Public attention to environmental responsibility has been heightened alongside the increasingly evident impacts of climate change. In response, corporations must continue to operate their businesses optimally while considering their environmental impact. This paper examines the impact of environmental responsibility on firm performance using unbalanced data from 681 companies across ASEAN-5 countries (Indonesia, Malaysia, Singapore, Thailand, and the Philippines). Our empirical investigation suggests that environmental responsibility is negatively associated with performance, both profitability and value. Further, in this paper, we documented that firm size can mitigate the adverse effect of environmental responsibility. This evidence may occur because large firms have better resources to benefit from their environmentally related investments and to create a reputation, especially in terms of firm value. We also find that the presence of a sustainability committee board in a firm can alter the negative impact of environmental responsibility on its campaign. Overall, this paper suggests that the size and sustainability of governance structures matter for firms' environmental responsibility in developing economies. Therefore, policymakers should implement different policies for firms of different sizes. Policymakers should also encourage companies to enhance their governance structures by considering the establishment of a sustainability committee.

Research Originality: This research develops a new digital transformation adoption measure based on the number of products and services provided by a bank. Research Objectives: This study examines the impact of digital transformation, specifically the adoption of digital services and products, on bank performance in Indonesia. Research Methods: This study used hand-collected data from commercial bank annual reports to determine their digital transformation adoption and the BankFocus BvD database for the banks’ financial data for 2014–2023. This study employed fixed- and random-effects models and the two-step generalized method of moments to address endogeneity. Empirical Results: Digital transformation positively affects banking performance, and the significant effect is heterogeneous in nonstate-owned commercial and small and medium-sized banks. Implications: This study provides policymakers and banking executives with insights into the critical role of digital product and service adoption in overcoming the increasing challenges of modern business. The heterogeneity test results suggest that targeted policies and incentives are needed to create a supportive climate for digital transformation. JEL Classification: G21, G23, G33

Purpose – This study investigates the relationship between basic psychological needs and financial well-being among outsourced employees in the e-commerce sector of Indonesia, with financial attitude as a mediating variable. Based on Self-Determination Theory (SDT), it aims to explore how the fulfillment of autonomy, competence, and relatedness contributes to positive financial outcomes. Design/methodology/approach – This research applied a quantitative method by collecting survey data from 422 outsourced employees in Indonesia’s e-commerce sector. Data were obtained through an online questionnaire distributed via Google Forms and analyzed using Structural Equation Modeling with the Partial Least Squares (SEM - PLS) technique, using SmartPLS version 4.0.9.9 Findings – The research results show that basic psychological needs have a significant positive effect on financial attitude and financial well-being. Financial attitude was found to partially mediate the relationship between psychological needs and financial well-being. When the psychological needs of e-commerce outsourcing employees are fulfilled, they not only feel better emotionally and become more motivated but also exhibit more adaptive financial behaviors. Adaptive financial behavior, combined with positive financial attitudes, can help employees achieve greater financial well-being. Research limitations/implications – This study is limited by its cross-sectional design and narrow employment context, which may affect generalizability. Using self-report surveys alone may not capture the full experiences of outsourced employees. Future research should consider longitudinal methods and qualitative approaches, such as interviews, to explore psychological needs and financial well-being more deeply. Practical implications – Organizations should foster supportive work environments that meet employees’ psychological needs and integrate financial education into employee support programs. This holistic approach can enhance financial well-being, particularly in unstable or outsourced work settings. Originality/value – This study expands the application of Self-Determination Theory within financial behavior by emphasizing how psychological needs influence individuals’ financial attitudes and outcomes. It also highlights the essential role of psychological resources in supporting financial well-being, especially among workers in unstable or uncertain employment conditions.

Presenteeism refers to a situation in which an employee performs less optimally due to problems such as poor health, job dissatisfaction, family conflicts, and financial difficulties. This often leads to decreased productivity, which is detrimental to employers. The main objective of this research is to examine the role of financial well-being in mediating the relationship between financial literacy and presenteeism and the relationship between financial behavior and presenteeism. To investigate the issue, we used data collected through a survey of 175 employees at a government agency in Indonesia and then conducted partial least squares structural equation modeling (PLS-SEM) regression technique. We find that financial behavior directly and negatively influences presenteeism, suggesting that presenteeism can be reduced if the employees maintain good financial behavior, which can eliminate financial difficulties as one of the sources of presenteeism. We also find that financial well-being, although it has no direct role in reducing presenteeism, can significantly mediate the effect of financial literacy on presenteeism. Employees with good financial literacy, in our case, cannot directly reduce presenteeism, but financial literacy will decrease presenteeism only if the employees have good financial well-being. Our finding recommends employers to increase their employees’ financial literacy and behavior to minimize presenteeism.

PurposeThis study aims to investigate the influence of risk perception, financial benefits and information quality on Islamic mortgage decisions among millennial consumers. It also examines the mediating role of information quality as a mediator for both risk perception and financial benefits on Islamic mortgage decision, offering a perspective beyond religiosity.Design/methodology/approachData were collected from 202 millennial customers of a major bank in Indonesia offering Islamic mortgage and analyzed using partial least squares structural equation modeling.FindingsThis study reveals that only financial benefits and information quality that directly influence Islamic mortgage decisions, while risk perception does not have direct impact. The "Islamic" label in Islamic mortgage products reduces consumers' uncertainty regarding perceived risk, making risk perception does not become a significant antecedent in driving mortgage decision. The authors also find that the indirect effect of information quality only applies to financial benefits because consumers more optimally use quality information to evaluate potential financial advantages rather than the risks associated with Islamic mortgages. Overall, financial benefits emerge as the primary determinant of mortgage decision, directly and indirectly.Practical implicationsIslamic bank managers and stakeholders may strengthen competitiveness by improving financial benefit offerings and ensuring high-quality information to gain positioning advantages over conventional banks. They need to project a public perception that Islamic mortgages are not just a means of religious obedience, but also a financially beneficial proposition.Originality/valueThis research sample comprised actual Islamic mortgage users, not just potential adopters or those with an intention, and incorporates information quality, which had been overlooked in previous studies.

In today’s global environment, technological advances, including artificial intelligence (AI), have reformed the financial sector. Even so, it is rarely empirically documented that AI adoption also plays a role in promoting better governance of financial institutions (FIs). This research seeks to identify how AI adoption impacts FI governance. The data used are patent data based on the Center for Security and Emerging Technology (CSET) in the FI sector from 20 countries to measure AI adoption from 2014 to 2022. Meanwhile, we collect unbalanced governance performance data from the London Stock Exchange Group (LSEG) database. We observe that AI has a positive impact on FI governance. AI offers benefits in various aspects, including more effective communication between stakeholders, increased transparency, improved risk identification, and enhanced data security. We further analyzed the three governance pillars (CSR, Management, and Shareholders) and found that only the management pillar shows an impact. Further tests confirm that this influence persists in FIs with high profitability, mature companies, developed countries, and with strong financial globalization, especially in the US. Our study highlights the critical role of AI adoption in the FI sector and emphasizes financial resource factors and supporting ecosystems in improving governance. Therefore, regulators or policymakers need to support the adoption of AI through appropriate policies, building a related investment climate, and finding solutions to related challenges.

We comprehensively investigate the impact of remuneration on the governance of Islamic banks pertaining to the board of directors (BOD), Shariah supervisory board (SSB), executives, and the chief executive officer (CEO). The research in this area is still muted, especially using samples of Islamic banks and involving all board member types. Using the hand-collected data of dollar remuneration on those board members, we estimate their 'normal' remuneration, and we find that all board types, including the CEO, are over-remunerated from USD 20,790-305,920. However, in further investigation, we find that the excess remuneration in the directors and SSB favours the Islamic banks, particularly to lessen the risk-taking incentive. Our result highlights the importance of Islamic banks' two-layer governance system, which has a role in preventing excessive risk-taking behaviour. Supporting the 'efficiency wage hypothesis', the good remuneration design for the directors and Shariah scholars will attenuate the agency problems in the context of Islamic banks. Regarding executives and the CEO, we do not find a significant impact of the excess remuneration. This is likely because the Islamic banking industry faces a number of restrictions due to its presence as a heavily regulated financial institution and the voluminous Shariah requirements that must be fulfilled in its operations.

Banks' ESG issues are gaining traction and public attention following the Paris Agreement 2015. As a result, many researchers are currently examining the influence of ESG pillar practices on banks' financial performance and stability. However, these results seem far from conclusive. Therefore, continuous studies need to be carried out. The objective of this research is to investigate the impact of ESG initiatives implemented by banks on their profitability (ROA, ROE, and Tobin's Q) and financial stability (Z-Score(CAR) and Z-Score(EQTA)). Using a set of unbalanced panel data of 178 commercial banks from 12 countries in the Asia Pacific region, spanning from 2013 to 2022, this study performs panel regression analysis to explore the ESG and bank profitability and bank stability links. Our research findings support stakeholder theory and the resource-based view (RBV) as explanatory frameworks for connecting ESG pillars and bank profitability and financial stability. These include banks' environmental, social, and governance measures enhancing profitability and stability. The results are robust across different models and settings (e.g., ESG pillars vs. dimensions, different financial performance and financial stability proxies, and lagged ESG pillars and dimensions in the model).

This article investigates the relationship among income diversification, bank monitoring and financial risk in the context of commercial banks in Indonesia. Using panel data of 91 Indonesian commercial banks operating during the COVID-19 pandemic, we find that income diversification can reduce bank risk, while monitoring is negatively associated with that risk. While our investigation does not indicate that monitoring can alter the impact of income diversification on bank risk, the results suggest that policymakers should adopt banking transformation by diversifying their income, particularly during a crisis such as the COVID-19 pandemic. We also suggest that banks enhance monitoring to obtain a good external perception that can ultimately increase a bank’s stability.

Recent studies suggest that digitalization does not uniformly enhance bank efficiency. A critical factor influencing this outcome is the size of the institution undergoing digital transformation (DT). Small and medium-sized commercial banks often encounter challenges such as limited financial resources and difficulty in adapting digital solutions that align with market conditions, thereby leading to DT failures. This study investigates the impact of DT on bank efficiency. Our analysis focuses on a sample of conventional Indonesian banks from 2015 to 2023. We also explore how digitalization affects the efficiency of both large and small banks. Regression analysis reveals nuanced findings. In large banks, the coefficient of DT2 does not significantly affect performance, whereas in small and medium-sized banks, it exhibits a statistically significant negative relationship. This suggests that digitalization influences bank performance non-linearly, posing different implications for banks of varying sizes. This study contributes to understanding the heterogeneous impacts of DT on bank efficiency, offering insights relevant not only to the Indonesian banking sector, but also to other emerging markets undertaking similar DT strategies.

Abstract Issues regarding environmental performance have become important recently. Moreover, after the Paris Agreement, it encouraged global attention to desire and responsibility for the environment. This issue puts pressure on companies to carry out their business activities responsibly so that they can report environmental performance well as a form of legitimacy. This research examines company characteristic factors, especially firm profitability, firm size, and firm size, which can influence environmental performance in five Southeast Asian countries: Indonesia, Singapore, Malaysia, Thailand, and the Philippines—using unbalanced panel data of 748 companies from 2013 to 2022, from Thomson Reuters. The research results show that the three company characteristics, size, and age, show significant positive results. This means that the bigger or longer the company has been around, the better its environmental performance. Meanwhile, company profitability produces significant negative results. The more companies focused on gaining profits, the lower their environmental performance. When companies focus on increasing their profits, they tend to neglect and avoid environmental performance because of the costs it causes. The research findings are expected to provide input for companies and governments to determine effective policies between business organizations and environmental performance integration within them.

Objective: While the importance of liquidity creation in banking has been widely acknowledged, limited empirical research has explored how Chief Financial Officer (CFO) characteristics influence this critical function, particularly within emerging markets such as Indonesia. This study addresses this gap by examining the impact of CFO attributes specifically gender, age, ethnicity, and tenure on liquidity creation in Indonesian banks. Research Design & Methods: This study adopts a quantitative research design utilizing secondary panel data from 40 banks listed on the Indonesia Stock Exchange (IDX) over the period 2013–2023. The analysis employs robust Ordinary Least Squares (OLS) regression to examine the effect of CFO characteristics including gender, age, ethnicity, and tenure on bank liquidity creation. Findings: The findings reveal that CFO age is positively associated with liquidity creation, indicating that older CFOs may be more effective in managing liquidity. Conversely, CFO gender and ethnicity exhibit significant negative effects, suggesting that female CFOs and those from minority ethnic backgrounds are linked to lower liquidity creation. CFO tenure, however, shows no statistically significant impact. Implications & Recommendations These results highlight the importance of executive demographics in shaping liquidity strategies and financial intermediation within bank-based economies. The study suggests that organizations should consider demographic diversity and experience when appointing financial leaders. Contribution & Value Added: This research adds to the limited literature on executive influence in liquidity creation, particularly in emerging markets. It offers practical insights for corporate governance, executive recruitment, and diversity policy in the financial sector.

This study explores how an Islamic label on firms influences stock price crash risk in Indonesia. We utilize a sample of 566 nonfinancial firms listed between 2016 and 2021, apply panel data method, and find that the Islamic label benefits the firms by lowering crash risk. Investors consider firms with the Islamic label as lower risk due to leverage constraints they must adhere to, which contributes to a decreased crash risk. Our primary results are robust to various sensitivity analyses. We also find that dividend policy and audit quality strengthen the Islamic label-crash risk nexus. The COVID-19 pandemic weakens the link between the Islamic label and crash risk. Furthermore, the Islamic label-crash risk nexus persists for up to two years.

Abstract As attention to environmental sustainability increases, firms are being encouraged to implement environmental, social, and governance (ESG) practices. In Indonesia, this support is evident in the requirement for all firms listed on the Indonesia Stock Exchange (IDX) to report their ESG practices. This research seeks to determine whether firms with high environmental sustainability scores are associated with financial constraints. We used data from 65 non-banking firms in Indonesia for the period from 2013 to 2022 to answer this research question. The findings of this study suggest that firms with high scores for environmental sustainability practices are more likely to face financial constraints. This could be due to the fact that, within Indonesia, such practices are predominantly adopted by smaller and newer firms. On the other hand, the leverage measure indicates that firms with robust environmental sustainability practices typically have lower levels of debt. Our research findings suggest that firms should be more proactive in improving their environmental compliance both larger and small firms through active supervision from independent boards to increase the firm’s financial access and avoid financial constraints.

The research on management control systems (MCS) is developing in recent decades. However, there is an existing gap in the available literature concerning a comprehensive overview of MCS research. Therefore, this research aimed to provide a summary of the most recent investigation on the relationship between MCS research. To achieve this aim, VOSViewer and R were used as the main analytical tools where data were obtained from the Scopus database from 2003 to 2023. In addition, co-word and co-authorship analyses were used, and the results showed that there was a significant increase in the last two decades despite experiencing fluctuations. The development was determined by several factors, including national productivity, universities as study centers, organizational funding sponsors, journals as publication centers, and author productivity. This exploration identified some well-established themes, namely management control systems, performance management, performance appraisal, human resource management, and performance measurement. However, some themes still needed further development, such as performance indicators, supply chain, recruitment and selection, developing countries, business intelligence, ethics, decision making, governance, and business performance. The development also provided a comprehensive synthesis of fragmented documents and proposed potential themes for future research.