How to cite:
Riwandari Juniasti. (2022). Analysis of the Influence of the Board of
Directors, Company Size, Management Ownership, and Kap Audit on
the Financial Performance of Bank Perkreditan Rakyat (BPR). Journal
Eduvest. Vol 2(2): 397-405
E-ISSN:
2775-3727
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Eduvest – Journal of Universal Studies
Volume 2 Number 2, February 2022
p- ISSN 2775-3735 e-ISSN 2775-3727
ANALYSIS OF THE INFLUENCE OF THE BOARD OF
DIRECTORS, COMPANY SIZE, MANAGEMENT
OWNERSHIP, AND KAP AUDIT ON THE FINANCIAL
PERFORMANCE OF BANK PERKREDITAN RAKYAT (BPR)
Riwandari Juniasti
Universitas Kristen Indonesia
Email: [email protected]
ARTICLE INFO ABSTRACT
Received:
January, 26
th
2022
Revised:
February, 17
th
2022
Approved:
February, 18
th
2022
This study aims to analyze the effects of the board of directors, firm
size, managerial ownership, and audit of KAP (Public Accounting
Firm) audit on the financial performance of Bank Perkreditan
Rakyat (BPR). This type of research is associative research. In this
study, the population of rural banks located in the Bekasi area was
used. The data obtained is based on financial reports that have
been published on the website of the Financial Services Authority
(www.ojk.go.id) for the period 2018-2021. The data obtained from
the results of the study were analyzed using multiple linear
regression analysis models using the Eview 10 software program.
The results showed that the KAP audit variable had a significant
influence on the return on assets of rural banks in the Bekasi area.
This is because the resulting p-value is smaller than 0.05. Then the
firm size variable significantly affects non-performing loans with a
negative relationship direction. The KAP audit variable was also
proven to have a significant effect on non-performing loans with a
similar direction, namely negative. Both are able to affect non-
performing loans because the p-value obtained is smaller than
0.05. Simultaneously also found the effect of the board of directors,
company size, managerial ownership, and KAP audits on the return
on assets or non-performing loans of BPRs in the Bekasi area for
the 2018-2021 period.
KEYWORDS
Board of Directors, Company Size, Managerial Ownership,
KAP Audit, Return on Assets, Non Performing Loan
This work is licensed under a Creative Commons
Attribution-ShareAlike 4.0 International
Riwandari Juniasti
Analysis of the Influence of the Board of Directors, Company Size, Management
Ownership, and Kap Audit on the Financial Performance of Bank Perkreditan Rakyat
(BPR) 398
INTRODUCTION
In this era of free competition, banks must be good at reading opportunities and
taking advantage of them in order to survive. Various methods are used by banks to
increase market share and profits (Indiatsy, Mucheru, Mandere, Bichanga, & Gongera,
2014). One way that can be done to improve banking performance is through the
implementation of Good Corporate Governance (GCG) (Napitupulu, Primiana, Nidar,
Effendy, & Puspitasari, 2020). The The factor that underlies the company implementing
GCG is due to the agency theory which assumes a conflict of interest between the
executive (agent) and the shareholders (principal) and other stakeholders, where the
company's management does not act in the interests of shareholders but prioritizes the
interests of shareholders (Jahja, Mohammed, Lokman, & Mohamed, 2020). himself. In
such conditions, GCG is present. The implementation of GCG is expected to increase
supervision over management to encourage effective decision making, prevent
opportunistic actions that are not in line with the interests of the company, and reduce
information asymmetry between executives and company stakeholders. Thus, GCG is
expected to be able to create conducive conditions and a solid foundation for a good
Rural Bank (BPR) operation (Manor & Desiana, 2018). Rural Banks (BPR) are banks that
carry out conventional business activities which in their activities do not provide services
in payment traffic as referred to in the Law concerning banking (Financial Services
Authority Number 4/POJK.03/2015).
Based on the Financial Services Authority Regulation Number 4/POJK.03/2015
concerning the Implementation of Governance for Rural Banks, it is stated that
Governance is the governance of BPRs that apply the principles of transparency,
accountability, and responsibility independence (independency), and fairness (fairness).
BPRs are required to implement Good Corporate Governance in each of their business
activities at all levels or levels of the organization (Harjanto, 2019). One of them is
implementing regulations regarding the number of directors based on core capital, a BPR
with a core capital of at least 50 billion must have at least 3 (three) directors and a BPR
with a core capital of less than 50 billion must have at least 2 (two) members of the board
of directors. . Even for share ownership alone, the directors, either individually or jointly,
are prohibited from owning shares of more than 25%. OJK also regulates the
implementation of an external audit function, in this case BPRs are required to appoint a
Public Accountant and a Public Accounting Firm to conduct an annual audit. BPRs are
required to implement Good Corporate Governance in each of their business activities at
all levels or levels of the organization (Endah, Tarjo, & Musyarofah, 2020). The
implementation of Good Corporate Governance in financial institutions is important to do
in order to further foster trust in the community and improve banking performance and
progress (Olannye & Anuku, 2014). The problem of Good Corporate Governance and
corporate ownership structure is not new, especially public companies which are usually
owned by many shareholders (Jiang & Kim, 2020). Several studies have tested the effect
of GCG on the company's financial performance. Sa'diyah (2020) examines the Effect of
Good Corporate Governance on the Financial Performance of Islamic Commercial Banks
in Indonesia, finding that corporate governance proxied by the Board of Commissioners,
Independent Board of Commissioners, Board of Directors and Sharia Supervisory Board
has no effect on financial performance. Saidat et al. (2018) also in his research examining
the relationship between GCG and the financial performance of companies in Jordan,
found that board size has a negative relationship with the performance of family
Eduvest – Journal of Universal Studies
Volume 2 Number 2, February 2022
399 http://eduvest.greenvest.co.id
companies. On the other hand, board size in non-family firms has no systematic
relationship with firm performance (Saidat, Silva, & Seaman, 2019).
The financial report is an information product produced by the company, and is a
very important instrument related to the condition of the company (Lev, 2018). Therefore,
every policy and decision taken in the process of preparing financial statements will
greatly influence the assessment of the company's performance (Lev, 2018). According to
POJK No. 4/POJK.03/2015 concerning Implementation of BPR Governance Article 76,
RBs are required to send reports on the implementation of governance to the Financial
Services Authority, the BPR Association in this case Perbarindo, and to 1 (one) media
office or economic and financial magazine. Based on the data from Perbarindo, the names
of 32 BPRs in the Bekasi area were taken which sent reports on their governance
implementation as well as the published financial reports of BPRs for the first quarter of
2019 - until the second quarter of 2021 in the Bekasi area from the website of the
Financial Services Authority.
By nature, banks are no different from other commodity companies or service
companies. In this case, the bank produces output in the form of credit and input in the
form of public savings funds (Bvirindi, 2021). Thus, banks can bridge the interests of the
owners of funds with those who need funds or are called carrying out the intermediation
function (Disemadi, 2019). The banking industry has a very important role in economic
development. The history of the Indonesian economy shows that the Indonesian economy
moves in tandem with the banking industry (Rizvi, Narayan, Sakti, & Syarifuddin, 2020).
The Indonesian economy is a bank-based economy, an economy that depends on the
existence of banks as a source of financing. Therefore, efforts to strengthen a healthy,
efficient and beneficial banking system for the economy are the key to success in
maintaining the sustainability of national economic development (Zhang, Shi, Zhang, &
Xiao, 2019).
Examines the relationship between the GCG index and five financial
performance measures (Suhadak, Rahayu, & Handayani, 2019). Partially, no statistically
significant relationship was found. Simultaneously, however, statistically significant
relationships emerged in both directions for most financial performance measures. Then
Mahrani & Soewarno (2018) tested the effect of Good Corporate Governance and
Corporate Social Responsibility on the company's financial performance, from the results
of testing and analysis of the GCG and CSR mechanisms that had a positive effect on
financial performance and earnings management.
Based on the study of thought above, the researcher is interested in raising the
title "Analysis of the Influence of the Board of Directors, Company Size, Managerial
Ownership, KAP Audit on the Financial Performance of BPRs in the Bekasi Region for
the 2018-2021 period”.
RESEARCH METHOD
This research is an associative type, where the research uses four
independent variables, namely (board of directors, company size, managerial
ownership, and KAP audit) and two dependent variables (return on assets and
non-performing loans). This type of data collection uses secondary data obtained
from quarterly BPR financial reports published by the Financial Services
Authority (www.ojk.go.id) for the period March 2018 - June 2021 from a BPR in
the Bekasi area who sends a report on the implementation of its governance to the
Riwandari Juniasti
Analysis of the Influence of the Board of Directors, Company Size, Management
Ownership, and Kap Audit on the Financial Performance of Bank Perkreditan Rakyat
(BPR) 400
BPR Association, in this case Perbarindo. The data analysis method used in this
study is simple regression analysis with assistance program Eviews 10. The
following will explain the operational definition of each variable.
Table 1 Operationalization of Research Variables
Kind of
Variable
Variable
Name
Scala
Independent
Board of
Directors
Dummy = complete 1, incomplete
0
Company
Size
Ln (Total Assets)
Managerial
ownership
Dummy = There is 1, there is not 0
KAP
Audit
Dummy = KAP audit 1, no KAP
audit 0
Dependent
Financial performance
Source: Research Results (2021)
RESULT AND DISCUSSION
Classic assumption test
One of the classic assumptions used in this research is the normality test. Where
in this study there are two dependent variables, so that the results of the normality test are
presented as follows:
Table 2 Normality Test Model 1
Variabel Dependen
Jarque-Bera
Probability
Return on Asset
66570.87
0.000000
Source: Data Processing Results with Eviews version 10 (2021)
The results of the normality test of model 1 obtained a Jarque-Bera value of
66570.87 with a probability value of 0.000000 which is smaller than a significant level of
0.05, so it is stated that the data in this study is not normally distributed. Because the
results of the normality test in model 1 are not normally distributed, the data is regressed
using the eviews application and using the Newey-West HAC test. Where this method is
one way of dealing with data that are not normally distributed or data variants are not
homogeneous. For the results of the second model normality test as follows:
Table 3 Normality Test Model 2
Variabel Dependen
Jarque-Bera
Probability
Non Performing Loan
331.9191
0.000000
Source: Data Processing Results with Eviews version 10 (2021)
Furthermore, the results of the normality test of model 2 show that the Jarque-
Bera value is 331.9191 with a probability value of 0.000000 which is smaller than the
0.05 significant level, so it can be concluded that the data in this study is not normally
Eduvest – Journal of Universal Studies
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distributed. Because the results of the normality test in model 2 are not normally
distributed either, the data is regressed using the eviews application and the Newey-West
HAC test.
Multiple Linear Regression Test
Because the data in model 1 and model 2 are not normally distributed, the data
analysis in this study used multiple linear regression analysis with the Newey-West HAC
test. The results of the Newey-West HAC test with multiple linear regression are
presented in table 4 below.
Table 4 Newey-West Model 1 . HAC Test Results
Variable
Coefficient
Std. Error
t-Statistic
Prob.
C
10.95765
2.558122
4.283475
0.0000
BOARD OF
DIRECTORS
-1.050886
1.902787
-0.552288
0.5810
SIZE
5.93E-09
3.49E-09
1.700895
0.0897
KEPMAN
-0.795014
0.952309
-0.834827
0.4043
AUDIT
-6.910605
2.472688
-2.794774
0.0054
Source: Data Processing Results with Eviews version 10 (2021)
Based on the results of the regression model 1 output that has been carried out in
this study, a regression equation model can be made as follows:
ROA_Y1 = 10.95765 – 1.050886DIREKSI + 5.93 SIZE – 0.795014KEPMAN –
6.910605 + ε
Table 5 Newey-West Model 2 . HAC Test Results
Variable
Coefficient
t-Statistic
Prob.
C
21.54757
7.059691
0.0000
BOARD OF
DIRECTORS
-3.417810
-1.873868
0.0616
SIZE
-2.17E-08
-4.301113
0.0000
KEPMAN
-1.108887
-0.748871
0.4543
AUDIT
-7.087053
-2.697278
0.0073
Source: Data Processing Results with Eviews version 10 (2021)
Based on the results of the regression model 2 output that has been carried out in
this study, a regression equation model can be made as follows:
NPL_Y2 = 21.54757– 3.417810DIREKSI - 2.17SIZE – 1.108887KEPMAN –
7.087053AUDIT + ε
Hypothesis testing
Hypothesis testing is a testing procedure that will result in a decision, namely the
decision to accept or reject the hypothesis in a study. Hypothesis testing in this study uses
partial hypothesis testing (t test), coefficient of determination test (R2), and F test.
t test (Partial Hypothesis Testing)
Statistical t test is used to determine the effect of an independent variable individually in
explaining the variation of the dependent variable (Ghozali, 2013). Criteria for acceptance
and rejection of the hypothesis are based on the significance value of p-value.
If the p-value (significance) > 0.05, the research hypothesis is rejected.
Riwandari Juniasti
Analysis of the Influence of the Board of Directors, Company Size, Management
Ownership, and Kap Audit on the Financial Performance of Bank Perkreditan Rakyat
(BPR) 402
If the p-value (significance) <0.05, the research hypothesis is accepted.
Based on the results of testing the partial hypothesis (t test) in the previous table,
it can be concluded:
1. Influence of the Board of Directors on Financial Performance Return on Assets
Based on the table, the beta coefficient value for the model 1 board of directors variable is
-1.050886 with a negative relationship direction, the p-value of model 1 is 0.5810 > 0.05.
Thus it can be concluded that the board of directors has no effect on the return on assets
of the BPR.
2. The Effect of Firm Size on Financial Performance Return on Assets
Based on the table, the beta coefficient value of the model 1 firm size variable is 5.93 and
the p-value of model 1 is 0.0897 > 0.05. Thus it can be concluded that the size of the
company has no effect on the return on assets at BPR.
3. The Effect of Managerial Ownership on Financial Performance Return on Assets
Based on the table, the beta coefficient value of the managerial ownership variable model
1 is -0.795014 with a negative relationship direction, the p-value of model 1 is 0.4043 >
0.05, in this model the p-value is greater than 0.05 so that concluded that managerial
ownership has no effect on return on assets at BPR.
4. The Effect of KAP Audit on Financial Performance Return on Assets
Based on the table, the beta coefficient value of the audit variable KAP model 1 is -
6.910605 with a negative relationship direction, the p-value of model 1 is 0.0054 <0.05.
The KAP audit variable model 1 has a p-value that is smaller than 0.05, which means that
the fourth hypothesis is accepted.
5. Influence of the Board of Directors on the Financial Performance of Non-Performing
Loans
Based on the table, the beta coefficient value for the board of directors variable model 2 is
-3.417810 with a negative relationship direction, the p-value of model 2 is 0.0616 > 0.05.
Thus it can be concluded that the board of directors has no effect on non-performing
loans at BPR.
6. The Effect of Firm Size on the Financial Performance of Non-Performing Loans
Based on the table, the beta coefficient value of the model 2 firm size variable is -2.17
with a negative relationship direction, the p-value of model 2 is 0.0000 <0.05. Thus, it
can be concluded that company size has effect on non-performing loans at BPR.
7. The Effect of Managerial Ownership on the Financial Performance of Non-Performing
Loans
Based on the table, the beta coefficient value of the managerial ownership variable model
2 is -1.108887 with a negative relationship direction, the p-value of model 2 is 0.4543 >
0.05. Thus, it can be concluded that managerial ownership has no effect on non-
performing loans at BPR.
8. The Effect of KAP Audits on the Financial Performance of Non-Performing Loans
Based on the table, the beta coefficient value of the audit variable KAP model 2 is -
7.087053 with a negative relationship direction, the p-value of model 2 is 0.0073 <0.05.
The p-value obtained is smaller than 0.05, so it can be concluded that the KAP audit has
effect on non-performing loans at BPR.
Eduvest – Journal of Universal Studies
Volume 2 Number 2, February 2022
403 http://eduvest.greenvest.co.id
Coefficient of Determination Test
The coefficient of determination (R2) test explains the percentage of total
variation in the dependent variable which is explained together. R2 describes the measure
of conformity (goodness of fit), namely the extent to which the sample regression line
matches the existing data. The criterion is that the higher the value of R2 (R2 is close to
1), the better the regression line of the sample. The results of the coefficient of
determination in this study are as follows:
Table 6. Coefficient of Determination Test Results (R2)
R-Squared
Model 1
0.031170 (3,11%)
Model 2
0.133453 (13,34%)
Source: Data Processing Results with Eviews version 10 (2021)
Based on Table 6 above, it is known that the results of the coefficient of
determination test of the two models in this study will be explained below.
1. The R-square value in model 1 is 0.031170, this indicates that 3.11% of the variables
of the board of directors, firm size, managerial ownership, and audit firm are influenced
by the return on assets variable, while the remaining 96.89% is influenced by other
variables. outside of the research.
2. The R-square value in model 2 is 0.133453 this shows that 13.34% of the board of
directors variables, company size, managerial ownership, and KAP audit are influenced
by non-performing loans, while the remaining 86.66% is influenced by other variables.
outside of the research.
F test (simultaneous hypothesis testing)
The F test (simultaneous test) is used to test whether together all independent
variables have a significant effect on the dependent variable. The results of the F test are
presented in the following table:
Table 7 F-test
F-statistic
Prob (F-statistic)
Model 1
3.5551/12
0.007206
Model 2
17.01758
0.000000
Source: Data Processing Results with Eviews version 10 (2021)
Referring to the table above, the significant value of p-value for model 1 is 0.007
< 0.05, with a statistical F value of 3.555 > 2.625. This means that the variables of the
board of directors, company size, managerial ownership, and KAP audit together have a
significant influence on the return on assets of BPR.
Then the p-value of model 2 is 0.000 <0.05, with a statistical F value of 17.017 >
2.625. Thus, the variables of the board of directors, firm size, managerial ownership, and
KAP audit together have a significant influence on non-performing loans in rural banks.
Riwandari Juniasti
Analysis of the Influence of the Board of Directors, Company Size, Management
Ownership, and Kap Audit on the Financial Performance of Bank Perkreditan Rakyat
(BPR) 404
CONCLUSION
This study aims to determine the effect of the board of directors, firm size,
managerial ownership, and KAP audit on return on assets and non-performing loans at
BPR. Based on the explanation above, it is concluded that it is proven that in model 1
only KAP audits have a significant influence on return on assets. Meanwhile, for model 2,
firm size and KAP variables have a significant negative effect on non-performing loans.
Simultaneously the board of directors, company size, managerial ownership, and KAP
audits are able to have an influence on both the return on assets and non-performing loans
of BPR Bekasi area for the 2018-2021 period.
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