Perception analysis on Indonesian university governance disclosure

A. Setiawan, D. Tanumihardja, G. Lusanjaya, M. Sylviana & C. Melinda

Accounting Department, Parahyangan Catholic University, Bandung, Indonesia

ABSTRACT: Corporate accountability depends on information disclosures by the company to its stake­holders.

KEYWORDS: good university governance, accountability, transparency

1 INTRODUCTION

Indonesia Corruption Watch (ICW) has reported 37 cases of alleged graft in higher education institutions within the last ten years (Yuntho 2016). Alleged graft cases in higher education institutions were not only found in Indonesia, but also in other countries, such as Singapore (Straits Times 2014) and Georgia (Janashia 2004).

This significant impact encourages many govern­ments in developed countries to establish regulations on good governance for NFPs, such as in Canada (Canada Not-for-Profit Corporations Act), Singapore (Code of Governance for Charities), and U.K. (The Good Governance Standards for Public Service). NFPs may take form as organizations in education, health, or other sectors. Meanwhile, in developing countries, there is no regulation on good governance. This research focuses on education because it is important in educating young generation as the future of the nation. To achieve its goals, a university must ensure to undertake its organizational focus, perform internal operations effectively, manage risks adequately, involve all stakeholders, and demon­strate accountability properly (Office for Public Management, 2004). Therefore, it is necessary to have a good management by implementing univer­sity governance.

Principles of Good Governance, including Good University Governance, consists of (1) focusing on the organization’s purpose and on outcomes, (2) per­forming effectively in clearly defined functions and roles, (3) promoting values for the whole organiza­tion and demonstrating the values of good govern­ance through behavior, (4) taking informed, transparent decisions and managing risks, (5) devel­oping the capacity and capability of the governing body to be effective, (6) engaging stakeholders and making accountability real (Office for Public Man­agement, 2004; Tamin 2015; Suryani 2015).

Stakeholders of a university consist of: (1) lectur­ers, (2) students, (3) parents, (4) education observers, (5) regulator, and (6) alumni/community. Each group of stakeholders has different interest on university management. The five stakeholders can be

categorized as education observers, so education observers are excluded in this research. To meet their expectations, information transparency is important. Transparency of a university is communi­cated through information disclosures using media acceptable for all parties. In this era of information and communication technology (ICT), a university may use its official website to disclose information.

The benefits of this research are as follows: (1) for the regulator in Indonesia, this research may serve as an input in developing advanced regulation on the management of higher education institutions; (2) for regulators in other countries, this research can be referred in developing regulation based on the case sample in emerging country; (3) for university management, this research may provide some insight to enrich consideration in decision-making regarding information disclosure for public.

2 LITERATURE STUDY AND RESEARCH

QUESTIONS

2.1 University governance

In developed countries, university governance is regulated by issuing common standard across the nation. One example is Committee of University Chairs in the U.K., which issues The Higher Educa­tion Code of Governance in 2014 to support mem­bers of governing bodies identifying the key values and practices of effective governance (Committee of University Chairs, 2014). Meanwhile, in the Nether­lands, an evidence-based management approach is developed for creating effective higher educational institutions (Waal & Kerklaan 2015). It is important that all evidence should be disclosed for all the stakeholders.

In Latin America, there was a change of external bodies which urged universities to be more con­cerned about information disclosures undertaken for their stakeholders (Balan 2006), whereas Thailand began to establish national standard dealing with communication and information technology (Sub- sermsri et al. 2015). However, the similar fact can also be found in developed countries such as Austra­lia (Ali & Green 2007). Meanwhile, in Ghana, a uni­versity may choose one of three given models of university governance, i.e. (1) traditional model, (2) business model, and (3) trusteeship model (Tetteh & Ofori 2009).

RQ#1: How does university governance in Indo­nesia regulated?

2.2 Transparency and disclosure

Disclosure is any form of corporate communication conducted voluntarily, either on website or in other company reports (Bhasin 2010). Corporate account­ability depends on information disclosures or publi­cations by the company to its stakeholders. However, there is no general standard on the form, content, and reliability of the disclosures, either established by the regulator or related parties, such as companies who perform the disclosures and stake­holders as the users (Spira & Page 2010). Since each group of stakeholders needs different types of infor­mation, it is necessary to identify what type of infor­mation each of them needs.

RQ#2: What are types of information needed by each group of stakeholders?

2.3 Relationship between disclosure and satisfaction

Many organizations assume that the users of their disclosures are satisfied, but results show dissatisfac­tion with this disclosure (Ferchichi & Paturel 2016).

RQ#3: What is the relationship between disclos­ure and satisfaction?

3 METHODOLOGY

The first data collection was conducted by identify­ing regulations in other countries and comparing those with regulation in Indonesia. Meanwhile, second data collection was exercised by employing focus group discussion (FGD) to obtain preliminary data used for the questionnaire. Invited stakeholders were to identify preliminary information about infor­mation needed by the stakeholders inthe FGD. Finally, the third data collection was performed by distributing questionnaires via email. In other words, this research was conducted through several steps as follows: (1) the FGD involving all stakeholders to compose a questionnaire, (2) Preliminary survey by distributing questionnaires in 2 weeks for identifying information needed by lecturers and students as pri­mary stakeholders (while alumni/community are cat­egorized as secondary stakeholders due to their interest of the governance of the university), and (3) Research survey by distributing research question­naire to all stakeholders.

This research was conducted through three stages: (1) FGD, (2) preliminary survey, and (3) research survey. The first stage is used to answer RQ#2 and confirm RQ#1, whereas the third stage is employed to resolve RQ#3.

4 Resultanddiscussion

4.1 Regulation of university governance

There is no global standard of regulation on good university governance. In developed countries, such as Canada (Jones et al. 2001), a research on the evo­lution of university governance found out that there are differences in management due to size, as well as socio-culture and political environment of each uni­versity. However, they all shared universal prin­ciples, namely (1) more transparent governance process, (2) more exceptional faculty and student participation, and (3) more significant role of gov­erning boards and Senates.

Thailand, as a developing country, has involved ICT implementation in supporting university govern­ance (Jairak & Praneetpolgrang 2013). Meanwhile, in Indonesia, good university governance must cover

(1) autonomy of higher education institutions, (2) the management system of higher education institu­tions, (3) university governance, and (4) public accountability (Pemerintah Republik Indonesia 2014). Based on the abovementioned explanation, the first research question is resolved. It can be deduced that transparency is a source of information needed by all stakeholders.

4.2 The need of information of university’s stakeholders

RQ#2 is answered through FGD followed by prelim­inary survey. FGD aims to obtain preliminary infor­mation from variety of stakeholders for their information needs. As a result, a university is expected to disclose transparency on: (1) operations,

(2) financial management, (3) HR qualification, and (4) organizational structures. Based on the result of FGD, preliminary survey was conducted on some stakeholders to investigate the extent of information needed, the information channel used, and which stakeholder has the largest interest on information disclosure of a university.

The result of survey from 307 respondents in Indonesia can be observed in Table 1. The profile of the respondents is as follows: 60.5% are female and 39.5% are male; 96.4% are domicile in Java; 53% are students, 6.9% are lecturers, 4.7% are parents, 2.3% are regulators, and 33.9% are alumni/commu- nity. In this research, the community and alumni are put in one category because the alumni can become a member of community and has similar interest. To be concluded, HR qualification is the main informa­tion needed by lecturers, whereas parents consider financial management is less important than

Table 1a. Information need of stakeholders #1.

Table 1b. Information need of stakeholders #2.

transparency of university operations, HR qualifica­tion, and organizational structures. Meanwhile, alumni and community prioritize information trans­parency on university operations, financial manage­ment, and HR qualification rather than information about organizational structures.

Tables 1a and 1b indicate that different experi­ences and interests of each respondent group resulted in different information needs. For lecturers in Indo­nesia who are required by regulator to improve their professionalism, HR qualification becomes the pri­mary information they want to know. They concern HR qualification of their university compared to others. Meanwhile, each aspect of information is considered necessary for regulator to observe trans­parency of certain university. For parents, informa­tion about educational operations, which may affect the success of study in the university, must be more important than that of its financial management. As for alumni/community with indirect interaction with university governance, information on organizational structures is less important than transparency of other aspects.

Regarding the channel of information, respond­ents were asked to choose three primary media as their preferences to obtain information about a uni­versity. The result presented in Tables 2a and 2b

Table 2a. Preference of information channels #1.

Table 2b. Preference of information channels #2.

demonstrates that website becomes the primary information channel chosen by all stakeholders. Sur­prisingly, social media as today’s favorite of the younger generation is not the first choice. It is assumed that, for formal communication, it is pre­ferred through formal channel, namely website or email. However, the table shows a shift in social media usage for information based on age group. Assumed as the oldest generation among respondent groups, only 20% parents use social media as source of information. The percentage increases to 24% among lecturers and 30% among alumni/community, whereas students as the youngest generation become the largest social media user with 33% among all respondent groups. Therefore, universities should prioritize website in information disclosure practices since it is the first preference of information channel.

4.3 Relationship between disclosure and satisfaction

RQ#3 can be answered by research survey, which only involved 3 respondent groups, namely lecturers, students, and alumni/community as stakeholders of university information disclosure based on prelimin­ary survey conducted before. The questionnaires were distributed to respondents consisting of 49 lec­turers from 13 universities in Indonesia, 512 students from 56 universities in Indonesia, and 164 members of alumni/community.

Table 3 displays average scoring of importance level of information. The scoring system ranges from 1 as the minimum score, which means the information is very unimportant, to 5 as the max­imum score, which means the information is very important. Compared to other respondent groups, lecturers gave the highest scores for transparency in operations, financial management, HR qualification, and organizational structures. On the contrary, stu­dents gave the lowest scores for those areas of trans­parency. Based on the result, it can be concluded that respondent group having direct interest on university management will give higher scores than those given by respondent group with indirect interest on the subject. Regarding the respondent group of students, despite having direct interest on the subject, it is assumed that they have little concern on university governance and transparency because of their matur­ity level. Older respondents have more concern on the information while younger ones have been more indifferent about information disclosed by the university.

In identifying factors correlated with website sat­isfaction, a correlation analysis was conducted. The correlation analysis is conducted to four areas of information disclosed by the university.

Tables 4a and 4b present correlation analysis between website satisfaction and the four areas of transparency, namely operations, financial manage­ment, HR qualification, and organizational structures of a university. The result shows that those four areas of transparency have no significant correlation with website satisfaction. Therefore, it can be con­cluded that despite considering university’s website as the most favorite channel to obtain information about the certain university, respondents do not browse further for its operations, financial manage­ment, HR qualification, and organizational structures.

Table 4a. Correlation analysis #1.

Table 3. Average scoring of importance level.

Alumni &

structures

Table 4b. Correlation analysis #2.

5 CONCLUSION

Stakeholders’ need of information reflected prevail­ing regulation in Indonesia, i.e. need of transparency. Therefore, it is recommended that a university dis­close information based on priority as follows: (1) operations, (2) HR qualification, (3) organizational structures, and (4) financial. Regarding channel of information, respondents of this research chose uni­versity’s website as their first preference, followed by university’s publication. Furthermore, website satisfaction had no correlation with information transparency. As a recommendation, advance researches can be conducted to examine (1) the extent of university’s website in providing informa­tion needed by stakeholders, and (2) the relation between different generations and information and communication technology.

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