customer business experience capital problems so that its business turnover is not smooth is a natural thing in the business world. Such conditions if not immediately responded by the bank / creditor and the filing of additional capital that was not approved by the bank / creditors before with a variety of considerations become one of the factors that cause customers prefer to move banks than to survive in the previous bank / creditor. 5.3 Due To The Law of Akad Qardh Wal Murabaha In Process Take Over Micro Financing in Pt Bank Syariah Mandiri Branch Kendal. Transfer of Rights and Obligations After Take Over

Any agreement or contract, shall entitle rights and obligations to the parties. The micro

financing agreement between the customer and the Bank also creates a number of rights and obligations set forth in the agreement (akad). Therefore, prior to take over, the customer binds the rights and obligations with the initial bank / creditor, but after take over, the customer ties his rights and obligations with the new creditor, namely BSM Kendal Branch. After the take-over agreement is approved, and subsequently set forth in the agreement, the remaining liability of the customer to the initial bank / creditor is paid by BSM Kendal Branch. The repayment fund is then moved within the BSM Kendal financing scheme. Therefore, there is no transfer of rights and obligations in the event that the customer has settled his / her obligations to the earliest bank / creditor, and furthermore the customer's rights and obligations arise again at BSM Kendal Branch.

Thus the micro financing take-over agreement on BSM Kendal Branch is a legal relationship between two parties, namely the bank with each customer as a partner of the capital owner to finance and run a halal and productive business. This legal relationship will have legal consequences, namely mutual rights and obligations for each party. In practice at Bank Syariah Mandiri Kendal Branch, the legal relationship of providing micro financing facility between the bank and the customer is set forth in the contract or financing contract of Qardh wal Murabaha. Based on the Qardh wal Murabaha. 6. CONCLUSION From the above discussion, the researcher concludes that: 1. The process of take over (diversion of debt) of micro financing in BSM Kendal Branch started

from the negotiation between the customer with Micro Financing Sales (MFS) / Micro Marketing Executive (PMM) to take over the financing. After the prospective customer is checked for quality through Bank Indonesia's information system, BI Checking with good payment quality, then BSM, represented by Micro Financing Analyst (MFA) and Micro Banking Manager (MBM) conducting residential, customer and business guarantee surveys customers. If approved by the financing committee, a Microfinance Letter of Supply (SP3) is issued. After the signing of the SP3, there are several signing of the document, among others: Akad Qardh wal Murabaha, Statement and authorization to debit Account, PINBUK



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and Blocking Agreement, Power of Attorney selling guarantee, Letter of Approval of Husband / Wife, Relation Statement Letter with Related Party, Letter of receipt of guarantee, Letter of receipt of money, Letter of Application of Realization of Micro Financing, Letter of Lariswah, Default Statement.

2. The process of Redeeming Debt (take over) BSM Micro Financing is based on Fatwa DSN-MUI Number: 31 / DSN-MUI / VI / 2002 on Debt Redemption, DSN Fatwa Number: 19 / DSN-MUI / IV / 2001 on al-Qardh and Fatwa DSN Number: 04 / DSN-MUI / IV / 2000 concerning Murabahah. BSM in running operations, the formation of contracts and the formation of products should refer to the Fatwa DSN-MUI, because the Fatwa DSN-MUI become binding reference for Islamic finance institutions (LKS) that exist in the land, as well as binding communities that interact with LKS. The sharia economic fatwa of DSN has now become a positive law through Bank Indonesia Regulation (PBI).

3. The take-over financing of BSM Micro Branch Kendal relates to several internal and external factors. Internal factors: requirements are relatively easy and fast, no penalties, affordable installments and customer priority. While external factors: customer orientation to sharia, increased interest rate of previous bank / creditors, customer disappointment to previous bank / creditor and additional requirement of working capital.

4. The micro financing take-over agreement on BSM Kendal Branch is a legal relationship between two parties. This legal relationship will result in legal consequences, namely mutual rights and obligations for each party contained in the financing contract of Qardh wal Murabaha. With the acquisition of such financing facility, BSM will replace the position of the Old Creditor, including but not limited to any rights owned by the Old Creditor to the Client.

5. The legal consequence of the Qardh wal Murabaha contract is the right of the initial creditor as the holder of a legal swap to a new creditor. If the collateral object is immovable, then by imposing the right of Dependent registered through BPN office is proved by Certificate of Mortgage Right (SHT). It is based on the Power of Attorney Charging the Insurance Rights and Deed of Burden of Mortgage which was made before. Whereas if the object of collateral in the form of moving objects then use fiduciary guarantee. Subsequently registered at the office of the Ministry of Law and Human Rights and issued a Certificate of Fiduciary Guarantee.

References Abdul Ghofur Anshori, Syariah Banking in Indonesia, Yogyakarta: Gadjah Mada University Press, Cet. I,

2006 Kartini Muljadi and Gunawan Widjaja, Deposit Rights, Jakarta: Kencana Prenada Media, 2006. Lasmiatun, Syariah Banking, Cet. Third, Semarang: LPSDM. RA Kartini Semarang, 2010. Lexi. J. Moleong, Qualitative Research Method, Bandung: PT Remaja Rosdakarya Offset, 2007. Sugiono, Qualitative Research Methods, Qualitative and R & B, Bandung: Alfabeta, 2008. Suharnoko, Law of Agreement, Theory and Analysis Case, Jakarta: Kencana Prenada Media Group,

2007. Interview with Administrative Staff of Financing, Dated 24 December 2017.



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Integrating the Communication into Quality of Life amongst Academician Sandwich

Generation

Mumtaz Ahmad, Aini Hayati Musa, Noor Hasvenda Abd Rahim, Masilah Mohamad & Nabilah Abdul Shukur

Faculty of Business Management, Universiti Teknologi MARA Cawangan Negeri Sembilan, Malaysia

[email protected]

ABSTRACT Sandwich generation is referring to generation of people, typically in their thirties or forties, responsible for raised up their own children and at the same time have to take care of their aging parents. Midlife or sandwich generation has been defined as the period between ages 40 and 60, although there is wide variation both across research studies and individual self-labelling (Lachman, 2004). In Malaysia there is less awareness of sandwich generation among citizen. Some also did not conscious that they are part of the sandwich generation because of lack of awareness and too busy with work. The term sandwich generation describes the group of people who concurrently took care for their aging parents and their children. To some researchers this term refers specifically to the generation between the ages of 45 and 55 (Belden et al., 2001). This sandwich generation phenomenon happened all around the globe and this no exception to Malaysian population too. In Malaysia the persons that face this problem is men and women but higher number will goes to women. The Quota Sampling Technique was used because of unavailability of this generation’s list or statistics. Set of questionnaire was distributed to 100 respondents. It was found that most of the carer was age 30-39 years old. They spend 61-70 hours caring for their children whilst 26 hours spend for their parents. Most of them have been carer for more than 10 years old. The highest mean for the WCL was 3.1 which indicate that they are too tired to do things after they come home. Besides that, the highest mean shows for SS is 3.39 which indicate the support from family members is needed to provide care for children and parent. The QoL shows the highest mean 3.26 is for the statement I want to give everything to my children which they wish. The relationship between WCL and QoL was found strong (r = 0.731). However, among academician, the SS was found to be no relationship with QoL with r=0.457. Therefore, the recommendation can be made from the result was the attention should be given to reduce work life conflict. This will increase the quality of life among sandwich generation and simultaneously increase their work production. The implication of this studied highlight managerial and employee to support each other to have better and balance between work and life. Keyworks: Sandwich Generation, Work-life Conflicts, Social Support, Quality of Work life.

1. INTRODUCTION

The general well-being of individuals and societies which outline the positive and negative features of life is known as Quality of Life (QOL). As defined by World Health Organization (WHO) the definition of quality of life is covers everything from physical health, family, education, employment, wealth, religious beliefs, finance and the environment. Someone's quality of life is the extent to which their life is comfortable or satisfying. In Malaysia scenario, young people who are genetic and active always seek for the high quality of their work life such as the balance of their work, career and social life with their family. When they fail to get the balance of their work and life, they potentially to risk with work-life conflicts such as family conflict. The result



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can affect their level of quality of their life. Ideally, when people are, the low family conflict they able to obtain the result in high quality of life but high family conflict will result in decreased quality of life.

Quality of life is also subjective from each and everyone points of view. From the point of World Health Organization the definition of quality of life is, as ‘An individual’s perceptions of their position in life, in the context of the culture and value systems in which they live, and in relation to their goals, expectations, standards and concerns [1]. Work-life conflict remains challenges to achieve a high quality of work life, particularly to the young generation. A young generation nowadays needs to struggle and strive towards work and family. Sandwich generation is referring to generation of people, typically in their thirties or forties, responsible for raised up their own children and at the same time have to take care of their aging parents [3]. This sandwich generation phenomenon happened all around the globe and this no exception to Malaysian population too. In Malaysia the persons that face this problem is men and women but higher number will goes to women. They have a responsibility to take care of family and in same time maintain to build up their career. Failure in managing work-life conflict can turn them to stress and depression. More than that, they feel the pressure of their role. Hence this studied aims to investigate the significant relationship between work-life conflict and social support towards the quality of work life. A group of 150 of academician have been selected in one of the local university in Malaysia. The data further analyze using SPSS and result revealed that work lofe conflict and social support highly significant influence on the quality of life

One of the significant problems is weak of financial and health problem. One studies of women who have low wages in the United States, most of them are likely to health problems and showed higher psychological pressure than women in the general population [2][3] This indicates that financial problems make some trouble to them for survive in medical expenses of children and parents. More than that, lack of support will affect their lifestyle and cause in abandoned children or parent. Next, is work overload also become a problem for people who have much commitment to working for a living while taking care of the family. There is more work to do can cause more pressure in life. It is also will effect on health. If they become sick, they will give a burden to the children or husband. Therefore this objective of this study to investigate social support and work-life conflict influence on the quality of life among the sandwich generation in Malaysia. Based on our deep observation, the problem had been stated will reduce the quality of life. When the level of quality of life is lower, it becomes the burden to the family and sandwich generation itself. Therefore, our study is to study the relationship between work-life conflict and social support in order to understand the phenomenon and the relationship between the variables. 2. LITERATURE REVIEW 2.1 Work-Life Conflict

The conflict between work and life will give an adverse impact on the workplace and family,

as well as affect the welfare of the community [4]. The conflict usually happens to young women who have responsibility for workplace and roles at home. In addition, the young women with multiple roles will give the negative impact on physical and mental well-being rather than women with fewer roles contribution [5](Wortes, 2011). The stress that comes from roles in home and family extend into negative effects held by individuals in the workplace. People tend to depression and stress of multiple roles and responsibilities. Based on the research, work-life conflicts have two components among which are work-family conflict and family-work conflict. Basically, work-family conflict and family work conflict are related to the married women who have multiple responsibilities towards their job and roles of family. Therefore, the age of the children is related to more work-family conflict and family-work conflict among married women employees [6]. Work-family conflict (WFC) happens when business related requests interfere with home duties. This conflict occurs when there are opposing demands between the work and family roles of an individual that makes the work more difficult for both. More than that, increasing the employees’ control over time, employees working lives and family and personal lives support from the supervisor will reduce by the workplace interfere [7]. Then, the supervisor



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should give support to employees need to balance their employee's different roles simultaneously to enhance their job performance and family roles throughout their lives.

In contrast to the family –work conflict (FWC), defined family responsibilities obstruct the work activities. It is a type of interrole conflict in which family and work responsibilities are not compatible. Based on the research, the family-work conflict has a negative influence at home that can causes lower self-esteem, lower life satisfaction and the caregiver will experience internal family conflict. Therefore, family-work conflict also related to attitudes about the job or workplace [8]. The negative attitudes such as lazy, lack of disciplines and lack of self-esteem will lead to poor job performance and resulting to lower life satisfaction. 2.2 Social Support

A network which involves an individual's family, friends and spouse who are able to support

the person psychologically and emotionally is called a social support network. Psychologists say that a strong social support network leads to a better coping experience with stress. The job or task can be more effective and successful if the person who has support with his or her awareness, may be the most beneficial to achieve the goals. Studies have found that low support from others is associated with increased risk of mortality for women or caregiver. However, in some studies, results indicate that for specific age groups, women with high social support also have an increased risk of mortality because people tend to experience higher blood pressure and heart rates at the stressful times. It does also depend on the presence of friends or family members to reduce these rates among people during difficult periods and stressful times. There are two components of social support which is non-work domain support and work-domain support.

Non-work-domain support has two elements, there are family support and spouse support. The support of family and friends during a crisis has long been seen to have a positive emotional effect on people. During stressful times, people tend to experience higher blood pressure and heart rates and the presence of friends or family members have been shown to reduce these problems to them. According to [9], home support and family members are important to work to support one another instrumentally and emotionally through interdependent interactions and empathic awareness. They manage a wide range of responsibilities to care about their life, children, parents and their job as well. Therefore, the social support network from their family can reduce distress, depression or anxiety and also have low rates of clinical depression to the caregivers because the family members are closer to them.

On the other hand, supervisor support and employer support may reduce their stress by motivation and encouragement from supervisor to remain the workers or staffs perform well in the organization. The expectation from the workers is support from supervisors in helping to carry out the task and solving the problem. According to [10] supervisor support is a major importance with regard to health and well-being at work, at least in case of absence of such support and in case of problems at work. This shows that supervisory support really helps the workers at work and also to maintain their good health while working. Supervisor support affected individual improvisation through the mechanisms of empowerment and self-efficacy [11]. It has been noted that supervisors are a key figure in different phases of work-related stress interventions directed to employees. Empirical studies show effectively that evaluation of supervisor support is an important determinant of job satisfaction [12]. Furthermore, the supervisor can give some advice to the workers about handling problems related works. For the sandwich generation, this advice is the most important to them in managing their working life and home life.

Furthermore, mostly organization has a number of small teams to work to achieve organizational goals, for example, the team to market the organization, the team of the sales process and so on. With emotional support from their supervisors, these teams will be more effective and more focused. Supervisor support at group-level extends beyond the norm of reciprocity in that high supervisor support provides employees with additional resources to better accomplish their goals and facilitates cooperation among group members [13]. It can also help the workers to have more information and foster a spirit of cooperation within a team by applying the proper way to communicate with and help each other. This can give job satisfaction towards the workers. The relationship between work engagement and job



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satisfaction at the individual level was buffered by supervisor emotional support at the group level [14]. 2.3 Communication

Effective communication within the family can lead to better relationships between the members of the family. It must be built on a foundation of trust, listening and understanding. The more effectively the family can communicate together is better. The communications allow share thoughts and feelings, coax expression towards children and foster a safe home environment in which all family members can feel comfortable and secure in their relationships [17]. Communication is a "god" term in our society because it is viewed as a panacea for ailing human relationships. Communication has moved from the periphery to center stage as the sine qua non of family life. Communication is central to family life today because the expectations for personal relationships have changed slowly but inexorably in this century. Although many of the traditional functions of the family have been delegated to other social agencies (e.g., care of the aged, education of the children, and so forth), the nurturance function remains. And, the nurturance of family members takes place primarily through the exchange of verbal and nonverbal messages [16]. Although the centrality of communication in the modern family is acknowledged across the social sciences, a great deal of the research that such a position inspires has an obvious applied focus. Researchers seek to uncover the set of communication skills that lead to healthy family functioning, or conversely, those that are correlated to distress or abuse. Though not without pragmatic value, much of the research on communication in the family is a theoretical. Consequently, this work is unlikely to lead to advances in our understanding of communication processes within the family. Anger subsides when a child learns to effectively communicate her feelings, says the University of Florida. Learning how to effectively express feelings can reduce the arguing and yelling in a household as well as increase satisfaction and the sharing of feelings. When a family knows how to communicate effectively, then all of the members of the household learn conflict management, problem-solving skills and the sharing of thoughts and idea [17]. Effective communication in the home will stay with children as they move through their lives. The communication skills of expression, listening and conflict resolution will affect their school, social and eventual professional life. They'll learn how to listen effectively, reserving judgment and showing empathy. They'll learn the right words to use when communicating with others. And most of all, they'll develop skills that will affect all of their future relationships; professional, educational and personal.

3. METHODOLOGY

The research design that been used for this study was non - experimental method. This method includes descriptive and correlation research. According to [15], descriptive research describes the characteristic of the existing phenomenon. Correlational research neither descriptive nor historical research does, it was to provide some indication as how to or more things are related to one another. Correlational research also examines the relationship between variables. A survey was conducted to 150 of fellow lecturer, from a local university in Malaysia. All the items measurement used five Likert scales which 1= strongly disagree, and 5= strongly agree.

3.1 Profile of Respondents

The demographic backgrounds are people age, gender, hours they spend caring their

parent per week, hours they spend caring their children per week, the time frame of their career and education level. Based on table I, the age of respondent that participate in this study consists of three categories which are from categories were 30 – 39 years old (n=28), aged of 40 -49 years old (n= 61) and more than 50 and above (n=61). This result interpreted that the respondents at age 30-39 years old and 40-49 years old are same with 40.7%. Meanwhile, the lowest were respondents at the age of 30-39 years old were about 18.7%. Next was hours spend caring per week and found that most respondents spend caring for a parent for 41-50 hours with 21.3%. Meanwhile, the moderate hours respondent scoring for their parents were



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31-40 hours with 16.7% and the lowest was 11-20 hours with 2.7%. On the other hand, the respondents spend caring for children for 61-70 hours with 26%. Meanwhile, the moderate hours respondent caring for their children were more than 70 hours with 16% and the lowest was 21-30 hours with 0.7%. Finally, working experience which result found 3.3% of the respondents had been in their career with less than 1 year, 18% had been a career in 1-5 years, 48% had been a career in 6-10 years and 30% had been a career in more than 10 years.

Table I. Demographic Factors

No Demogprahic Factors Frequency Percent

1. Age 30-39 years 40-49 years 50 and above

28 61 61

18.7 40.7 40.7

2. Gender Male Female

73 77

48.7 51.3

3. Hours spend caring parent per week 11-20 hours 21-30 hours 31-40 hours 41-50 hours 51-60 hours 61-70 hours More than 70 hours

4

28 25 32 30 24 7

2.7

18.7 16.7 21.3 20.0 16.0 4.7

4. Hours spend caring children per week 21-30 hours 31-40 hours 41-50 hours 51-60 hours 61-70 hours More than 70 hours

1

16 34 36 39 24

0.7

10.7 22.7 24.0 26.0 16.0

5 Working Experience Less than 1 year 1-5 years 6-10 years More than 10 years

5

28 72 45

3.3

18.7 48.0 30.0

3.2 Normality and Reliability Analysis

Normality has been accessed by using the Kolmogorov-Smirnov statistic with a Lilliefors. The significance level defined the data is normal or not normal is produced with the normal probability and detrended probability plots. If the significance level is greater than 0.05, then the normality is assumed. Based on the table above shows the normality results variables that involved in this study. For work-life conflict, social support and quality of life all the data presented were not normal as the significance values were less than 0.00. Next was assessment reliability of the items measurement of this study. The Cronbach's alpha values should are more than 0.7 then the items were the high internal consistency of the study. The result revealed work-life conflict are below from 0.6 and Cronbach's alpha for social support, communication and quality of life factor were large and have exceeded the minimum value 0.6. Therefore, an item of work-life conflict which were item 3, item 7and item 6 has been deleting so then the Cronbach alpha increase to 0.709. Therefore, all the components are reliable to represent the factor as depicted in Table II.

TABLE II: Normality and Reliability

No Variables No of Items

Cronbach Alpha

Sig.values

1. Work Life Conflict (WLC) 12 0.555 0.000 2. Social Support (SS) 13 0.760 0.000 3. Communication 13 0.865 0.000 4. Quality of Life (QoL) 8 0.709 0.000



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3.3 Descriptive Analysis

The tables III discussed the mean score for variables that used in this study. Results show that mean score for work-life conflict is 2.95. It means that most of the respondents answer 2, Probably False in the questionnaire given. Although, the mean score for variable social support is 3.13 and communication is 3.20 which is most the respondent often answer 3, Probably True in this study. Lastly, the mean score for variable quality of life, the table shows the result is 3.01. Often of the respondents who contribute in this study answer 3, Probably True.

TABLE III: Descriptive Analysis

No Variables Mean Standard Deviation

1. Work Life Conflict 2.95 0.215 2. Social Support 3.13 0.289 3. Communication 3.20 0.312 4. Quality of Life 3.01 0.352

3.4 Correlational Analysis Table IV presented relationship results for work-life conflict and quality of life reported by the

respondent. The Spearman correlation is used to determine both relationships. The findings result show there is a positive relationship between work-life conflict and quality of life, (p= <0.05 and r= 0.58). The strength of the relationship between both variables are moderate (r=0.58). Next was the relationship results for social support and quality of life reported by the respondent. The Spearman correlation is used to determine both relationships. The findings results show there is a positive relationship between social support and quality of life, (p= <0.05 and r= 0.74). The strength of the relationship between both variables is strong (r= -0.74).A comparison studied with Hassan, Ma’amor, Razak and Lapok (2013) supported that work environment and job facet significance to influence the high quality of life. The strength of the relationship between communication and quality of life is also strong (r= -0.81). Finally, the hypothesis 1, hypothesis 2 and hypothesis 3 was supported by this study.

TABLE IV: Correlation Analysis

No Variables Correlation

Coefficient ® Sig.

Values Hypotheses

1. WLC- QoL 0.581 p<0.00 H1: Supported 2. SS- QoL 0.740 p<0.00 H2: Supported 3. Com- QoL 0.810 p<0.00 H3: Supported

4. CONCLUSION As a conclusion to the discussion above, this studied aimed to study the relationship

between work-life conflict, social support and communication among 150 of a academician from a local university in Malaysia. The finding revealed that most of the academicians spending more time on taking care of parent and children and same time they need to fulfil their duty, task and responsibilities. Most of the respondent did agree that social support able to minimize the stress and conflict either work or family conflict. The engagement and encouragement between family and work relationship may strengthen their motivation and enhance satisfaction in their life. Besides that, with the proper communication has increase the good relationship between the family. Therefore, they able to maintain a healthy life, bonding relationship between family and work and ultimately achieve a high quality of work life. The implication of this studied, the managerial level has to recommend and review of their flexibility and facilities provided to the employee. This could help the employee to feeling comfortable and convenience at their workplace. The peer to peer also needs to support each other so that they may maintain and retain good interpersonal relationship in the workplace. For an individual, may enhance their awareness of the strategies to maintain their relationship at workplace and balance with their family and social life. An individual not just to be aware of the strategies but



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able knowledgeable to balance and maintain their schedule and activities to the high quality of life.

References W.Groupt (1993). Study Protocal for the World Health Organization project to Develop Quality of Life

Assessment Instruments. S.Danziger, M.Corcoran, S.Danziger (1999). Barriers to the Employment of Welfare Recipients. Institute

for Research on Poverty Discussion Paper no. 1193-99. L. Pavetti, K. K. Olson, N.M. Pindus, M. Pernas, J Isaacs. (1996). Designing Welfare-to-Work Programs

for Families Facing Personal or Family Challenges Lessons from the Field.Retrieve from : https://www.urban.org/sites/default/files/publication/67236/407338-Designing-Welfare-to-Work-Programs-for-Families-Facing-Personal-or-Family-Challenges.pdf

H. Mayerhofer, A.Schmidt, L. Hartmann, R. Bendl, (2011) "Recognising diversity in managing work life issues of flexpatriates", Equality, Diversity and Inclusion: An International Journal, Vol. 30 Issue: 7, pp.589-609, https://doi.org/10.1108/02610151111167043

S.M. Krisor & J. Rowalds. (2013). Effort-Reward Imbalance Theory and Irritation: The Important Role of Internal and External Work-Family Conflict. Journal of Business and Media Psychology (2013) 4, Issue 2, 1-10, available at: www.journal-bmp.de

N.K. Reddy, M.N., Vernada, A. Ahmed, B.P. Nirmala, B. Siddaraamu (2011). Work Life Balance among Married Women Employee. Indian J Psychol Med. 2010 Jul;32(2):112-8. doi: 10.4103/0253-7176.78508.

L.A. Perlow and E.L. Kelly (2014). Towards a Model of Work Redesignfor Better Work and Better Life. Work and Occupations, Vol. 41(1) 111–134

R.G. Netemeyer, J.S. Boles, M. Robert (1996). Development and validation of work–family conflict and family–work conflict scales. Journal of Applied Psychology, Vol 81(4), Aug 1996, 400-410

J.S.Gloud, K. Byrne, C. Tong, A.M. Matthews (2015). Home Support Workers Perceptions of Family Members of their Older Clients: A Qualitative Study. BMC Geriatirics 2015. Pp. 115-165.

O. Hämmig, (2017). Health and well-being at work: The key role of supervisor support. SSM - Population Health, 3, 393-402.

A. Nisula, (2015). The relationship between supervisor support and individual improvisation. Leadership & Organization Development Journal, 36(5), 473

T. W. Ng,& K. L. Sorensen, (2008). Toward a Further Understanding of the Relationships Between Perceptions of Support and Work Attitudes: A Meta-Analysis. Group & Organization Management, 33(3), 243-268.

W. A., Hochwarter, L. A., Witt, D. C., Treadway, & G. R. Ferris, (2006). The interaction of social skill and organizational support on job performance. Journal of Applied Psychology, 91(2), 482-489.

S. Pohl, & M. Galletta, (2017). The role of supervisor emotional support on individual job satisfaction: A multilevel analysis. Applied Nursing Research, 33, 61-66.

N. J. Salkind, (2017). Exploring research. Boston: Pearson Tims, A. R. , & Masland, J. L. (1985). Measurement of family communication patterns. Communication

Research, 12, 35-57. Google Scholar, SAGE Journals, IS Rantanen M, Mauno S, Kinnunen U, Rantanen J. Do individual coping strategies help or harm in the work–

family conflict situation? Examining coping as a moderator between work–family conflict and well-being. International Journal of Stress Management 2011; 18: 24–48.

https://www.urban.org/sites/default/files/publication/67236/407338-Designing-Welfare-to-Work-Programs-for-Families-Facing-Personal-or-Family-Challenges.pdf

https://www.urban.org/sites/default/files/publication/67236/407338-Designing-Welfare-to-Work-Programs-for-Families-Facing-Personal-or-Family-Challenges.pdf

https://www.emeraldinsight.com/author/Mayerhofer%2C+Helene

https://www.emeraldinsight.com/author/Schmidt%2C+Angelika

https://www.emeraldinsight.com/author/Hartmann%2C+Linley

https://www.emeraldinsight.com/author/Bendl%2C+Regine

https://doi.org/10.1108/02610151111167043

https://www.ncbi.nlm.nih.gov/pubmed/21716777



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The Determinants of Job Stress that Influence Quality of Life among Working Adults

Mumtaz Ahmad, Aini Hayati Musa, Noor Hasvenda Abd Rahim, Masilah

Mohamad & Nabilah Abdul Shukur

Faculty of Business Management,

Universiti Teknologi MARA Cawangan Negeri Sembilan, Malaysia

[email protected]

ABSTRACT

Job stress is a serious threat to the working people’s quality of life (QoL). Stress at workplace gives a big impact on a person’s health. The purpose of this study was to investigate the relationships between job stress and the QoL of working people. A total of 400 validated sets of questionnaire were distributed to respondents in the selected areas of Meru, Klang and the acquired data were analysed using IBM SPSS 22.0. The findings revealed that there was a significant relationship between job stress and the quality of life among employees. The most influential factor on the QoL was job-related stress, followed by organisational, interpersonal, perceived stress and work environment related stress. The lack of reward and recognition was highly related to the causes of stress and influence the employees’ concentration and confidence. In conclusion, the measurement of stress in the QoL is important because it will also reflect on people’s life evaluation, expectancy and standard of living. Keyworks: Stress, stressor, job stress, Quality of Life

1. INTRODUCTION

A high quality of life (QoL) is important for organisations to attract and retain qualified, committed and motivated employees. Every people have experienced stress, and some of them can manage it effectively, while the rest are not. However, stress can help people to perform better under pressure and motivate them to achieve the best. Thus, stress can be either positive or otherwise. Yet stress is often not a handful and can do worse if it is not effectively managed. For most people, stress is negative and unpleasant. People who experienced self-conflict, such as feeling of fear and frustration, occasionally and sometimes cannot be controlled. People nowadays need to tackle their workloads, social relationships, and self-responsibilities. When experiencing stress, individuals may not display symptoms of stress while some may realise and be aware of it. Today, there is a lot of diseases related stress and it is important to investigate the stress experienced by people as this may assist finding the best alternative to cope with stress. The entire situation can lead to stress toward an individual. If this is not being resolved, it may lead to the worst condition which can affect one’s health. One of the health conditions resulting from stress is heart attack in which could lead to death.

Qualities of life in Malaysia are being observed and measured frequently by the Economic Planning Unit (EPU) for future development and references. In 2010, the EPU stated that Malaysia’s quality of life in the sector of working condition recorded to be the lowest sub-index shared placed with family compared to another subject such as environment, education, transport and housing. However, there was a slight increase in 2011 which indicated more conducive working environment and less number of industrial accidents (EPU, 2011).

Work stress appears to be a more pervasive problem in recent years. It arises when demand exceed abilities, while job-related strains are reactions or outcome resulting from the experiences of stress. Some of the examples are excessive workload, being forced to work



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overtime and unsatisfying job performances. According to Haider and Supriya (2007), stress is now becoming a global issue affecting all countries, all categories of employees and societies. Moreover, World Health Organisation (2015) stated that occupational stress is the stress related to the workload burden that is usually experienced by most of the working individuals which happens in both the government and private sectors. If an individual has a job that is challenging, he or she will feel some pressure at work. However, when that pressure is excessive and one deems it as a burden, then it becomes stress. Consequently, people usually experience anxiety, mood changes and will have many health problems when stress become excessive, contributing to physical and psychological impairment (Syed, Naqvi, Asif Khan and Aftab Qadir, 2013).

Therefore, the aim of this research is to investigate the relationship between job stress and quality of life among employees working at selected areas, particularly in Meru, Klang. This study will show which type of stress could either positively or negatively affect the quality of life among working people. The study was conducted due to the growing empirical evidence suggesting workplace stress adversely affects task performance, physical health and well-being of employees. This evidence of negative effects of workplace stress is a unilateral cause for concern and makes a strong case for understanding this issue in greater detail.

2. LITERATURE REVIEW 2.1 Overview of Quality of Life

Quality of life is a broad concept that incorporates all aspects of life and has been used ina variety of subjects and disciplines such as geography, philosophy, medical, advertising, as well as in the working life.According to Barcaccia (2013), quality of life can be described as the multidimensional factors that include everything from physical health, psychological state, thelevel of independence, family, education, wealth, religious beliefs, a sense of optimism, local services and transport, employment, social relationships, housing and the environment. However, World Health Organization Quality of Life assessment instrument (WHOQOL-100) had identified four domains of quality of life, which are physical, psychological, social relationship and environment (WHO, 1986). Quality of life covers all aspects of people life that would affect the health of the persons and relationship of the persons with the environment and other people.

The quality of life is an elusive concept approachable at varying levels of generality from the assessment of societal or community wellbeing to the specific evaluation of the situations of individuals or groups (Felce and Perry, 1995). Dorfinan, as cited in Bronson (1999), defined quality of life as “satisfaction, a sense of well-being indicating how the individual perceives his or her quality of life.” This was supported by Revicki et al, as cited by Nagy, Pifko and Nagy (2011), indicating that the quality of life is a broad range of human experiences related to one’s overall well-being, in which minimally includes the broadly-defined assessments of the physical, psychological and social domains of functioning. 2.2 Job Stressor

Stress can be defined as a normal physical response to events that caused people feel threatened or upset in some way (Smith, Segal & Segal, 2015). Stress is the psychological and physical state that results when an individual’s resources are not sufficient to cope with the demands and pressures of the situation (Michie as cited in Mosadeghrad, Ferlie & Rosenberg, 2011). Stress often occurs when individuals’ physical and emotional states do not match or cannot handle their job demands, constraints and/or opportunities (Ismail, Yao & Yunus, 2009). Causes of stress are also known as a stressor. Lack of exposure incomprehension of stress in their interpersonal, intrapersonal, relationship and environmental surrounding become the major causes of stress among individuals (Bulo & Sanchez, 2014).The relationships at work with superiors, colleagues, and subordinates have also been identified as potential stressors (Oke & Dawson, 2008). Additionally, the variety of job-related, interpersonal, organisational and environmental factors could influence a person’s level of job stress (Mosadeghrad, Ferlie & Rosenberg, 2011).

According to Wight, Chen, Dodd and Weiler (2011), a sick environment can threaten health through biological and psychological pathways. Stress not only influences mental health and



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quality of life but also increases chronic diseases such as heart disease. Mazumdar, Haloi, and Mazumdar (2011) contendedthat work stress due to unusual posture or improper postural adjustment to the work results in back pain, headaches, nervousness, aching muscles, excessive perspiration and depressions. Hussain, Naqvi, Khan, Kant, and Khan (2013) also indicated that stress is very harmful to the humanbody because it increases blood pressure, sugar, and suppressestheimmune system, decreases digestive system activity and reduces urine output. Stress experienced by workers at work is called job stress. 2.3 The Relationship between Job Stress and Quality Of Life

The quality of life encompasses the fulfilment of human needs such as a satisfactory material life, health, education, security, living in a clean environment and also the enjoyment of the aesthetic and spiritual need (Narehan, Hairunnisa, Norfadzillah & Freziamella, 2013). The ability of employees to manage their physiological and psychological stresses may have a significant impact on their job satisfaction (Fairbrother & Warn, 2003). Quality of life can be defined as individuals’ perception of their position in life in the context of the culture and value systems in relation to their goals, expectations, standards, and concerns (Chadha, Sood & Smalhotra, 2012). This was supported by Dijkers, as cited in George (2005) that quality of life is complex and often depends on the organisation and its environment.

Saxena and Orley (1997) defined quality of life as the individuals' perception of their position in life in the context of culture and value systems in which they live and in relation to their goals, expectations, standards and concerns. Meanwhile Borthwick-Duffy, as cited by Felce and Perry (1995), presented three perspectives on quality of life: quality of one's life conditions, one's satisfaction with life conditions, and the combination of both life conditions and satisfaction.This was supported by Revicki et al., as cited by Nagy, Pifko and Nagy (2011) by asserting that quality of life is a broad range of human experiences related to one’s overall well-being that minimally includes the broadly-defined assessments of the physical, psychological and social domains of functioning. Besides that, Mosadeghrad et al., (2011) stated that quality of life refersto an employee’s satisfaction with working life, which depends on the employee’s feeling about various dimensions. Physiological stress is often viewed as a physiological reaction of the body such as headache, migraine, abdominal pain, backache and also sleep disturbance (Ismail et al., 2009). Figure 1 illustrates a framework of stress related to quality of life which is adopted from Mosadeghrad, Ferlie and Rosenberg (2011).

Independent variables Dependent Variable

Figure 1: Stress related to quality of life framework

Mosadeghrad, Ferlie and Rosenberg (2011)

3. METHODOLOGY This study employed a cross-sectional method. Data collection using questionnaire was

carried out at Meru, Klang, Selangor. Convenience sampling technique was chosen due to the unavailability of the sampling frame. The questionnaires were personally distributed and accompanied with a cover letter in order to avoid any difficulties in understanding the questions among the respondents. It was also to convince the respondents that the information used was only for academic purpose and would be kept confidential. Respondents were given 20 minutes to complete the questionnaires. After 20 minutes, the researchers personally collected the questionnaires from the respondents. A total of 400 respondents volunteered to participate in

Job stressors

Perceived stress

Job related factors

Organizational related factors

Interpersonal relation related factor

Environmental related factors

Quality of Life

Physical

Psychological

Social

Environment



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this research study. However, the number of valid questionnaires for data analysis were 377 which represented 99.73% of the response rate.

4. RESULTS AND DISCUSSIONS

Assumptions of normality and linearity of the obtained data were examined and found acceptable. The reliability testing was considered as acceptable with Cronbach alpha value of .902 for 46 items in the questionnaire. A descriptive analysis was conducted to examine the demographic profile. The demographic profile of the respondents includes gender, age, marital status, employment status and highest educational background. Findings of the demographic profile are described in Table 1. Female respondents were the majority (74.5%; n=281) whereas male employees made up the other 25.5% (n=96). There were 72.4% (n=273) respondents within the age range of 18 to 27 years old and 18.3% (n=69) of the respondents were aged 28 to 37 years old. Only 6.9% (n=26) of the respondents were between the age group of 38 and 47 years old, followed by 1.6% (n=6) in the age range of 48 to 57 years old. Only 1% (n=3) of respondents were 58 years old and above. In terms of academic background, it was found that 52.3% (n=197) of the respondents were undergraduate, followed by 38.7% (n=146) of the respondents who were school leavers and 4.8% (n=18) of the respondents were postgraduate. Meanwhile, 4.2% (n=16) of the respondents had other qualifications.

Table 1: Demographic profile (n=377)

Items Frequency Percentage

Gender Male

Female

96

281

25.5 74.5

Age 18 – 27 273 72.4 28 – 37 69 18.3 38 – 47 26 6.9 48 – 57 6 1.6

58 and above 3 0.8

Marital status Single

Married Others

245 122 10

65

32.4 2.7

Employment status Permanent Contract Others

216 92 69

57.3 24.4 18.3

Education level School Leavers Undergraduate Postgraduate

Others

146 197 18 16

38.7 52.3 4.8 4.2

More than 65% of the respondents were single (n=245) while 32.4% (n=122) of the

respondents were married and 2.7% (n=10) stated others. Nearly 60% (n=216) of the respondents were permanent employees and 24.4% (n = 92) of the respondents were on contract basis. On the other hand, 18.3% (n=69) of respondents were identified as in other employment status.

A bivariate correlation analysis was carried out to investigate the relationship between job stress and quality of life. Table 2 shows the descriptive and correlation analysis of the variables. Based on the mean analysis, figures indicated that the varying degree of respondents’ score on the studied variable. Pertaining to the independent variables, the highest mean value was Organizational Related Stress [M=3.53, SD=.799] while the lowest was Working Environment Related Stress [M =2.87, SD =.635].

The correlation coefficient result was interpreted using “Eyeball method” which the correlation between 0.8 – 1.0 was said to be very strong, 0.6 – 0.8 was said to be strong, 0.4 – 0.6 was moderate relationship, 0.2- 0.4 was interpreted as weak and 0.0 – 0.2 was very weak. The results indicated that there was a weak positive relationship between Quality of Life and Perceive Stress, Working Environment Stress, and Interpersonal Stress. From the findings, the



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output indicateda marked degree of correlation r= .362, r=.112 and r=.399 respectively with p<.05. Therefore, the hypothesis was accepted.

The other two variables were verified to have a significant moderate positive relationship with quality of life. From the findings, the output confirmed that there was a significant positive relationship for the Organization Stress and Job Stress with employees’ Quality of Life. The results of the finding of the correlation were r=437 and r=.460 respectively with p<.05. Therefore, the hypothesis was accepted.

Table 2: Descriptive and Correlational Analysis of Job Stress Constructs and Quality of life

** Correlation is significant at the 0.01 level (1-tailed)

5. DISCUSSION

Based on the findings, the perceived stress had a weak correlation with quality of life among

working adults in Meru, Klang.It was revealed that the feelings or thoughts of an individual had about how much stress they are under at or over a given point in time did not really influence their quality of life.The presence of perceived stress could lead a person to fail in controlling important things in their lives due to failure of making decisions, and will affect the way of their lives (Higgins & Lee, 1999). This happens because the person was afraid of making a wrong decision and what people may think of him or her. This was consistent with a study conducted by Eswi, Radi and Youssri (2013), in which they stated that stress started within self-perception and he or she will express it through behaviour. Since most of the respondents were still young, the probability of making decision is low.

A weak relationship between job-related stress and quality of life among employees in Meru was also discovered. Employees who have the authority or have the opportunity to make a decision on how they should finish their tasks will have the lowest stress at work and become healthy (Pediwal et al, 2011).According to Hussain et. al. (2013), job-related stress is an unpleasant emotional situation that an individual experiences when the requirements of the job are not counter balanced with his ability to cope with the situation. Most of the cases, the lack of reward and recognition were the causes of stress and affect the concentration and confidence of employees. Meanwhile, according to Pediwal (2011), job stress is a phenomenon where the employees or employers face at the job and handles it differently according to their own way. Basically, a job stress is a mismatch between the individual capabilities and organisational demand and can lead to poor health condition due to worry about discomfort and difficulties in sleeping.

However, the work environment related stress has a moderate positive relationship with the quality of life. The factors that influence stress at working environment are the physical demands of work and the distress caused by environmental factors, such as, noise, vibration, extremes of temperature, workload, work hours (including shift work), the effects of technological changes, and exposure to risks and hazards (Oke &Dawson, 2008). This was supported by Ulleberg and Rundmo (1997) by stating that the environment is the main factor of stress including noise, lighting, air and safeties. All of these will affect the moodiness of the workers and it will directly affect their life. Besides that, it also disrupts their working performance such as losing concentration on their work. Mostly the employees or workers become distracted and unable to concentrate on their job due to a lot of noise in the workplace. Cooper, Cary, Sutherland and Valerie (1987) stated that most employees are getting stress by

No Variables 1 2 3 4 5 6

1 Perceive Stress - 0.87* .281** .152** .015 .362

2 Job Related Stress - - .030 .569** .632** .460**

3 Working Environment

Stress - - -

-0.14 -0.20 .112**

4 Organizational Stress - - - - .582** .437**

5 Interpersonal Stress - - - - - .399**

6 Quality of Life - - - - - 1

Mean 3.03 3.26 2.87 3.53 3.45 3.45

SD .800 .932 .635 .800 .908 .520



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disturbance due to noisy environment. Consequently, it affects their concentration to complete their tasks and indirectly causing them to go back home late. Due to this problem, the employees will experience lack of sleep and cannot perform excellently at work. Besides that, it was stated that a healthy working environment is free from noise which was ranked first in environment stress (Neelamegam & Asrafi, 2010). Stress among employees depends on smooth work routine and conducive workplace. Employees who are satisfied with their working environment will be more motivated to accomplish their tasks satisfactorily and at the same time influence their relationship with family members and colleagues.

There was a significant relationship between organisational stress and quality of life (r=.39, p<.05). To maintain safety at the workplace the organisation need to prepare a work environment which is efficient and effective especially with adequate equipment and facilities. Hayes, Perander, Smecko and Trask (1998) verified this fact by stating that employees who are satisfied with their job safety will stay longer at the organisation compared with those who feel insecure with the organisation at which they are working for. Moreover, employees who think that the organisation will take care of them will make them stay longer in the organisation and will make them happy with their work. Robyn et.al. (2000) stated that maintenance of safe work practice can increase the concentration of the employees to complete their job successfully.

The findings also revealed that there is a relationship between interpersonal related stress and quality of life among employees. According to Dixon and Robinson (2005), if parties involved in a dispute cannot reach to an understanding of solving the problem, this will lead to dissatisfaction. This condition can contributenegatively to an individual’s psychology. As stated by the National Institute for Occupational Safety and Health (2006), the interpersonal relationships that influence the stressor are the poor social environment and lack of support or help from co-workers, supervisors and inadequate equipment provided. This was supported by Oke and Dawson (2008) who stated that relationships at work with superiors, colleagues, and subordinates have been identified as potential stressors. Furthermore, Danna and Griffin (1999) found that mistrust of co-workers is related to high role ambiguity, poor communication, low job satisfaction, and poor psychological well-being.

Masterson, Lewis, Goldman and Taylor (2000) stipulated that when the management and employees are working together to make sure the safety of the workplace is maintained, employees feel more motivated to finish the job. An employee’s stress level depends on how a person is treated by his supervisor, interaction with the supervisor and nature of the work, such as being involved in decision-making process. A good relationship with the supervisor will reduce stress among employees and can contribute to high job performance. When the relationship between employees and supervisor is fair in anything which involves work, such as getting information, empowerment and receiving sufficient equipment, their job will be simplified and stress at the workplace will be avoided (Konovsky and Pugh, 1994).

6. CONCLUSION The result shows that the mean score for organisational related stress is the highest among

all of the job stressors. It can be concluded that the employees, particularly who work in Meru, Klang, perceived that organisational related stress is the main factor which contributes to their quality of life (QoL). Understanding the causes of job stress by measuring it accurately, subsequently enabling to identify problem areas, implementing interventions and re-evaluating the situation could prove useful. Therefore, focus should be given to the five factors of stress which are perceived stress, job-related stress, work environment related stress, organisational stress and interpersonal related stress in order to improve the present situation, as well as to rectify the problems.

References Eswi, A.S, Radi, S. & Youssri, H. (2013). “Stress/ stressors as perceived by baccalaureate Saudi nursing

students,” Middle East Journal of Scientific Research, 14(2), 193–202. Chadha,M., Sood,K & Malhotra,S. (2012). Effects of organizational stress on quality of life of primary and

secondary school teachers. Delhi Psychiatry Journal, 15(2), 342-346.



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Danna, K. & Griffin, R.W. (1999). Health and Well-Being in the Workplace: A Review and Synthesis of the Literature. Journal of Management. 25(3), 357–384.

Dixon, S, K. & Robinson, E. (2005). Depression and College Stress Among University Undergraduates. Journal of College Student Development. 49(5), 412-424

Fairbrother K, & Warn, J. (2003). Workplace Dimensions, Stress and Job Satisfaction, Journal Managerial Psychology. 18(1), 8-21.

Felce, D. & Perry, J. (1995). Quality of Life: Its Definition and Measurement. Research in Developmental Disabilities, 16, 51-74.

Haider, Y. & Supriya, M. V. (2007). Career Management: A View through Stress Window. International Review of Business Research Papers, 3(5), 182-192.

Hayes, B.E., Perander J., Smecko T., & Trask J.(1998). Measuring perceptions of workplace safety: development and validation of the Work Safety Scale. Journal Safety Res. 29, 145–161.

Konovsky, M.A., & Pugh, S.D. ( 1994). Citizenship behavior and social exchange. Academy of Management Journal. 37(3), 656-669

Masterson, S.S., Lewis, K., Goldman, B.M., & Taylor, M.S. ( 2000) Integrating justice and social exchange: The differing effects of fair procedures and treatment on work relationships. Academy of Management Journal. 43(4), 738-748

Nagy, J., Pifko, J., & Nagy, K. (2011). Quality of life of H&E cancer patient after prosthetic rehabilitation. Journal Dentist Res. 90( 3), 773

Narehan, H., Hairunnisa, M., Norfadzillah, R. & Freziamella, L. (2014). The Effect of Quality of Work Life (QWL) Programs on Quality of Life (QOL) Among Employees at Multinational companies in Malaysia. Social and Behavioral Sciences, 112, 24 – 34.

Neelamegam, R., & Asrafi, S. (2010). Work Stress Among Employees of Dindigul District Central Cooperative Bank, Tamil Nadu: A Study. The IUP Journal of Management Research. 5(2), 57-69.

Oke, A. & Dawson, P. (2008). Contextualizing workplace stress: The experience of bank employees in Nigeria. Research Online. http://ro.uow.edu.au/compapers/503. Retrieved 2011-06- 16

Pediwal, G. L. (2011). Excessive stress and its impact on employee behavior. Journal of Global Economy., 1(1), 13-40.

Hussain N. S. M., Khan, M.A., Kant, A.Q., & Khan, S.N. (2013). Job stress and employees’ productivity: Case of Azad Kashmir public health sector. Interdisciplinary Journal of Contemporary Research in Business. 5(3), 525-542

http://ro.uow.edu.au/compapers/503.%20Retrieved%202011-06-%2016



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Internet Privacy Challenge for Facebook Users in Malaysia

Jamaliah Mohd Taib1 & Hajah Makiah Tussaripah Jamil2

1Faculty of Computer and Mathematical Sciences, UiTM Kampus Kuala Pilah, Malaysia

2Academic of Contemporary Islamic Studies, UiTM Kampus Seremban, Malaysia

[email protected]

ABSTRACT Users of the Social Networking Sites (SNSs) nowadays are more socially connected in an interactive manner. These sites provide venue where users are able to have an open profile with considerable amount of personal information (PI) readily presented. One of the most visited SNS is the Facebook where this site has already reached more than one billion users worldwide. Nowadays, there are increasing concerns about privacy and information disclosure for the users of Facebook which can generate a number of privacy threats to its users. This paper is to highlight the actual implementation of privacy setting and legal aspect of Internet privacy in Facebook. This paper will also present technical and policy recommendations to improve privacy without compromising the benefits of personal information (PI) sharing through Facebook for Malaysian. As a result, user can be well-informed about privacy threats and are able to reap the most benefit of social interactive Internet communication through Facebook. Keywords: Facebook, Privacy, Legal, Protection

1. INTRODUCTION

It Users of the Social Networking Sites (SNSs) nowadays are more socially connected in an interactive manner. One of the most visited SNS is the Facebook where this site had already reached 2.2 billion monthly active users across both desktop and mobile devices (Statista, 2018). Nowadays, there are increasing concerns about privacy and information disclosure of the users of Facebook which can generate a number of privacy threats to its users (Al Hasib, 2009: Tuunainen, Pitkänen & Hovi, 2009; Wilson, Gosling & Graham, 2012). It is a major concern in Malaysia since The Star Online Malaysia (2010) has reported that Malaysian has an average of 233 friends in their social networks. Compared to the users of the People’s Republic of China who has an average of 68 friends, obviously Facebook would be the most prominent selection by Malaysians.

Facebook.com is a social networking site founded in February 2004 by Mark Zuckerberg. Initially, Facebook was largely restricted to university and high-school students and not until October 2006, it was opened to all Internet users. As stated by the Facebook’s founder, “our mission is to make the world more open and connected” (Jarvis, 2011). With the advances in web 2.0 applications, it had enabled Facebook users to be more transparent in relationships and identities.

This paper has examined the actual implementation of privacy setting in Facebook and the legal aspect of Internet privacy protection in Malaysia. The information obtained can be used to provide a better technical and legal solution to improve privacy while using Facebook for Malaysian.

This paper is organised as follows, section 2 summarizes the privacy issues and awareness issues of Facebook users. Section 3 discusses on the current implementation of policy setting in Facebook. The current legal issues of Internet privacy, particular Facebook privacy issues in Malaysia constitution will be discussed in section 4. Section 5 presents technical and policy recommendations to improve privacy for users of Facebook in Malaysia.



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2. RELATED WORKS The rise of SSNs brings both benefits and at the same time, there also are increasing

concerns about privacy protection and information disclosure that may be dangerous to the users (Al Hasib, 2009; Tuunainen, Pitkänen & Hovi, 2009; Wilson, Gosling & Graham, 2012). Privacy policies imposed by the service providers usually contains detail of what PI is collected, how the PI may be used, to whom the PI may be disclosed, the security measures taken to protect the PI and whether the website uses cookies and/or web bugs (Privacytrust, 2018). It was found through Esmir Demaj (2012), users are not fully aware about how Facebook use their information even though they say it is very important that they should be aware and knowledgeable about how their personal information will be used when submitted online.

Most SSN profiles convey fairly accurate personality impressions of profile owners since individuals generally want others to see them as they see themselves (Wilson, Gosling & Graham, 2012; Young & Quan-Haase, 2009). This is because most users have trusted the service provider and agreed with the idea of the world should be opened and personal data should be disclosed widely (Osman & Ab. Rahim, 2011). Without a proper protection of PI, unauthorized access to PI may cause losses to individual in particular to both one self’s image and public identity (Tuunainen, Pitkänen & Hovi, 2009). Various ways had been suggested against privacy invasion which includes building self-awareness among users, reviewing and reinterpreting the regulatory framework of SSN privacy policy and setting the appropriate default by users (al Hasib, 2009).

Tuunainen, Pitkänen & Hovi (2009) has defined privacy features as “technical implementation of privacy controls” which it encouraged safe participation for users. Historically, Facebook users must click through 50 privacy buttons and choose from 170 options in order to opt out personal information disclosure as stated in Bilton (2010). In May 2010, Facebook had rolled out new and simplified privacy setting options as many findings [Al Hasib, 2009; Osman & Ab. Rahim, 2011; Tuunainen, Pitkänen & Hovi, 2009) have stated that users have found the setting of privacy options for Facebook is cumbersome and complicated. The most current rewriting of Facebook policy was done on Dec. 2012, but it also has foster apathy and confusion among the users (Rosenblatt, 2012). With the latest implementation of revised policy settings, there are still some concerned over privacy issues over the use of the timeline, news feed, and search function.

With the current implementation of privacy law worldwide (Greenleaf, 2011), almost half of the implementation of privacy law is based on privacy principles articulated by the Organization for Economic Cooperation and Development (OECD). These principles have been enacted in over 30 European and non-European developed countries. Australia is one of the countries that adhere to OECD privacy principles.

There are two legal elements that had being discussed with regard to Facebook’s privacy compliance within the Australian constitutional law as stated by Johston and Wilson (2012). The first legal element that was under securitised is the Collection Limitation Principle. This principle provides that there should be limits to the collection of personal data and any such data should be obtained by lawful and fair means and, where appropriate, with the knowledge or consent of the data subject. It is argued by Johston and Wilson (2012) that Facebook needs to justify with reference to a clear purpose for any collection of “necessary” information to the user. The second legal element that was under securitised is the Use Limitation Principle which stated that the personal data should not be disclosed made available or otherwise used for purposes other than those specified in accordance with [the Purpose Specification] except with the consent of the data subject, or by the authority of law. Johston and Wilson (2012) have suggested that Facebook are using the information collected in an unforeseen and barely disclosed way. In a way, it is an act that will breach the above stated principles.

3. CURRENT IMPLEMENTATION OF POLICY SETTING IN FACEBOOK

Registration of a new user is so easy where a user needs to agree to the term of use and to read the privacy policy of Facebook. Some studies (Michalopoulos & Mavridis, 2010; Tuunainen, Pitkänen & Hovi, 200), have found that the term of use and privacy policy of Facebook were largely not known or understood by the respondents. During the registration process, there is no control provided to a new user over privacy settings. Once registered, there will be a feature



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called “Find Friends”. Once selected by the user, it will automatically search through the new user’s contact for e-mail addresses in common with other existing members and offer up those members as instant friends. Problems may arise due to, by default, imported contact details are shared with everyone (Johnston & Wilson, 2012).

Most users have posted their real name as being prompted by the service provider. Facebook has legally enforced users to only use their real names on the social network (Facebook, 2018). Facebook has extended profiling of users which includes e-mail address, birthday, gender, and personal preference of liked pages, music and movies. The information that remained public are users’ name, profile picture, cover photo, network, and user ID. It was found by Mahmood (2012), a design flaw in Facebook can help those marketers and phishers map email addresses to real names and identity of a user.

Users own all the content and information posted on their Facebook page. Users can control who can access it through their privacy settings. Users can also have shared information and this shared information is available through the status update, comments and timeline. By default, all information and shared information are available publicly. Public information can be accessed by everyone including people off of the Facebook. To make any information to be available to selected audience, user needs to use the privacy setting of Facebook.

With the latest policy revision done on Dec. 2012, the timeline is always been public (Facebook, 2018). The timeline comes with some default and unchangeable privacy settings. Publicly available timeline provides information of mutual friends of users. People can always see mutual friends. If people can see your friendship on another timeline, they will also be able to see it in the news feed, search and other places on Facebook. On December 27, 2012, CBS News (2012) has reported that Randi Zuckerberg (sister of Mark Zuckerberg) criticised a friend of sharing her private Facebook photo on Twitter, only to be told that the image had appeared on a friend-of-a-friends Facebook news feed. Once a user like a page of news feed of other user, an automated connection is added to your timeline and other friends may see it in on their news feeds. One drawback of this link is that you can control who can see your timeline but you cannot control the privacy setting of your friend news feed (Mohamed & Ahmad, 2011).

Facebook also has provided a new service called search function. Facebook has removed an option which allows users to hide themselves from strangers through Facebook’s search function. A user can search through any available public information using the search function. For any removed content either by the user or Facebook authority, the contents can be available upon any request but it cannot be viewed using the search function provided within the service. This is because any removed content may persist in backup copies for a reasonable time (Facebook, 2018).

4. CURRENT LEGAL STATUS OF INTERNET PRIVACY IN MALAYSIA Privacy is mainly protected by general human and constitutional right with a more specific

data protection rules as stated in Tuunainen, Pitkänen and Hovi (2009). Practically in Malaysia, operation of Facebook is not governed by any specific act or regulation especially with respect to the privacy law. The terms and conditions applied to users in Malaysia and provider of the service are basically related to basic principle underlined by the Contract Law. Its basic principle has defined that both the promisor (Facebook as the service provider) and promisee (registered user) is bound by the agreed promises that has been implemented and enforced by law. The process is referring to the agreed term of use and privacy policy during registration process. Otherwise, it is just a mere promise between parties and not bound each other. Privacy policies on website have legal significance since the Federal Trade Commission of USA has some ability to hold companies to the promises made in those policies.

It is stated in Malaysia Communications and Multimedia Commission (2013) that any form of action which is not comply with the jurisdiction in Malaysia, regardless of the medium being used, can be executed using the existing law in Malaysia constitution. Therefore, Internet contents in Malaysia are still governed by Sedition Act 1948, Act 574 Panel Code (for criminal actions), Defamation Act 1957, Computer Crimes Act 1997 and Communications and Multimedia Act 1998. In other words, Facebook users in Malaysia are still bound by some acts and regulations within Malaysia constitution.

https://www.facebook.com/help/151469804922694



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Legal enforcement is applicable for any action which is not complies with the above acts and regulations while using the service provided at Facebook.com. For instance, in the case of defamation (“Libel”,n.d.); it will occur when a person expresses words that may lower another person’s reputation in the eyes of the public. (Case referred; Sim V Stretch [1936] All ER 1237 (HL)). There are two types of defamation in Malaysia: libel and slander. Libel is when such words are expressed in a permanent form which is usually visible to the eye, like in a book, e-mail, blog or picture. The libel could be done through any medium of communication including social network such as Facebook.

In criminal cases of defamation, when the state prosecutes a private person for defamation, Section 499 to Section 502 of the Penal Code in Malaysia is applicable. Both kind of offences could be charged and convicted with remedies, fine or punishment of imprisonment. When a person is found guilty of defamation, there is no way out of defending based on the freedom of speech or right of privacy through Facebook. However, in line with terms and conditions provided by the Facebook authority, the conviction could not against the Facebook provider itself instead of the person individually. However, the legal enforcement action may come from a class action lawsuit, not by regulation action or legal standard of online privacy rules within Malaysia constitution.

5. DISCUSSIONS AND RECCOMMENDATIONS The first step to secure your Facebook is by controlling who can find you on the Facebook

application. Once you have signed up for a Facebook account, you are exposed to everyone where everyone can find you by simply type in your name or anything related to you in the search function box. To avoid this privacy visibility, click this gear icon ( ) located at the top right corner and select the “Privacy Settings” menu. One drawback is that the privacy settings feature can only be reviewed after a user has completed the sign up process (Jarvis, 2011).

As a general rule, a user should assume that if he/she does not see a sharing icon, the information will be publicly available. Facebook has provided multiple privacy settings which allow users to customize how much of their profile is to be accessed by others. The default setting would be one’s entire profile would be visible to the public. Even if users can control level of access to their own profile, they cannot control what others reveal about them (Mohamed & Ahmad, 2011). It is suggested that the default setting of PI would be always private and only necessary information can be available publicly.

Users can access and correct most of their personal data by viewing the timeline and activity log. It is suggested that users need to review their privacy setting regularly. Users must be careful in the process of sharing information through any social media. It is suggested to be aware of the consequences of any information and to provide minimal required information as possible during any social interaction. Predator can always do mapping through a user submitted PI at various SSN services available in the Internet. The new opt-out settings certainly are complex. Facebook users who hope to make their personal information private should be prepared to spend a lot of time pressing a lot of buttons (Bilton, 2010). It is recommended that Facebook should provide more direct and clear notification about any publicly available information to its user. Hence, users can have an informed decision as who can get access to their information.

In Malaysia, there is an agency called cyber999 where Malaysians can report any computer/Internet incidents. A user can report any cybercrime to the cyber999 Help Centre (Malaysia computer emergency response team) at www.mycert.org.my. One example of cybercrime is the creation of a fake Facebook account. The agency can forward any report to Facebook authority. Facebook may close any account if they have received a formal request that satisfies certain criteria (Facebook, 2018).

There is an enforcement of Personal Data Protection Act 2010 in Malaysia. However, the Act is to regulate the processing of personal data in commercial transactions and to provide for matters connected therewith and incidental thereto. In other words, this act is only applies to any person who processes and who has control over or authorizes the processing of any personal data in respect of commercial transactions. Privacy protection within the act is focused primarily on commercial transaction whereas privacy data protection needed for Facebook users in Malaysia should be on social communication.

http://dululainsekaranglain.com/add-on/defamatory-meaning-sim-v-stretch/

http://dululainsekaranglain.com/add-on/defamatory-meaning-sim-v-stretch/



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6. CONCLUSION Users need to construct countermeasure by taking informed steps on how to protect privacy

online. It was found by Dwyer (2011) and Johnston & Wilson (2012) that Facebook users are not fully briefed on the consequences of their action but it is likely their actions are being indirectly evolved by the social service provider. A more robust solution is users need to be well-informed about Internet privacy protection in Malaysia, along with an individual culture that may result preventative actions to protect privacy while they are online. Facebook will continue to face problem of complying with the basic privacy principle as long as it continues to collect “unnecessary” PI of the registered users (Johnston & Wilson, 2012).

References Al Hasib, A. (2009). Threats of online social networks. Int. Jour. Of Comp. Sc. and Network Sec., 9:11. Bilton, N. (2010). “Price of Facebook privacy? start clicking,”

http://nytimes.com/2010/05/13/technology/personaltech/13basics.html, accessed: Feb., 06, 2014. CBS News (2012). “Zuckerberg private family pic goes public,”

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GMRC 2018

Multiple Steps Tuning Control Strategies of Distillation Column

Nasser Mohamed Ramli, Ummu Athirah Elias & Haslinda Zabiri

Chemical Engineering Department, Faculty of Engineering,

Universiti Teknologi PETRONAS, 32610 Bandar Seri Iskandar, Perak, Malaysia

[email protected]

ABSTRACT The performance of different advanced control strategies was studied and compared on multiple steps tuning control. The control strategies of tuning studied include Smith Predictor control, Internal Model control, Cascade control, Feedback control and Feedforward control. The comparison was done by MATLAB Simulation using SIMULINK. Each of the control strategies was studied in terms of set point changes, manipulated variable which is valve opening and the process variable. The success of control strategies is determined by the stability of the process model obtained from each control strategies and minimum value of error. Keywords: control, tuning, distillation column

1. INTRODUCTION

Since many years, industry has been practicing automatic feedback control systems for many processes and equipment (Bennett, 1996). This self-regulating system requires minimal human intervention due to its capability to automatically adjust a control variable. The most widely used automatic feedback control in industrial processes is PID controller, where P, I and D stand for Proportional, Integral, and Derivative, respectively. It has still remained the most widely used controller since 1940s due to its competency to continuously calculate the error and attempt to minimize it (Araki, 2010).

Report by (Zhang,2004) shows that more than 95% of PID type controller is used in control process industry due to its simplicity, clear functionality, applicability and ease of use. This ability of PID controller to compensate most practical industrial process has led to their wide acceptance in many industrial applications (O’Dwyer, 2009)

However, although PID controllers are widely used and applicable to many control processes, they are also the most basic. A PID controller can only deal with specific process requirement since it only relies on the measured process variable, not on the fundamental knowledge of the process. Therefore, PID controllers are significantly limited in their capabilities when complex processes are required to perform a task. The non-linearity existed in a system may disturb the regulation versus response time and caused lag in response. The use of PID controllers also does not guarantee optimum control and stability of the system. Due to this, some industries may require several and/or more expensive controllers to provide the appropriate system control (Tajjudin, 2012) .

This research will be conducted to compare different advanced control strategies in tuning controller method in the distillation column and to select the best control strategy among them. The comparison will be done by MATLAB simulation to evaluate the performance of the controllers in terms of response towards set point changes.

The control strategies, including Smith Predictor control, Internal Model control, Cascade control, Feedback control and Feedforward control, will be tuned using Genetic Algorithm (GA). Different type of parameters will be applied to measure the performance of the control strategies including flow rate, level, temperature, and pressure.



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2. METHODOLOGY

The best control strategy for each parameter; flow rate, level, temperature and pressure, is evaluated using Integral Absolute Error (IAE). Integral Absolute Error is calculated by MATLAB function to measure the controlled system performance. IAE is defined as;

𝐼𝐴𝐸 = ∫|𝜀| 𝑑𝑡 (1)

Each of the parameters is evaluated on different control strategies, which are feedback,

feedforward, cascade, internal model and smith predictor control. After the error is calculated, the value is compared and the best control strategy is selected based on the minimum value of error and stability in the system, which is displayed in Table 7. Table 1 to 6 shows the Integral Absolute Error for flow rate, level, temperature and pressure parameter.

Table 2 Integral Absolute Error value for flow 1

Control Strategy Integral Absolute Error Value

Feedback Control 1.3502e+16 Feedforward Control 1.3502e+16 Cascade Control 4.0232e+92 Internal Model Control 367.3920 Smith Predictor Control

1.7372e+12

Table 3 Integral Absolute Error value for flow 2


Feedback Control 1.5480e+10 Feedforward Control 1.5480e+10 Cascade Control 1.0267e+03 Internal Model Control 2.5789e+03 Smith Predictor Control 6.3661e+03

Table 4 Integral Absolute Error value for level 1


Feedback Control 1.1642e+04 Feedforward Control 1.1642e+04 Cascade Control 1.8009e+04 Internal Model Control 5.5199e+03 Smith Predictor Control 1.8362e+04

Table 5 Integral Absolute Error value for level 2


Feedback Control 1.3136e+40 Feedforward Control 1.3136e+40 Cascade Control 5.7290e+281 Internal Model Control 2.8824 Smith Predictor Control 8.0162e+16

Table 6 Integral Absolute Error value for temperature


Feedback Control 1.6337e+03 Feedforward Control 1.6337e+03 Cascade Control 976.7178 Internal Model Control 458.0179 Smith Predictor Control 8.6086e+03



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GMRC 2018

Table 7 Integral Absolute Error value for pressure


Feedback Control 1.3166e+36 Feedforward Control 1.3166e+36 Cascade Control 6.9736 Internal Model Control 110.9912 Smith Predictor Control 1.2355e+06

Table 8 The best control strategy for each parameter

Parameter Control Strategy

Flow 1 Internal Model Control Flow 2 Cascade Control Level 1 Internal Model Control Level 2 Internal Model Control Temperature Internal Model Control Pressure Cascade Control

The next step is to evaluate the stability and efficiency of the selected control strategies

by using multiple tuning methods. Each of the control strategies will be assessed in signal generator. The parameters need to be assigned in signal generator block are the wave form, amplitude and frequency. The wave form in this research is set to square wave with frequency 0.05 rad/s for all parameters. However, amplitude is differentiate between parameters to indicate different set point value. Table 8 shows the Amplitude value for different parameters.

Table 8 Amplitude value for different parameters in signal generator block

Parameter Amplitude

Flow 1 44.64 Flow 2 7.55 Level 1 45.88 Level 2 7.6 Temperature 20 Pressure 823.8

3. RESULTS AND DISCUSSION In order to determine the stability and efficiency of the control system, the process variable

versus time must exhibit and maintained at a stable condition. Figure 1 shows the fluctuation in signal generator block for Internal Model control. The result indicates that the process is fluctuating at the beginning of and then began to stabilize, where it is maintained until the end of the process.

Figure 1: Flow 1 versus time using signal generator

Figure 2 shows the flow 2 versus time graph in signal generator block for cascade control.

The graph indicates that the process is fluctuating at the beginning of and then began to stabilize, where it is maintained until the end of the process.



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Figure 2: Flow 2 versus time using signal generator

Figure 3 shows the level 1 versus time in signal generator block for Internal Model control.

The graph indicates that the process is stable.

Figure 3: Level 1 versus time using signal generator

Figure 4 shows the level 2 versus time in signal generator block for Internal Model control.

The graph indicates that the process is fluctuating at the beginning of and then began to stabilize, where it is maintained until the end of the process.

Figure 4: Level 2 versus time using signal generator

Figure 5 shows the temperature versus time in signal generator block for Internal Model

control. The graph indicates that the process is fluctuating at the beginning of and then began to stabilize, where it is maintained until the end of the process.



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GMRC 2018

Figure 5: Temperature versus time using signal generator

Figure 6 shows the pressure versus time graph in signal generator block for cascade control.

The graph indicates that the process is unstable.

Figure 6: Pressure versus time using signal generator

4. CONCLUSION This simulation has successfully achieved the objective which is to compare different

advanced control strategies in multiple steps tuning controller method in the distillation column and to select the best control strategy. The comparisons have been successfully conducted using MATLAB simulation to evaluate the performance of the controllers in terms of response towards set point changes and opening valve which represented by Manipulated Variable.

After determining the best control strategies in Step mode, the sources is replaced with Signal generator input, to study the stability and efficiency of the controller. Most of the system shows stable value in different tuning methods. This indicates that the control system is stable and efficiency in different sources. For further action plans, more parameters and other advanced control of strategy should be considered and study to increase the efficiency for

control strategy in a distillation column.

References

Araki, M. (2010). Control Systems, Robotics and Automation—vol II—PID Control. Kyoto University, Japan.

Bennett, S. (1996). A brief history of automatic control. IEEE Control Systems Magazine, 16(3), 17-25.

O'Dwyer, A. (2009). Handbook of PI and PID controller tuning rules (Vol. 57). London: Imperial college press.

Tajjudin, M., Rahiman, M. H. F., Ishak, N., Adnan, R., & Ismail, H. (2012, June). Comparison between optimally-tuned PID with self-tuning PID for steam temperature regulation. In Intelligent and Advanced Systems (ICIAS), 2012 4th International Conference on (Vol. 2, pp. 551-556).

Zhang, J., Wang, N., & Wang, S. (2004, June). A developed method of tuning PID controllers with fuzzy rules for integrating processes. In American Control Conference, 2004. Proceedings of the 2004 (Vol. 2, pp. 1109-1114).

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