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The 13th _{UBAYA International Annual Symposium on Management} MARKET INTEGRATION IN ASEAN:

SUSTAINABLE GROWTH AND CROSS CULTURAL ISSUES

Editors:

Dudi Anandya, PhD. Edithia Ajeng P, SE.

Phan Thi Hong Xuan, Prof. PhD. Nguyen Ngoc Tho, PhD.

Do Hoang Phuong An, M.A. Reviewers:

Candra S. Chayadi, Ph.D. (School of Business, Eastern Illinois University) Dudi Anandya, Dr (University of Surabaya)

Joniarto Parung, Ph.D, Prof. (Universitas Surabaya) Ning Gao, Ph.D. (Manchester Business School)

Wahyu Soedarmono, Ph.D. (Research Analyst, the World Bank, Jakarta) Yuanto Kusnadi, Ph.D. (City of Hong Kong University)

Tran Nam Tien, Dr. Prof. (USSH, VNU-HCM) Huynh Ngoc Thu, Dr. (USSH, VNU-HCM) Tran Anh Tien, Dr. (USSH, VNU-HCM) Published by:

Department of Management, Faculty of Business & Economics, University of Surabaya

Jl. Raya Kalirungkut

Surabaya, Indonesia 60293

Phone: +62-31-2981139; Fax : +62-31-2981239

University of Social Sciences and Humanities, Vietnam National University Ho Chi Minh City, Vietnam

10-12 Dinh Tien Hoang, Ben Nghe Ward, District 1, HCMC Phone: (84 - 8) 38293828; Fax: (84 - 8) 38221903

ISBN (Indonesia): 978-602-73852-0-7 ISBN (Vietnam): 978-604-73-4020-0

Copyright © 2015 Department of Management, Faculty of Business & Economics, University of Surabaya - University of Social Sciences and Humanities, Vietnam National University Ho Chi Minh City (USSH, VNU-HCM).

CONTENTS

FOREWORD ... iii CONTENTS ... v

FINANCE & ACCOUNTING

1. RISK TAKING AND PROFITABILITY: EVIDENCES FROM INDONESIA

Abdul Mongid, Muazaroh ... 3 2. CAPITAL ADEQUACY RISK AND SYSTEMIC RISK: AN EFFORT TO

ANTICIPATE BANKING CRISIS WITH SYSTEMIC IMPACT

Alfiana ... 17 3. CD INDEX, A NEW METHODS FOR MEASURING BANKING CRISIS

Amir Ambyah Zakaria, Musdholifah ... 33 4. THE EFFECT OF GOOD CORPORATE GOVERNANCE TO STOCK

RETURN IN INDONESIAN MOST TRUSTED COMPANY FOR 2006 – 2013 PERIOD

Andreas Kiky, Michael Chris Ardhitya ... 46 5. THE DETERMINANT OF INDONESIA’S ISLAMIC RURAL BANKING

RISK TAKING

Anggraeni ... 56 6. FREEDOM OF CONTRACT: RISK MANAGEMENT PRACTICES IN

MANAGING FRANCHISE BUSINESS

Aris Armuninggar ... (Abstract only) 7. BUSINESS STUDENT’S FINANCIAL LITERACY IN SURABAYA: ARE

THEY GOOD ENOUGH?

Aulia Imiaf ... (Abstract only) 8. THE IMPACT OF TRADE LIBERALISATION ON THE ECONOMIC

PERFORMANCE OF ASEAN COUNTRIES

Awan Setya Dewanta ... 70 9. FINANCIAL PERFORMANCE IMPACTS OF CORPORATE

ENTREPRENEURSHIP

Bertha Silvia Sutejo ... 85 10. FRAMING EFFECT TO INVESTOR REACTION BASED ON GENDER

PERSPECTIVE: AN EXPERIMENTAL STUDY

11. THE INFLUENCE OF ENVIRONMENTAL MANAGEMENT ACCOUNTING TOWARD THE COMPANY PERFORMANCE AND STAKEHOLDERS

Candra Sinuraya ... 111 12. GENDER COLLABORATION ROLE IN ANALYZING AND

MANAGING RISKS AT BODY REPAIR “X” IN MALANG

Debby Andriani, Fidelis Arastyo Andono ... 120 13. A SIMPLE STRESS TEST ON INDONESIAN ISLAMIC

BANKING INDUSTRY

Dece Kurniadi, Sutan Emir Hidayat ... 135 14. THE INFLUENCES OF INVESTMENT OPPORTUNITIES AND

PROFITABILITY ITS POLICIES DIVIDEND AT LQ45 COMPANY

Dede Hertina ... 153 15. INVESMENT OPPORTUNITY SET BASED INDUSTRIAL GROWTH IN

INDONESIAN MANUFACTURE

Eka Handriani ... 169 16. ILLIQUIDITY, MARKET CHARACTERISTIC AND STOCK RETURN (A

STUDY AT INDONESIA STOCK EXCHANGE)

Erman Denny Arfinto, Putri Nur Rositawati ... 188 17. THE EFFECT OF CORPORATE GOVERNANCE MECHANISM ON

FINANCIAL PERFORMANCE WITH AGENCY COST AS INTERVENING VARIABLE

Finda Selli Anditya, Sutrisno ... 201 18. BANKING INTEGRATION AMONG EMERGING AND DEVELOPED

MARKET COUNTRIES: EVIDENCE FROM SOUTH EAST ASIA

Ghalih R Viratama, Harjum Muharam ... 215 19. IMPACT OF INTERNAL AND EXTERNAL FACTORS ON STOCK

RETURN IN INDONESIA STOCK EXCHANGE

Gusni ... 229 20. THE EXAMINING CAPITAL STRUCTURE DETERMINANTS:

EMPIRICAL ANALYSIS OF REGIONAL DEVELOPMENT BANKS IN INDONESIA

Hamdi Agustin, Detri Karya, Suyadi ... 252 21. ANALYSIS OF FACTORS AFFECTING THE PREDICTING

BANKRUPTCY PRIVATE BANKS IN INDONESIA

Hasrizal Hasan , Hamdi Agustin, Eva Sundari, Yul Efnita ... 266 22. THE EFFECT OF ENTERPRISE RISK MANAGEMENT DISCLOSURE

AND ACCOUNTABILITY OF FINANCIAL REPORT TOWARD FIRM VALUE (A CASE OF INSURANCE FIRMS LISTED IN

INDONESIAISTOCK EXCHANGE)

Ifada Diah Ayu Rizka, Zaenal Arifin ... 277 23. ANALYSIS OF FACTORS AFFECTING THE CAPITAL STRUCTURE IN

INDONESIA STOCK EXCHANGE

Indira Kurniasari, Werner R. Murhadi, Mudji Utami ... 290

24. STUDY OF FINANCIAL LITERACY ON MAGISTER MANAGEMENT

XTUDENTS: DEMOGRAPHIC REVIEW (not abstract)

Rr. Iramani ... 299

25. ASYMMETRY INFORMATION AND CREDIT RISK EFFECT ON LOAN PRICING IN ASIA PACIFIC

Ivana Alim, Deddy Marciano, Liliana Inggrit Wijaya ... 312 26. ANALYSIS OF THE DAY OF WEEK EFFECT, WEEK FOUR EFFECT,

ROGALSKY EFFECT, AND JANUARY EFFECT ON STOCK RETURN IN INDONESIA STOCK EXCHANGE

Kartini, Meilya Dian Santika ... 326 27. PERFORMANCE AND RISK ANALYSIS BETWEEN JAKARTA

ISLAMIC INDEX AND LQ45

Luluk Kholisoh, Sulistyani Rahmah Indah, Untara ... (Abstract only) 28. THE EFFECT OF INTERNATIONALIZATION TO RISK IN

INDUSTRIAL MANUFACTURING COMPANY THAT LISTED ON THE INDONESIA STOCK EXCHANGE 2010-2014 PERIOD

Mechiko, Deddy Marciano, Arif Herlambang ... 344 29. BIAS REPRESENTATIVENESS WITH TREND AND SEQUENCES

APPROACH: THE OVERVALUE/UNDERVALUE, MOMENTUM AND REVERSAL RETURN TEST

Putu Anom Mahadwartha, Bertha Silvia Sutejo ... 359 30. RISK MANAGEMENT IN INDONESIA TO CREATE HEALTHY

COMPANY IN ASEAN ECONOMIC COMUNITY

Rosemarie Sutjiati ... 383 31. FINANCIAL LITERACY STUDY OF MAGISTER MANAGEMENT

STUDENTS: DEMOGRAPHIC REVIEW

Rr. Iramani ... (Abstract only) 32. CORPORATE GOVERNANCE AND FIRM PERFORMANCE: THE

MODERATING ROLE OF INVESTMENT

Siti Puryandani, Hartati Hadady ... 394 33. FINANCIAL PERFORMANCE ANALYSIS OF PRE AND POST

MERGER ON INDONESIAN COMMERCIAL BANK WHICH REGISTERED ON INDONESIAN STOCK EXCHANGE

34. ANALYSIS OF READINESS FOR ISA (INTERNATIONAL STANDARD AUDITING) BASED IN AUDIT PLANNING (CASE STUDY AT LOCAL PUBLIC ACCOUNTANT “X” IN SURABAYA)

Steffi Sunur, WiyonoPontjoharyo, Senny Harindahyani ... 430 35. MEASUREMENT OF ISLAMIC BANK HEALTH USING SHARIA

COMPLIENCE ANDIPERFORMANCE

Sutrisno, R. Agus Basuki ... 450 36. INTELLECTUAL CAPITAL DISCLOUSURE AND FIRM VALUE: AN

ANALYSIS WITH NON RECURSIVE MODEL

Toni Heryana ... 461 37. THE NEW CORPORATE GOVERNANCE MEASUREMENT AND ITS

IMPACT ON FIRM VALUE

Ulil Hartono, Musdholifah ... (Abstract only) 38. REAL EXCHANGE RATE MISALIGNMENT AND CURRENCY CRISIS:

CASE OF INDONESIA

Unggul Heriqbaldi ... (Abstract only) 39. THE INFLUENCE OF ENTERPRENEURSHIP ON FINANCIAL

PERFORMANCE MEDIATED BY NON-FINANCIAL PERFORMANCE

Uswatun Hasanah, Saniman, Faidal ... 487 40. THE ROLE OF CORPORATE GOVERNANCE IN FAMILY CONTROL

FIRMS: EVIDENCE FROM INDONESIA

Yie Ke Feliana, Suwenda Liantina ... 499 41. E-PAYMENT SYSTEMS IN SUPPORT ONLINE TRANSACTIONS

(USER CASE STUDIES OF E-PAYMENT SERVICES IN MAKASSAR)

Zikra Supri, Andi Rahmatullah Mangga, Mediaty ... 510

HUMAN RESOURCES

42. THE EFFECT OF COMMITMENT CAREER TO THE SUCCESSFUL CAREER WITH EMOTIONAL PERCEPTION AS VARIABLE MODERATOR AT PT. PJB PUSAT SURABAYA

Aninda Tri Cahyaningrum, M.E Lanny Kusuma Widjaja ... 525 43. THE INFLUENCE OF THE ISLAMIC BUSINESS ETHICS AND

SPIRITUAL INTELLIGENCE OF ISLAMIC LEADERSHIP AND PERFORMANCE MANAGER SHARIA BANK IN SURABAYA

A Rochim Sidik ... 546 44. EVALUATION OF EFFECTIVENESS ON DESIGN THINKING METHOD

FOR THE DERGRADUATE STUDENTS(CASE STUDY ON LEADERSHIP COURSE IN PARAHYANGAN CATHOLIC

UNIVERSITY)

Annisaa Novieningtyas, Triyana Iskandarsyah,

Rizka Nugraha Pratikna, Ivan Prasetya Tanimukti ... 562 45. OPTION-BASED MODEL AND PROJECT-BASED CAREER MODEL

AFFECT EMPLOYEE’S INTENTION TO STAY IN

PROFESSIONAL SERVICES ORGANIZATION: KNOWLEDGE AND SKILLS AS MODERATOR

Bagus Suripto, Gugup Kismono ... 575 46. THE IMPACT OF KKNI (INDONESIAN QUALIFICATION NETWORK)

IMPLEMENTATION TO HIGHER EDUCATION GRADUATES’ QUALITY: A STUDY OF UNDERGRADUATE ALUMNI AT TANGERANG, BANTEN

Dewi Wahyu Handayani, Anthony Halim ... 598 47. ORGANISATIONAL CHANGE IN PUBLIC SERVICE:

DECONSTRUCTING SECTORIAL EGO IN PUBLIC COLLABORATION

Dian Ekowati ... 617 48. WORKLOAD ANALYSIS FOR GOOD HUMAN RESOURCE PLANNING

AT FACULTY Y IN UNIVERSITY X

Endang Ernawati, Elsye Tandelilin ... 635 49. THE APPLICATION OF INTERNAL CONTROL FOR THE WOMEN

COOPERATIVE PERFORMANCE IN EAST JAVA

Eni Wuryani, Dewi Prastiwi ... 649 50. THE INFLUENCE OF THE QUALITY OF WOMEN’S COOPERATIVE

PERFORMANCE TO GOOD CORPORATE GOVERNANCE (STUDI ON WOMEN’S COOPERATIVES IN EAST JAVA)

Erlina Diamastuti, Ni Nyoman Alit Triani ... 661 51. SUSTAINABLE GROWTH AND ETHICS A STUDY OF BUSINESS

MANAGEMENT STUDENTS IN SURABAYA

Erna Andajani ... 674 52. REPUTATION ORGANIZATION DEVELOPMENT MODEL TO CREATE

COMPETITIVE ADVANTAGE – A CASE STUDY IN TRANSMEDIA

Indrianawati Usman ... 682 53. PERFORMANACE MANAGEMENT APPROACH AS THE BEST

CHOICE IN THE IMPLEMENTATION OF INDONESIAN NATIONAL QUALIFICATIONS FRAMEWORK

Joseph L. Eko Nugroho ... 693 54. ORGANIZATIONAL HEALTH AS A CORPORATE CULTURE AND

FOUNDATION OF ORGANIZATIONAL DEVELOPMENT

55. ANALYSIS OF JOB COMPETENCIES ADVERTISED IN NEWSPAPERS AND THE CURRICULUM OF MANAGEMENT DEPARTMENT OF A SCHOOL OF BUSINESS

Laila Saleh Marta ... (Abstract only) 56. EMPLOYER BRANDING AND THE MEANING OF WORKING THEIR

EFFECTS ON WORK PLAVE PREFERENCE - A COMPARATIVE STUDY ON WORK PERCEPTION BETWEEN LOCAL WORKERS AND EXPATRIATES WORKING WITHIN LOCAL AND MULTINATIONAL FIRMS IN BANDUNG AND EXTENDED AREAS

Maman Kusman, Dwinto Martri Aji Buana, Nugroho Hardiyanto ... (Abstract only) 57. COMPARISON OF CULTURAL VALUES IN

THREE INDONESIAN SUB-CULTURES

Mirwan Surya Perdhana, Devia Arda... 717 58. INFLUENCE OF WORK FAMILY CONFLICT, JOB SATISFACTION,

AND TURNOVER INTENTION – THE CASE OF CV. STAR INTERNATIONAL

Mochamad Rizki Sadikin, Debby Ulfah ... 726 59. THE EFFECT OF INVOLVEMENT OF WORK AND DEMANDS OF

WORK ON WORK-FAMILY CONFLICT WITH THE SOCIAL SUPPORT AS A MODERATING VARIABLE EMPLOYEES

Ninin Prastiwi, Dwiarko Nugrohoseno ... 734 60. THE ROLE OF MANAGEMENT SUPPORT ON CORPROATE

ENTREPRENEURSHIP AND EMPLOYEE WORK OUTCOME

Nuri Herachwati, Yohana Dewi Anggur ... (Abstract only) 61. ASEAN ECONOMIC COMMUNITY IMPACT TO SOCIO-CULTURE TO

INDONESIA BORDER AREA RIAU STATE

Nurman, Detri Karya, Zulkifli Rusby, Evizal Abdul Kadir ... 756 62. CONTRIBUTION LANGUAGE (ENGLISH) AND CULTURE TO

MARKET INTEGRATION IN ASEAN

Seno H Putra, Desy Mardianti ... 768 63. THE INFLUENCE OF MOTIVATION AND WORK ENVIRONMENT TO

LECTURER PERFORMANCE IN BATAM CITY

Sri Langgeng Ratnasari ... 773 64. THE IMPACT OF WORK FAMILY CONFLICT TOWARDS THE

EMPLOYEE PERFORMANCE OF DEPARTMENT OF FORESTRY AND ESTATE CORPS IN BATANG REGENCY, CENTRAL JAVA, WITH THE JOB SATISFACTION AS THE INTERVENING VARIABLE

65. ANALYSIS OF FACTORS AFFECTING THE INFORMATION TECHNOLOGY USER PERFORMANCE IN MAKASSAR GOVERNMENT’S PUBLIC BANKS

Suhartono, Dewi Arvini Wisudawaty, Grace T. Pontoh ... 795 66. CONCEPTUAL REVIEW ON THE NEEDS FOR COMPREHENSIVE

INTEGRATED CASE STUDIES OF ORGANIZATION DEVELOPMENT, WHICH SUPPORT TALENT DEVELOPMENT

AND LEADERSHIP PROGRAM

T. Soemarman ... 812 67. JOB AUTONOMY, SELF-EFFICACY, JOB PERFORMANCE AND

RESISTANCE TO CHANGE (EMPIRICAL STUDY ON EMPLOYEE PT. UNITED WARU BISCUIT MANUFACTORY SIDOARJO)

Tri Siwi Agustina, Nidya Ayu Arina ... 833 68. ASEAN ECONOMIC COMMUNITY CHALLENGING AND

OPPORTUNITY FOR INDONESIAN GRADUATE

Zulkifli Rusby, Nurman, Hasrizal Hasan, Evizal Abdul Kadir ... 848

MARKETING

69. THE EFFECT OF BRAND EQUITY ON PURCHASE INTENTION AND ITS IMPACT ON PURCHASE DECISION (CASE STUDY: MITSUBISHI MIRAGE BRAND)

Aam Bastaman, Ilmi Dimas Rahma Pradana ... 863 70. ANTECEDENTS AND CONSEQUENCE OF CUSTOMER

SATISFACTION IN GLOBAL FAST FOOD RESTAURANT Anas Hidayat, Aulia Arifatu Diniyya,

Muhammad Saifullah, Asmai Ishak ... (Abstract only) 71. DOES MESSAGE FRAMING MATTER? THE ROLE OF MESSAGE

FRAMING AND INVOLVEMENT IN INFLUENCING ATTITUDES AND RESERVATION PRICE TOWARD ORGANIC PRODUCTS

Andhy Setyawan ... 886 72. THE IMPACT OF INSTITUTIONAL IMAGE AND STUDENT

SATISFACTION ON ATTITUDINAL AND BEHAVIORAL LOYALTY – THE CASE OF UNIVERSITAS TERBUKA

Andy Mulyana, Devi Ayuni ... 895 73. THE CONSUMER INTEREST OF KEDAI MANGKOK MANIS

BANDUNG: A STORE ATMOSPHERE PERSPECTIVE

Ayuningtyas Y. Hapsari ... 905 74. THE IMPACT OF FAIRNESS ON SERVICE RECOVERY

ON PEMALANG BRANCH OF CENTRAL JAVA

Chandra Arief Mauriat, Budi Astuti ... 917 75. ACHIEVING STUDENTS LOYALTY THROUGH QUALITY OF

SERVICES, STUDENTS SATISFACTION, AND REPUTATION

Devi Ayuni, Andy Mulyana ... 930 76. EFFECT OF LOW-PRICE AND HIGH-PRICE PRODUCTS DEPTH AND

PROMOTION OPTIONS ON MESSAGE FRAMING AND NOMINAL PERCENTAGE DISCOUNT

Dian Ambarwati, Dudi Anandya, Indarini ... 943 77. CAUSE RELATED MARKETING: THE IMPORTANCE OF

BRAND ENGAGEMENT TO WIN THE COMPETITION IN ASEAN ECONOMIC COMMUNITY

Dorien Kartikawangi, Avianto Nugroho ... 950 78. EFFECT OF PRODUCT INNOVATION, CORPORATE IMAGE AND

QUALITY OF SERVICE TO CONSUMER SATISFACTION AND LOYALTY CATERING CUSTOMERS IN SURABAYA

Eny Rochmatulaili ... 968 79. MAYOR’S PERSONAL BRAND ACCELERATES THE EMERGENCE OF

CITIZEN’S BRAND ATTITUDE

Eriana Astuty, Sri Astuti Pratminingsih ... 984 80. THE EFFECT OF LOYALTY FORMING FACTORS AMONG VISITOR

AT BANDUNG CULINARY TOURISM

Etik Ipda Riyani, Devi Ayuni, Andy Mulyana ... 994 81. IMPLEMENTATION OF E-COMMERCE ON THE USE OF

GOJEK SERVICE IN MAKASSAR

Fajriani Azis, Nurlaila Hasmi, Mediaty ... 1011 82. ANALYSIS INTENTION TO USERS OF ONLINE SHOPPING ON

E-COMMERCE: REVIEW OF THEORY OF PLANNED BEHAVIOR

Grace T. Pontoh, Ibrahim, Satriani ... 1029 83. GENDER DIFFERENCES ON THE RELATION OF

SATISFACTION-LOYALTY

Gregorius Stanley Pratomo, Christina Rahardja Honantha,

Liliana Inggrid Wijaya ... 1047 84. MARKETING ANALYSIS, EXPERIENTIAL AND MARKETING

CUSTOMER RELATION TO REALIZE CUSTOMER VALUE, AND IMPLICATIONS FOR CUSTOMER LOYALTY

(SURVEY ON CUSTOMER STAR HOTELS 3, 4, AND 5 IN BANDUNG AREA)

85. ANALYSIS OF FACTORS QUALITY OF SERVICE E-COMMERCE AND ITS EFFECT ON CUSTOMER LOYALTY (SURVEY ON E-COMMERCE CUSTOMER IN WEST JAVA)

Heppy Agustiana Vidyastuti ... 1101 86. THE IMPACTS OF TRI HITA KARANA AWARD ON HOTEL ROOM

RATES PERFORMANCE: AN EXAMINATION OF ITS APPLICATIONS ON HOTELS IN BALI BASED ON SEASONS AND RESORT AREAS

I Ketut Surata, I Nyoman Sudiksa, Ida Bagus Made Wiyasha ... 1129 87. THE IMPLEMENTATION OF THE STAKEHOLDER PERSPECTIVE TO

SUPPORT SUSTAINABILITY ACTIVITIES AND THE ENABLING FACTORS

Iin Mayasari, Devi Wulandari, Iyus Wiadi, Anita Maharani ... 1151 88. THE EFFECT OF COUNTRY OF ORIGIN IMAGE ON BRAND EQUITY

THROUGH THE MEDIATION OF BRAND ASSOCIATIONS, BRAND LOYALTY AND BRAND AWARENESS ON LG AIR CONDITIONER (AC) IN SURABAYA

Ivana Haryanto, Silvia Margaretha, Dudi Anandya ... 1177 89. ARE GENDER AND ETHNICITY MATTER IN IMPULSIVE BUYING

BEHAVIOUR? A STUDY ON YOUNG ADULT CONSUMERS IN AUSTRALIA AND INDONESIA

Made Pranadatha Gunawan, Mahestu N Krisjanti ... (Abstract only) 90. PASSPORT SERVICE QUALITY DEVELOPMENT BASED

E-GOVERNMENT (E-PASSPORT) ON SATISFACTION USERS

Mediati, Purnama Sari, Kartini, Muslimin ... 1191 91. THE INFLUENCE OF CORPORATE SOCIAL RESPONSIBILITY

AND SERVICE QUALITY TO PURCHASE INTENTION IN ISLAMIC BANKING

Muchsin Muthohar, Merlin Rahmawati ... 1206 92. EFFECT OF COUNTRY OF BRAND TO

QUALITY PERCEPTION AND BRAND TRUST

Muhammad Hasbi Zaidi, Nurman, Azmansyah ... 1218 93. THE INFLUENCE OF CREATIVITY, PRODUCT

INNOVATION,CUSTOMERS RELATIONSHIP MANAGEMENT TO THE PRICE DETERMINATION WHICH GRABS THE SUCCESS (THE

RESEARCH ON SMALL MEDIUM BUSINESS UNITS (UKM) OF BATIK IN CENTRAL JAVA AND D.I. YOGYAKARTA PROVINCES)

R. Adjeng Mariana Febrianti ... 1233 94. ATTITUDE TOWARDS CIGARETTE ADVERTISEMENT

95. CRITICAL ANALYSIS ON MARKETING ACTIVITIES OF MUSEUMS IN BALI

Rizal Hari Magnadi... (Abstract only) 96. THE IMPACT OF THE QUALITY OF INTRINSIC AND EXTRINSIC

ATTRIBUTES IN CREATING LOYALTY AND PURCHASE INTENTION

Sofiana Dewi, Albari ... 1262 97. DOES SOCIAL ADVERTISING IN TWITTER AND

FACEBOOK WORK DIFFERENTLY?

THE ROLE OF PROFIT ORIENTATION OF THE ORGANIZATION

Sony Kusumasondjaja ... 1278 98. ANALYSIS OF INTERNET BANKING BASED ON RISKS, BENEFITS,

AND SIMPLICITIES ON THE CUSTOMERS TRUST

Sri Nirmala Sari, Juniaty Ismail, Grace T. Pontoh ... 1287 99. DETERMINANTS OF BRAND PRODUCTS SWITCHING ON

SMARTPHONE (CASE STUDY ON WIDYATAMA UNIVERSITY)

Sri Wiludjeng SP, Rudi Gunawan ... 1300 100. INFLUENCE ON AWARENESS, PERCEIVED QUALITY,

UNIQUENESS, SOCIAL IMAGE, AND HOME COUNTRY ORIGIN TO PRICE PREMIUM AND LOYALTY ON

HÄAGEN DAZS PREMIUM PACKAGED ICE CREAM

Sutrisno Hamdany, Indarini, Dudi Anandya ... 1309 101. THE INFLUENCE OF SERVICE QUALITY AND TRUST ON LOYALTY

CONSUMER OF CICENDO EYE HOSPITAL PERIOD 2014

Taufik Rachim, Adam Apriyadi Putra ... 1324 102. STUDENT INTEREST TO PRESERVE DRAGON AND LION

TRADITIONAL DANCE (AN INTERNAL FACTOR

AND IMAGE OF BANDUNG SANTO CLUB PERSPECTIVE)

Tezza Adriansyah Anwar, Galuh Boga Kuswara ... 1332 103. THE EFFECT SERVICE QUALITY AND CORPORATE IMAGE

ON LOYALTY WITH CUSTOMER TRUST AS A MODERATOR: A STUDY IN A PRIVATE UNIVERSITY

Yasintha Soelasih, Efendi... 1341 104. EFFECT ATTRIBUTES SERVICES TO SATISFACTION USER

SERVICES AND ITS IMPACT ON WORD OF MOUTH

(STUDIES IN WIDYATAMAUNIVERSITY BANDUNG - INDONESIA)

Yenny Maya Dora ... 1349 105. THE INFLUENCE OF CUSTOMER RELATIONSHIP MANAGEMENT

AT PT.BERJAYA ABADI TOUR AND TRAVEL)

Zulganef, Sri Astuti Pratminingsih, Santy Hepty Hexiawaty ... 1373

OPERATION

106. IMPROVING SERVICE QUALITY OF SECRETARIAL AND OFFICE MANAGEMENT STUDY PROGRAM,

FACULTY OF VOCATIONAL, UNIVERSITAS AIRLANGGA BY INTEGRATING MATRIX IMPORTANCE PERFORMANCE ANALYSIS AND FISHBONE DIAGRAM

Febriana Wurjaningrum, Ida Setya Dwi Jayanti ... 1385 107. PERBAIKAN KUALITAS LAYANAN “CALL CENTER”

MENGGUNAKAN METODE “DMAIC” DAN “SERVICE BLUEPRINT”

Fino Wahyudi Abdul, Nining P. ... 1401 108. RESTAURANT ATTRACTIVENESS AND PSYCHOLOGICAL EFFECT

OF UPLOADING FOOD PICTURE ON INSTAGRAM TO WILLINGNESS TO DINE OUT

Hanz Christianto, Siti Rahayu, Prita Ayu Kusumawardhany ... 1416 109. RISK AND MITIGATION ANALYSIS OF SUPPLY CHAIN WITH

HOUSE OF RISK APPROCH FOR A BUSINESS IN FREE TRADE ERA

Indrianawati Usman, Rudati Ariani ... 1430 110. THE FOOTWEAR SMES VALUE ORCHESTRATION IN MOJOKERTO

Juliani Dyah Trisnawati ... 1442 111. IMPROVING QUALITY OF SERVICES USING IMPLEMENTATION

OF QFD TO WIN MARKET COMPETITION

Ratna Widiastuti... 1449 112. SUPPLIER SELECTION USING ANALYTICAL HIERARCHY PROCESS

IN PT PELITA MEKAR SEMESTA

Sharon Audrey Madeline Vriso, Stefanus Budy Widjaja, A. Budhiman S. ... 1456 113. THE EFFECTS OF DINING ATMOSPHERICS ON BEHAVIORAL

INTENTIOS THROUGH SERVICE QUALITY AND FOOD QUALITY IN GOJUMONG RESTAURANT SURABAYA

Shelli Rustam Moidady, Fitri Novika Widjaja, Dudi Anandya... 1462 114. THE EFFECT OF SUPPLY CHAIN MANAGEMENT PRACTICES ON

PERFORMANCE OF SMEs IN YOGYAKARTA

Siti Nursyamsiah, Ninoury Ardaiva ... 1474 115. MOTIVATION OF STUDENTS IN HOSPITALITY AND TOURISM

MANAGEMENT PROGRAMS

116. THE IMPLEMENTATION OF SEVEN QUALITY MANAGEMENT TOOLS: EXPERIENCES FROM THREE ENTERPRISES

IN EAST JAVA, INDONESIA

Stefanus Budy Widjaja, Anthonius Budhiman Setyawan... 1503 117. IMPLEMENTATION OF QUALITY CONTROL

BY USING PDCA AND STATISTICS TOOLS

IN BREAD STORES OLIVIA BAKERY AT MOJOKERTO

Steven Anggriawan, Stefanus Budy Widjaja, Prita Ayu Kusumawardhany ... 1516 118. THE DEVELOPMENT OF EDUCATIONAL TOURISM

IN THE AREA OF MOUNT PENANGGUNGAN THROUGH COMMUNITY EMPOWERMENT Veny Megawati,Edna Sri Redjeki, Gunawan,

Yoan Nursari Simanjuntak, Nanang Krisdinanto ... 1531 119. GREEN COMPANIES SCORECARD

Zainur Hidayah ... 1543

STRATEGIC & ECONOMICS

120. E-ASEAN JOB AS STRATEGY TOWARDS FREE LABOUR MARKET IN ASEAN ECONOMIC COMMUNITY (CASE STUDY INDONESIA)

Alfina Rahmatia, Resky Izzati Afiah, Nida’ Al-Ulfah Untoro ... 1557 121. AN ANALISYS WORLD OIL PRICE MOVEMENTS

AND THE G7 CAPITAL MARKETS

Dian Surya Sampurna ... (Abstract only) 122. BUILDING ASEAN EXCHANGE RATE UNIT (AERU)

FOR MONETARY INTEGRATION IN ASEAN-5 COUNTRIES Dimas Bagus Wiranatakusuma, Masyhudi Muqorobin,

Imamudin Yuliadi, Alif Supriyatno ... 1569 123. THE ANALYSIS OF FACTORS INFLUENCING DEMAND

FOR IMPORTED COFFEE MALAYSIA FROM INDONESIA 1993-2013

Eko Atmadji, Afik Beny Adam ... 1601 124. THE EFFECT OF CORPORATE SOCIAL RESPONSIBILITY

ON COMPANY REPUTATION AND MARKET RISK

Fitri Ismiyanti ... 1612 125. INTERNATIONAL BUSINESS RELATION OF EMERGING INDONESIA

WITH ASIAN NEIGHBOURS

126. ASEAN ECONOMIC COMMUNITY (AEC) AND ECONOMIC STABILITY: A REVIEW FROM INDONESIA’S SIDE

Hersugondo, Robiyanto, Gatyt Sari Chotijah ... 1629 127. BUSINESS STRATEGY ANALYSIS AND IMPLEMENTATION

TO WIN COMPETITION (CASE STUDY AT SSM)

Idris Gautama So, Fransisca Chatarina, Natalia ... 1638 128. ANALYSIS OF THE STRATEGY TO DEVELOP THE OLD TOWN

ARRANGEMENT (SUNDA ETHNIC) USING THE CONCEPT OF THE NEW CITY IN BANDUNG WEST JAVA

Keni Kaniawati ... 1647 129. DRIVERS OF COUNTRY’S EXPORT PERFORMANCE

Masmira Kurniawat ... 1662 130. IMPROVING COMPETITIVENESS OF MICRO AND SMALL BUSINESS

PRODUCT FACING GLOBAL MARKET (CASE ON MICRO AND SMALL BUSINESS FOOD AGROINDUSTRY IN GIANYAR REGENCY)

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STRENGTHENING SME COMPETITIVENESS TO FACE MARKET INTEGRATION IN ASEAN

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IN SOUTHEAST ASIAN NATIONS TOWARDS THE ASEAN VISION 2025 (THE CASE-STUDYOF LABOR EXPORT IN VIETNAM

AND THE ASEAN COUNTRIES)

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(SMEs) IN THE CREATIVE INDUSTRY IN SUPPORTING REGIONAL ECONOMIC IMPROVEMENT THROUGH GROSS DOMESTIC REGIONAL PRODUCT (GDRP) REGION IN BANDUNG

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VIETNAMESE HIGHER EDUCATION IN THE INTEGRATION ERA

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IN THE CULTURAL ACTIVITIES

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(TỨ VỊ ĐẠI CÀN NƯƠNG NƯƠNG) IN SOUTHWESTERN VIETNAM – A CASE STUDY OF DIEU HOA COMMUNAL HOUSE

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AND FAMILY LIFE THROUGH CUSTOMARY LAWS

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IN SOUTHEAST VIETNAM

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CURRENT DEVELOPMENT INDICES

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IN EDUCATIONAL MANAGEMENT

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IN THE DEVELOPMENT OF TOURISM IN LAOS

Phan Thi Hong Xuan, Quach Dua Tai ... 2052 161. HO CHI MINH CITY’S TOURIST DESTINATION PRODUCTS

IN ASEAN INTEGRATION TRENDS THROUGH SWOT MATRIX

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IN CENTRAL VIETNAM WITH SOUTHERN LAOS AND NORTHEASTERN CAMBODIA

344 ISBN (Vietnam): 978-604-73-4020-0

THE EFFECT OF INTERNATIONALIZATION TO RISK IN

INDUSTRIAL MANUFACTURING COMPANY THAT LISTED ON

THE INDONESIA STOCK EXCHANGE 2010-2014 PERIOD

Mechiko Deddy Marciano Arif Herlambang

Management Departement, Faculty of Business and Economics, University of Surabaya, Indonesia

a_rifh@yahoo.com us31143@gmail.com

Abstract

The objective of this study is to examine the effect of internationalization to risk in industrial manufacturing company that listed on the Indonesia Stock Exchange 2010-2014 period. This study uses 3 regression analysis model, which is model of linear, quadratic, and cubic to test the hypothesis. The number of observation used in this study is 385 observations. The result shows that internationalization has a significant positive effect on systematic risk, total risk, and unsystematic risk of the company. At the level of internationalization of less than 10%, there is an inverted S-shaped pattern between internationalization and total risk, as well as between internationalization and unsystematic risk as there is no significant effect on systematic risk of the company. While the level of internationalization is more than or equal to 10%, internationalization has a significant positive effect on systematic risk, and there is an inverted U-shaped pattern between internationalization and the total risk, as well as between internationalization and unsystematic risk.

Keywords: internationalization, systematic risk, total risk, unsystematic risk

JEL CLASSIFICATION: G32

INTRODUCTION

Globalization has brought great changes to the world. In the economic sphere, globalization has eliminated boundaries and geographical barriers, so that trade between countries has become freer and cash flow movements in various countries have also increased. These conditions make local companies more motivated to expand internationally in order to improve competitiveness. Moreover, in 2015 there were momentum AEC and AFTA is expected to increase the level of internationalization of companies in Indonesia.

There are several advantages (benefits) arising from the internationalization process. Portfolio theory, according to Markowitz (1952), states that internationalization can reduce the risk of the company. Correlation between markets where the company operates tends to be imperfect or weak that it will reduce the risk of systematic domestic market (Lessard, 1983 in Olibe et al., 2008). In addition, the company also can increase competitive advantage by maximizing foreign market conditions, such as profits from the price deviations (Giri, 2012) and international market forces (Grant, 1987). On the other hand, the internationalization process will also lead to some costs (cost) due to the increased uncertainty facing the company. When the company has entered into foreign markets, the risks facing the company is no longer only from their own country, but also the risk in an investment destination, such as political risk, risk culture, and economic risks (Goerzen et al., 2010 in Thomsen, 2012). Moreover, it also appears that other costs, such as transaction costs (Williamson, 1975 in Thomsen, 2012), agency/monitoring problems (Grant, 2010), and the asymmetry of information (Jin and Myers, 2006). Referring to the above benefits and costs, internationalization can reduce or increase the risk of the company. Reduction or increase in the risk depends on how dominant the benefit and the cost incurred (Krapl, 2015). Risk of important companies to be identified because the risk is one of the determinants of a company's stock price reflects the value of the company (Fama, 1978; Gitman and Zutter, 2015). The risk that the company would reduce the value of the company increases, so does conversely, if the company's risk decreases, the value of the company will increase. Risk will also affect the behavior of investors in making investment decisions (Riaz et al., 2012). Some researchers have investigated the relationship between the internationalization of the company to risk, but still showed ambiguous results. Hughes et al. (1975) in Krapl (2015), Fatemi (1984) in Krapl (2015), and Michel and Shaked (1986) in Olibe et al. (2008) stated that the establishment of a portfolio by MNC has total risk and systematic risk that is smaller than the portfolio by domestic companies. Mikhail and Shawky (1979) in Krapl (2015) failed to find a significant influence coefficients of variation of the stock return volatilities. Goldberg and Heflin (1995) stated that the internationalization lowers systematic risk but increase the total risk. On the other hand, some of the latest research states that the effect of internationalization will increase the risk (Reeb et al., 1998; Olibe et al., 2008; Krapl, 2015). Aabo et al. (2014) examined the effects of internationalization on the risk of using a sample of companies in Scandinavian, stating that foreign sales will increase the risk (risk-increasing), foreign assets will neutralize the risk (risk-neutral), and foreign costs will reduce the risk (risk-decreasing), results vary from these studies occurred because of different proxies are used to measure the company's internationalization process. Previous studies have generally uses foreign assets to total assets (FATA), and foreign sales to total sales (FSTS) as a proxy internationalization (Mikhail and Shawky, 1979; Fatemi, 1984; Michel and Shaked, 1986; Goldberg and Heflin, 1995; Reeb et al., 1998). However, other studies have also added foreign costs to total costs (FCTC) (Aabo et al., 2014), number of

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foreign countries (Numb) (Olibe et al., 2008), and geographical segment (GEO) (Olibe et al. 2008; Krapl , 2015) as a proxy internationalization. Furthermore, the company's risk is measured using a beta that shows the systematic risk (Krapl, 2015; Hughes et al., 1975; Mikhail and Shawky, 1979; Fatemi, 1984; Michel and Shaked, 1986; Goldberg and Heflin, 1995; Reeb et al., 1998), stock volatility indicates risk of total (Goldberg and Heflin, 1995; Aabo et al., 2014), and idiosyncratic volatility indicates unsystematic risk (Krapl 2015).

LITERATURE REVIEWS

Internationalization

Al-Obaidan and Scully (1995) in Thomsen (2012) states that there are two causes companies internationalize, the Modern Portfolio Theory and Internationalization Theory. Portfolio Theory states that multinational companies are a collection of some domestic companies. Markowitz (1952) stated that the company's risk can be reduced by expanding internationally. Each country has a market mover different, such as product life cycle (product life cycles), inflation, business cycles, and government regulations, so that the correlation between companies in each country will tend to be imperfect, and companies can reap the benefits of the overall profit less volatile (Miller and Pras, 1980; Qian, 1996 in Thomsen, 2012).

Internationalization Modern Theory focuses on the company's ability to obtain economic benefits (economical profit) through the company's competitiveness in foreign markets. In line with this theory, Dunning (1977) stated that the company will enter into foreign markets will make the company has a competitive keungguluan larger than domestic companies, as long as the cost to reduce entry barriers and the complexity is still within reasonable limits.

Risk

Risk can be defined as uncertainty or deviation from the expected results (Megginson, 1997). According to Weston and Copeland (1992) risk is divided into two parts: systematic risk and unsystematic risk. Summing these risks referred to the total risk. 1. Systematic Risk

Systematic risk is the sensitivity between the company and macro markets. Measurement of systematic risk is measured using a beta of a single index model (Bodie et al., 2008).

2. Total Risk

Total risk can be defined as a deviation from the expected rate, or the standard deviation (Megginson, 1997).

3. Unsystematic Risk

Unsystematic risk is business risk can be reduced through the establishment of a portfolio diversification or market changes and are not affected (Megginson, 1997). Unsystematic risk can be measured using the idiosyncratic volatility, derived from the standard deviation of the residuals from non-systematic risk or idiosyncratic risk.

Internationalization and Risk

Eiteman et al. (2010) stated that the internationalization raises benefits and cost that would affect the risk. If the benefits arise more than cost, it will reduce the risk of internationalization of the company. Conversely, if the benefit arises less than cost, internationalization will increase the risk of the company. Furthermore, when the benefit and the cost incurred balanced/equal, then the internationalization has no significant impact on the company's risk.

Diversification

Diversification can be defined as an asset allocation in some places that aim to reduce risk (Gitman and Zutter, 2015). Each country has a market mover different, such as product life cycle (product life cycles), inflation, business cycles, and government regulations, so that the correlation between companies in each country will tend to be imperfect. The lower the correlation between the markets in which the company operates is, the greater the reduction in the risk of internationalization process. Operational Flexibility International operational flexibility can be defined as a company's ability to adjust in the country where the company produces or sells products and can demonstrate business benefits operationally. Aside from the potential to earn high profits, operational flexibility also potentially reduces the downside risk, such as changes in exchange rates (exchange rate). Just like the theory of diversification, the value of operational flexibility depending on market conditions correlation between countries. The lower the correlation is, the higher the difference, the more valuable economic flexibility (Thomsen, 2012).

Environmental Risks Johanson and Vahlne (1977) in Thomsen (2012) stated that the internationalization of reducing risk and increasing psychic distance. Psychic distance can be defined as the perceived distance between the home country and the foreign country (Joliet and Hubner, 2003). According Goerzen et al (2010) in Thomsen (2012), environmental risk can be divided into three, namely the political risk, the risk culture, and economic and financial risks. Political risk is most often defined as the negative impact of political changes that took effect in certain countries, including events such as political upheaval, nationalization, and other government regulations. More political risk affects foreign companies than domestic companies, because domestic companies tend to be better at navigating local political risk (Goerzen et al., 2010). Risk culture is the result of

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potential differences in values and perceptions between individuals and companies in different countries. Great cultural differences between countries of origin and foreign countries cause conflicts interest and spur the agency cost, thus reducing the overall assurance business (Roth and O'Donnell, 1996).

Economic and financial risks derived from fluctuations in the economic environment in the country, such as inflation, exchange rates, unemployment, and so on, are all potentially affect the size and value of cash flows of foreign direct investment (Miller, 1992).

Transaction Costs Theory

According to Williamson (1975) in Thomsen (2012), transaction costs can be defined as the managerial costs, legal fees, and other expenses resulting from inefficient to complete the transaction. Currency exposures and risks associated with exchange rate fluctuations are taken into account as a transaction fee. Industrial Organization Theory Industrial Organization Theory focuses more on internal point. This theory suggests three causes of the rise in risk because of the internationalization: (1) Along with the growth of the company, the complexity of the company is also getting higher. The increasing complexity complicates both operational and strategic decision-making, and can cause a variety of operational efficiency as well as a decrease in the company's ability to adapt to changes in the external environment (Grant, 2010). (2) The international expansion is a decision to maximize their personal welfare CEO regardless of the potential losses to shareholders or other stakeholders to improve the agency/monitoring costs because there are different interests (conflict of interest). Thus, from the perspective of shareholders, any increase in the level of internationalization can potentially destroy the value of incentives, which may lead to increased volatility in the company's stock price. (3) The asymmetry of information between management and investors. Jin and Myers (2006) say that the lack of transparency will only create value for internal investors.

Control Variables Liquidity

Some researches reveal that companies are liquid and have enough cash to cover all short-term obligations and have a low risk (Beaver et al., 1970; Logue and Merville, 1972; Krapl, 2015). Instead, Jensen (1986) in Krapl (2015) says that “high levels of corporate liquidity lead to moral hazard problems the which in turn increase of agency costs.” The company's liquidity is measured using the Quick Ratio.

Leverage

Modgliani and Miller (1958) say that if the amount of debt in the capital structure of the companies increases, the risk also increases. Hamada (1972) and Bowman (1979) in his

study also state that companies with high leverage will increase the risk. Leverage companies measured using Debt Ratio.

Profitability

Previous studies found a negative relationship between profitability and risk (Schemer and Mathison, 1996; Kim et al., 2002; Lee and Jang, 2006; Rowe and Kim, 2010 in Iqbal and Shah, 2009). Companies that have high profit can improve a company's ability to reduce financial instability, so as to reduce the risk. Meanwhile, Borde et al. (1994) in Iqbal and Shah (2009) found out the positive relationship between profitability and risk of the insurance company, because the company's high profitability of the financial sector that have a high credit risk as well. It also fits with the concept of “High Risk, High Return” by Gitman and Zutter (2015), which means companies that have a profit or a high return, high risk anyway. The company's profitability is measured by using a Return on Assets. Operating Efficiency

Logue and Merville (1972) in Krapl (2015) say that the company is more efficient when its operations benefit and reduce the potential of loss. Kim et al. (2002) and Eldomiaty et al. (2009) in Krapl (2015) also found a negative relationship between operating efficiency and risk. Operating efficiency can be measured by using Asset Turnover Ratio.

Market to Book Value

Beaver et al. (1970) in Krapl (2015) found "unexpected profits Arising from growth opportunities as competition erode Enters the market place". As a result, revenue windfall that comes from growth opportunities are riskier than normal profit, resulting in a positive relationship between growth and risk. La Porta (1996) in Krapl (2015) provides empirical evidence that “the expected high-growth stocks have higher standard deviations of returns and higher expected market betas than low-growth firms.” Internationalization is closely connected with high growth opportunities.

Dividend Payout

Agency costs can be reduced with high dividends (Ang et al., 1985). The effect of high dividend distribution is negative towards risk as investors consider the certainty of return than cash flow from dividends from the stock price is high (Logue and Merville, 1972; Beaver et al, 1970; Kim et al, 2002 in Krapl, 2015). The dividend distribution may be measured using the Dividend Payout Ratio.

Size

Based on previous research (Logue and Merville, 1972; Kim et al., 2002 in Krapl, 2015) large companies that have a systematic risk is small because it has the ability to reduce the

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impact of economic changes. Titman and Wessels (1988) in Krapl (2015) also said that large companies will tend to be diversified and reduce the possibility of bankruptcy. Methodology

Target population used in this study is an industrial manufacturing company listed on the Indonesia Stock Exchange period 2010 to 2014. The number of samples used in this study is 77 companies manufacturing industry with the observation period from the period 2010 to 2014. Thus, in this study there were 385 observation points. The study also divides the sample into sub-samples by looking at the ratio of foreign sales to total sales. According to Singh and Nejadmalayeri (2004), the company with FSTS ratio <10% is still regarded as domestic companies, while companies with FSTS≥10% ratio of new to say as a multinational corporation (MNC). Then there are 29 companies that became sample FSTS <10%, and 48 companies that are sub-samples FSTS≥10%.

Testing data uses regression test that takes into account the value of the f-statistic, t-statistic, and the coefficient of determination (R2). To ensure that the regression equation was inaccurate, biased, and consistently then performed classical assumption that includes normality test, multicollinearity, autocorrelation, and heteroscedasticity test.

In previous studies, the regression model is used only multiple linear regression model (Krapl, 2015; Olibe et al., 2007; Aabo et al., 2014). This research seeks to analyze further by adding a nonlinear model is a model quadratic and cubic models in order to determine the effect deeper. This model was used to test all samples, subsamples FSTS <10%, and sub-samples FSTS ≥10%.

Beta and FSTS

Linear model (Model 1):

Quadratic models (Model 2):

Stock Volatility and FSTS Linear model (Model 4):

Quadratic models (Model 5):

Cubic Model (Model 6):

Idiosyncratic Volatility and FSTS

Linear model (Model 7):

Quadratic models (Model 8):

Cubic Model (Model 9):

where:

BETA = systematic risk (beta) companies

STOCK VOL = volatility of stock prices / stock volatility I_VOL = idiosyncratic volatility

FSTS = foreign sales to total sales

LIQ = the company's liquidity, measured using the quick ratio LEV = leverage, measured using the debt ratio

PROF = the company's profitability, measured using return on assets

EFF = the company's operational efficiency, measured using the total asset turnover MB = market to book ratio

DPR = dividend payout ratio SIZE = size companies

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Results All samples

Table 1. Results of Regression All Samples

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9 C -2.139904 -2.062834 -0.712536 3.393662 3.516155 3.532661 0.317664 0.336188 0.33805 (-0.409498) (-0.397933) (-0.129887) (5.320047) (5.431052) (5.622038) (3.808234) (3.98252) (4.033037) FSTS 1.966391*** 0.891583 -3.563743 0.237621** 0.664882* -0.373632 0.024672* 0.090689** 0.033315 (4.214392) (0.366872) (-1.039042) (2.149477) (1.942639) (-0.481431) (1.702134) (2.019988) (0.320329) FSTS^2 1.553098 15.36237* -0.486407 2.617799 -0.075147 0.097294 (0.442004) (1.967338) (-1.31778) (1.219135) (-1.553236) (0.337876)

FSTS^3 -10.56139** -2.20528 -0.122791

(-2.04818) (-1.460036) (-0.606043)

LIQ -0.009865 -0.009619 -0.008275 -0.001746 -0.001412 -0.001997 -0.00059 -0.000535 -0.000568 (-1.020646) (-1.006132) (-0.902669) (-0.257055) (-0.207536) (-0.296169) (-0.640152) (-0.579755) (-0.616389) LEV -1.6807*** -1.641822*** -1.57023*** 0.204104** 0.195379** 0.212588*** 0.028366*** 0.027054** 0.027929*** (-5.677269) (-5.304695) (-4.860602) (2.525329) (2.398517) (2.659948) (2.673256) (2.537013) (2.614104) PROF -1.682679** -1.679386** -1.798665** 0.800821** 0.832997** 0.721997** 0.090819* 0.096044* 0.090157* (-2.039864) (-2.058465) (-2.085921) (2.194089) (2.272991) (1.977299) (1.855354) (1.956271) (1.82064) EFF 0.123195 0.107726 0.09939 0.018886 0.022396 0.025023 -0.001179 -0.000691 -0.000522 (1.637735) (1.377805) (1.383745) (0.475774) (0.561648) (0.636861) (-0.221112) (-0.129236) (-0.097972) MB 0.000554*** 0.000564*** 0.00061*** -0.000319** -0.000307** -0.000296** -0.0000309* -0.000029* -0.0000284* (2.913147) (2.801474) (3.024321) (-2.575316) (-2.460735) (-2.432035) (-1.884466) (-1.761378) (-1.735115) DIV -0.059116 -0.072746 -0.064724 -0.034178 -0.034933 -0.042554 -0.001477 -0.001681 -0.002118 (-1.138838) (-1.247265) (-1.059878) (-0.959484) (-0.98032) (-1.188747) (-0.302135) (-0.34375) (-0.429561) SIZE 0.246592 0.245115 0.161323 -0.086634* -0.099155** -0.096741** -0.017506*** -0.019407*** -0.019347*** (0.646003) (0.64047) (0.400772) (-1.822066) (-2.037034) (-2.049651) (-2.815881) (-3.057636) (-3.072753) N

0.039172 0.043513 0.036648 0.040098 0.039012 385

Adj.

Rsquared 0.393935 0.394203 0.390605 0.037627

Variabel Beta Stock Vol Idiosyncratic Vol

FSTS and Beta

Demonstration of a significant positive relationship model 1 means that internationalization will increase the risk of systematic enterprises, so companies are increasingly sensitive to changes in the market. When companies operate in new markets that are less familiar, uncertainty and additional costs will be raised. The cost for internationalization among others, is an increased risk that occurs in an investment destination, namely the political risk, the risk of cultural, economic, and financial risks, the additional transaction costs and information asymmetries. In addition to the model 1, model 3 also showed a significant result between FSTS and beta. In this model it is known that there are three levels of internationalization between FSTS and beta: low, medium, high, and depicted in the S-shaped pattern. At a low level of internationalization (FSTS <14%), FSTS have a negative effect on the beta as the company benefits from international diversification. However, this negative effect was not significant, indicating that at this level does not affect the internationalization of systematic risk (beta) company. Furthermore, when the company made the process of internationalization of the medium level is higher than 14%, beta FSTS positive effect on the company, which means that the

sensitivity of the company to the market will increase. At this level, the costs result from the process of internationalization of higher than profits. However, when the high level of internationalization of the company, which is already more than 80%, beta companies will decrease, which shows the advantages of international diversification return greater than the cost of the company.

FSTS and Stock Volatility

Demonstrated a significant positive relationship model 4 means that internationalization will increase the company's total risk. When companies make the process of internationalization, the complexity in managing the company will be higher. The increasing complexity will be difficult for both operational and strategic decision-making, and can increase the agency cost for stockholders because of the difficulty in monitoring the company. So any increase in the level of internationalization, could potentially destroy the incentive value and will increase the volatility of the stock price. In addition to the model 4, 5 models also showed significant results between FSTS and stock volatility. There is a U-shaped pattern which indicates that there is positive when the level of internationalization of the company below 68%, but when the level of internationalization of the company is more than or equal to 68%, the company's total risk will decrease. This is because the company's main market is no longer the domestic market, so that managers, investors / shareholders, and other stakeholders are already capable of and used to manage and monitor multinational companies.

FSTS and Idiosyncratic Volatility

Demonstration of a significant positive relationship models 7 means that internationalization will increase the risk of non-systematic companies. Multinational companies will face a higher business risk than domestic companies. These risks include (1) sales risk, namely the lack of information on foreign markets (information asymmetry) to reduced sales and market share of the company, (2) competition risk, namely the risk of the product being imitated by foreign competitors, which can be produced at a price cheaper, (3) product risk, namely the condition of the damaged goods due to differences in climate and treatment, (4) distribution of risk, namely the risk of the product is damaged or not delivered when delivery will incur additional costs and harm the good name of multinational companies. In addition to the model 7, 8 models also showed significant results between FSTS and idiosyncratic volatility. There is an inverted U-shaped pattern also between FSTS and idiosyncratic volatility which shows that there is positive when the level of internationalization of the company below 60%, but when the level of internationalization of the company is more than or equal to 60%, the unsystematic risk companies will decline. This is because the company is already getting knowledge in managing international markets.

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Subsample FSTS <10% (Early Stage)

Table 2. Results of Regression Subsample FSTS < 10%

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9

C -2.358717 -2.617365 -2.660285 3.544111 3.615086 3.595266 0.229643 0.256399 0.255679

(-0.950986) (-1.02428) (-1.022344) (5.490129) (5.426414) (5.412641) (3.196643) (3.485224) (3.535458)

FSTS -1.844131 -8.354934 -0.469256 -1.284898 0.170229 9.433949 -0.137599 0.403314 1.475286***

(-0.449827) (-0.823501) (-0.022804) (-1.057615) (0.053916) (1.620564) (-1.207280) (1.292068) (2.833572)

FSTS^2 58.71638 -108.3027 -13.51854 -205.9732* -5.106498* -27.96462***

(0.69836) (-0.28299) (-0.495328) (-1.908768) (-1.850374) (-2.963767)

FSTS^3 842.2312 978.4678* 121.9568**

(0.450022) (1.797389) (2.476457)

LIQ -0.016166 -0.01544 -0.015282 -0.003443 -0.003434 -0.003622 -0.000372 -0.000369 -0.000418

(-0.944964) (-0.897889) (-0.882209) (-0.556758) (-0.555566) (-0.597217) (-0.479574) (-0.483394) (-0.557856)

LEV -1.510172* -1.529474* -1.533473* 0.177412 0.190547 0.136724 0.026083 0.029413 0.017933

(-1.920432) (-1.919122) (-1.900267) (0.765471) (0.81821) (0.585444) (1.061415) (1.195144) (0.727642)

PROF -2.338997 -2.515663 -2.361409 0.131926 0.179398 0.311632 0.006372 0.023667 0.033926

(-1.370737) (-1.434632) (-1.309151) (0.307025) (0.407927) (0.711628) (0.155570) (0.563019) (0.8258)

EFF -0.151473 -0.149078 -0.162956 0.069076 0.060156 0.04844 0.007047 0.003123 0.002731

(-0.515963) (-0.496515) (-0.532507) (0.849921) (0.723817) (0.590675) (0.894745) (0.391722) (0.349764)

MB 0.000294 0.000348 0.000336 -0.000159* -0.00017* -0.000179** -0.00000699 -0.0000112 -0.0000123

(0.757606) (0.866313) (0.821848) (-1.893251) (-1.964559) (-2.128337) (-0.889141) (-1.427498) (-1.647066)

DIV -0.267689 -0.307176 -0.317709 -0.170845 -0.159407 -0.16767 -0.026035** -0.021149* -0.019161*

(-0.70292) (-0.788794) (-0.806108) (-1.491359) (-1.344173) (-1.432472) (-2.536031) (-1.968043) (-1.835141) SIZE 0.354466* 0.386124* 0.384599* -0.098642** -0.106291** -0.10979** -0.011843** -0.014571*** -0.014998*** (1.760998) (1.842691) (1.801754) (-2.01269) (-2.051439) (-2.116824) (-2.249597) (-2.633941) (-2.749152) N

Adj. Rsquared 0.022289 0.017367 0.010912 0.135348 0.132119 0.154829 0.141406 0.160701 0.205307

145

Variabel Beta Stock Vol Idiosyncratic Vol

FSTS and Beta

In model 1, 2, and 3 was not found significant results between FSTS and beta. So that when the level of internationalization of the company is still in the stage of early stage, there is no effect on the risk of the company.

FSTS and Stock Volatility

Model 6 showed a significant result between FSTS and stock volatility companies that have shown inverted S-shaped pattern. FSTS has a positive influence on stock volatility when new companies internationalize (FSTS <3%) due to the complexity of the company's first time doing internationalization. Furthermore, when the company made the process of internationalization at the level of higher than 3%, FSTS will negatively affects the company's stock volatility, which means that the company benefits from internationalization in accordance with the portfolio theory of Markowitz (1957). However, when the international diversification of the company has more than 12%, stock volatility will rise again, which shows the cost of international diversification return is greater than the benefit received by the company.

FSTS and Idiosyncratic Volatility

FSTS significant influence on the idiosyncratic volatility can be seen through the model 8 and 9. In the model 8 models, terdapat inverted U-shaped pattern between FSTS and idiosyncratic volatility. FSTS has a positive influence on the idiosyncratic volatility when

the new company to diversify internationally (FSTS <3%) will decrease when the company diversified its international higher than 3%, which the company benefits from international diversification in accordance with the theory portfolio of Markowitz (1957). Model 9 showed a significant result between FSTS and idiosyncratic volatility shows inverted S-shaped pattern. FSTS has a positive influence on the idiosyncratic volatility when the new company to diversify internationally (FSTS <3%) due to increased sales of business risks such as risk, additional taxes, transaction costs. Furthermore, when the company diversified its international higher than 3%, FSTS will negatively affect the company's idiosyncratic volatility, which means that the company benefits from international diversification portfolio accordance with the theory of Markowitz (1957). However, when the international diversification of the company has more than 12%, idiosyncratic volatility will rise again, which shows the cost of international diversification return is greater than the benefit received by the company. Subsample FSTS≥10% (Mature Stage)

Table 3. Regression Results Subsample FSTS≥10%

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9

C 11.11663 10.6521 12.35672 2.201831 2.242704 2.25499 0.144977 0.141619 0.147035

(2.401521) (2.244165) (2.224795) (2.575901) (2.660165) (2.516916) (2.144943) (2.076235) (1.928817)

FSTS 1.741302*** 1.661105 -4.324161 0.232291 1.144134** 1.136482 0.016608 0.080114* 0.059618

(3.021305) (0.738963) (-0.963517) (1.608964) (2.0656) (0.756037) (1.372784) (1.763257) (0.491740)

FSTS^2 0.186584 16.54169 -0.884257* -0.866517 -0.061970 -0.015885

(0.057499) (1.424896) (-1.702732) (-0.252492) (-1.457980) (-0.057798)

FSTS^3 -11.67938 -0.011683 -0.029207

(-1.300161) (-0.005317) (-0.165484)

LIQ -0.275654*** -0.273361*** -0.279005*** -0.063186* -0.065955* -0.066221* -0.00466 -0.005186 -0.005006

(-5.693277) (-5.663866) (-5.548774) (-1.755595) (-1.844933) (-1.837684) (-1.471303) (-1.586792) (-1.493189) LEV -2.000173*** -1.956954*** -1.901434*** 0.173084* 0.176982* 0.176031* 0.030621*** 0.028919*** 0.029124*** (-4.955204) (-4.779706) (-4.716454) (1.871218) (1.938668) (1.898802) (3.192171) (2.996463) (3.015522) PROF -1.973855** -1.981682** -2.078753** 1.696316*** 1.566601*** 1.565725*** 0.225772*** 0.209500*** 0.207112*** (-2.289173) (-2.292263) (-2.30435) (3.385965) (3.102482) (3.079377) (3.903489) (3.444844) (3.353860)

EFF 0.092093 0.092275 0.064545 0.033236 0.045095 0.045131 0.0000562 0.001205 0.001236

(1.136657) (1.183332) (0.906476) (0.771932) (1.040222) (1.029517) (0.016024) (0.327839) (0.335537) MB -0.018564 -0.018966 -0.019469 -0.008448*** -0.007662** -0.007667** -0.000811*** -0.000725*** -0.000727*** (-1.408835) (-1.476402) (-1.499197) (-2.825828) (-2.563176) (-2.536878) (-4.124929) (-3.471329) (-3.442889)

DIV -0.087335 -0.089019 -0.094011 -0.026641 -0.028419 -0.028297 -0.000659 -0.000684 -0.000688

(-1.640034) (-1.582272) (-1.555187) (-0.733866) (-0.783899) (-0.768777) (-0.209691) (-0.207890) (-0.207706)

SIZE -0.760315** -0.725532* -0.817293** 0.011204 -0.006315 -0.007168 -0.005124 -0.005734 -0.005994

(-2.120327) (-1.940632) (-1.987928) (0.164049) (-0.092594) (-0.102615) (-0.96696) (-1.071876) (-1.055842) N

Adj. Rsquared 0.453655 0.451569 0.443662 0.070113 0.078439 0.073641 0.207919 0.213521 0.207392

240

Variabel Beta Stock Vol Idiosyncratic Vol

FSTS and Beta

Demonstrated a significant positive relationship model 1 means that internationalization will increase the systematic risk of the company, the higher the level of internationalization, companies are increasingly sensitive to changes in the market.

FSTS and Stock Volatility

Model 5 showed a significant result between FSTS and stock volatility companies that have shown an inverted U-shaped pattern. There is a positive effect on the company's total

356 ISBN (Vietnam): 978-604-73-4020-0

risk when the level of internationalization of the company below 86% (FSTS <86). This is due to the uncertainty, the higher the complexity, and difficulty in monitoring in the foreign market. However, when the level of internationalization of the company is more than or equal to 86%, the company's total risk will tend to be stable / falling. This is because the company's main market is no longer the domestic market, so that managers, investors / shareholders, and other stakeholders are already capable of and used to manage and monitor multinational companies.

FSTS and Idiosyncratic Volatility

Model 8 showed a significant result between FSTS and idiosyncratic volatility companies that have shown an inverted U-shaped pattern. There is a positive influence on the risk of non-systematic company when the company's internationalization level below 65% (FSTS <65). This is due to the additional costs that must be incurred by the company as well as the lack of information and experiences that increase the risk of the company's business. However, when the level of internationalization of the company is more than or equal to 65%, the unsystematic risk companies will decline. This is because the company is already getting knowledge in managing international markets.

CONCLUSION

Based on the results of testing the hypothesis, it is known that the level of internationalization for all samples, independent variables FSTS has a significant positive effect on systematic risk, total risk, and the unsystematic risk enterprises described linearly. At the level of internationalization of less than 10% (subsample FSTS <10%), are inverted S-shaped pattern between internationalization and total risk or unsystematic risk, whereas no significant effect on systemic risk. While the level of internationalization is more than or equal to 10% (subsample FSTS≥10%), internationalization has a significant positive effect on systematic risk, and there is an inverted U-shaped pattern between internationalization and total risk, are also at unsystematic risk.

For investors, the results of this study can be used as consideration before investing in multinational companies. The good investors invest in accordance with the preferences of the risk. For investors who are risk averse, may invest in companies that are new to internationalization at an early stage because there was no significant effect between internationalization and systematic risk (beta) company. As for investors who are risk seekers, may invest in companies which have the internationalization level equal to or greater than 10%, due to the uncertainty faced by larger companies. For the manager of the company, the results of this study can be used as an additional consideration in managing the company's strategy. The greater the level of internationalization of the company, the company's risk will also increase. Researchers face that the results of this study can be used as educational material for identification and analysis of risks facing the

MARKET INTEGRATION IN ASEAN: SUSTAINABLE GROWTH AND CROSS CULTURAL ISSUES

ISBN (Indonesia): 978-602-73852-0-7 357 company when the internationalization process so that companies can develop better risk management.

This study has limitations that can be used as an opportunity for the next researcher to conduct research next. Limitations of this study include: (1) This study assumes that the integration of capital markets that are not described in the study; (2) This study uses monthly beta is considered normal distribution, so the monthly beta equal to the annual beta, and can be paired with the annual data. For subsequent researchers, researchers can add a period of research and study sample that research results more valid and less biased. Subsequent researchers can also conduct research in sectors other than manufacturing. It would be very useful for companies in sectors other than manufacturing because it will provide new information to determine the risk of the company when the process of internationalization. In addition, researchers can observe the effect of internationalization on the risk through different proxies, such as the ratio of foreign assets to total assets, the ratio of foreign cost to total cost, the amount of investment destination, as well as the geographical segments in order to provide more accurate information on their internationalization.

REFERENCES

1. Aabo, T., Pantzalis, C., Sorensen, H., dan Teilmann T.M., 2014, Corporate Risk and External Sourcing from Foreign Suppliers: A Scandinavian Stock Market, Working Paper, Aarhus University and University of South Florida.

2. Ang, J., Peterson, P., Peterson, D., 1985, Investigations into the Determinants of Risk: A New Look, Quarterlu Journal of Business and Economics, Vol. 24(1): 3-20.

3. Bodie, Z., dkk., 2008, Essentials of Investments, 7th Edition, McGraw-Hill.

4. Bowman, R.G., 1979, The Theoretical Relationship between Systematic Risk and Financial (Accounting) Variables, The Journal of Finance, Vol. 34: 617-630.

5. Dunning, J.J., 1977, Trade, Location of Economic Activity and the MNEs: A Search for an Ecletic Paradigm, The International Allocation of Economic Activity, p. 395-418.

6. Eiteman, D.K., Stonehill, A.I., dan Moffett, M.H., 2010, Multinational Business Finance, 12th edition, Pearson Education.

7. Fama, Eugene F., 1978, The Effect of a Firm’s Investment and Financing Decision on the Welfare of its Security Holders, American Economic Review, Vol: 68: 272-28.

8. Giri, R., 2012, Local Costs of Distribution, International Trade Costs and Micro Evidence on the Law of One Price, Journal of International Econoics, Vol. 86(1): 82-100.

9. Gitman, L.J. dan Zutter, C.J., 2015, Principles of Managerial Finance, 14th Edition, Pearson Education.

10. Goldberg, S.R. dan Heflin, F.L., 1995, The Association between the Level of International Diversification and Risk. Journal of International Financial Management and Accounting, Vol. 6: 1-25.

13th _{UBAYA INTERNATIONAL ANNUAL SYMPOSIUM ON MANAGEMENT}

358 ISBN (Vietnam): 978-604-73-4020-0 11. Grant, R., 1987, Multinationality and Performance among British Manufacturing

Companies, Journal of International Business Studies, Vol. 18(3): 79-89.

12. Grant, R.M., 2010, Contemporary Strategy Analysis, 7th Edition, United Kingdom: Wiley. 13. Hamada, R.S., 1972, The Effect of the Firm’s Capital Structure on the Systematic Risk of

Common Stocks, The Journal of Finance, Vol. 27: 435-452.

14. Iqbal, M.J. dan Shah, S.Z.A., 2009, Determinants of Systematic Risk, The Journal of Commerce. Vol.4(1).

15. Jin, L. dan Myers, S.C., 2006, R 2 Around the World: New Theory and New Tests, Journal of Financial Economics, Vol. 79(2): 257-292.

16. Joliet, R. dan Hubner, G., 2003, Firm Internationalization and Systematic Risk: A Multidimensional Approach, Working Paper, University of Liege dan Maastricht University.

17. Krapl, A.A., 2015, Corporate International Diversification and Risk, International Review of Financial Analysis, Vol. 37: 1-13.

18. Markowitz, H.M., 1952, Portfolio Selection, The Journal of Finance, Vol: 7(1): 77-91. 19. Megginson, W.L., 1997, Corporate Finance Theory, Addison-Wesley.

20. Modigliani, F. dan Miller, M., 1958, The Expected Cost of Equity Capital, Corporation Finance, and the Theory of Investment, American Economic Review, p. 261-297.

21. Olibe, K.O., Michello, F.A., dan Thorne, J., 2008, Systematic Risk and International Diversification: An Empirical Perspective, International Review of Financial Analysis, Vol. 17: 681-698.

22. Reeb, D.M., Kwok, C.C., dan Baek, H.Y., 1998, Systematic Risk of the Multinational Corporation, Journal of International Business Studies, p. 263-279.

23. Riaz, L., Hunjra, A.I., Rauf-i-Azam, 2012, Impact of Psychological Factors on Investment Decision Making Mediating by Risk Perception: A Conceptual Study, Middle-East Journal of Scientific Research, Vol. 12 (6): 789-795.

24. Roth, K. dan O’Donnell, S., 1996, Foreign Subsidiary Compensation Strategy: An Agency Theory Perspective. Academy of Management Journal, Vol. 39(3): 678-703.

25. Singh, M. dan Nejadmalayeri, A., 2004, Internationalization, Capital Structure, and Cost of Capital: Evidence from French Corporations, Journal of Multinational Finance, Vol. 14: 153-169.

26. Thomsen, A.H., Risk and Internationalization: An Empirical Study of Large Firms in the Euro Countries 2006-2011, Thesis, Aarhus University.

27. Weston, J.F. dan Copeland, T.E., 1992, Managerial Finance, 9th Edition, Forth Worth: The Dryden.

28. www.finance.yahoo.com 29. www.idx.co.id

1 GENERAL INSTRUCTIONS

1.1 Type area

The text should fit exactly into the type area of 187 × 272 mm (7.36" × 10.71"). For correct settings of margins in the Page Setup dialog box (File menu) see Table 1.

1.2 Typefont, typesize and spacing

Use Times New Roman 12 point size and 13 point line spacing (Standard;text tag). Use roman type ex-cept for the headings (Heading tags), parameters in mathematics (not for log, sin, cos, ln, max., d (in dx), etc), Latin names of species and genera in botany and zoology and the titles of journals and books which should all be in italics. Never use bold, except to denote vectors in mathematics. Never underline any text. Use the small font (10 points on 11 points) for tables (Table tags), figure captions (Figure cap-tion tag) and the references (Reference text tag).

Never use letterspacing and never use more than one space after each other.

2 GETTING STARTED

2.1 Preparing the new file with the correct template

Copy the template file B2ProcA4.dot (if you print on A4 size paper) or B2ProcLe.dot (for Letter size

pa-per) to the template directory. This directory can be found by selecting the Tools menu, Options and then by tabbing the File Locations. When the Word pro-gramme has been started open the File menu and choose New. Now select the template B2ProcA4.dot or B2ProcLe.dot (see above). Start by renaming the document by clicking Save As in the menu Files. Name your file as follows: First three letters of the file name should be the first three letters of the last name of the first author, the second three letters should be the first letter of the first three words of the title of the paper (e.g. this paper: balpcc.doc). Now you can type your paper, or copy the old ver-sion of your paper onto this new formated file. 2.2 Copying old text onto new file

Open your old file and the new file. Switch between these two with the Window menu. Select all text of the old file (excluding title, authors, affiliations and abstract) and paste onto bottom of new file, after having deleted the word INTRODUCTION (see also section 2.5). Check the margin setting (Page Setup dialog box in File menu) and column settings (see Table 1 for correct settings). After this copy the texts which have to be placed in the frames (see sections 2.3 and 2.4 ). In order to avoid disruption of the text and frames, copy these texts paragraph by paragraph without including the first word (which includes the

Preparing a two column paper with MS Word for Windows

A.T. Balkema & G. Westers

A.A. Balkema Publishers, Rotterdam, Netherlands

B. Unknown

New Institute, Gouda, Netherlands

ABSTRACT: Authors of papers to proceedings have to type these in a form suitable for direct photographic reproduction by the publisher. In order to ensure uniform style throughout the volume, all the papers have to be prepared strictly according to the instructions set below. A laser printer should be used to print the text. The publisher will reduce the camera-ready copy to 75% and print it in black only. For the convenience of the authors template files for MS Word 6.0 (and higher) are provided. provided AUTHORS: Do not include au-thor's title (Prof., Dr.), position (president, research engineer), or degrees (ph. D., M Sc., M. E.). The abstract should contain the objectives and significance of the paper, method of analysis, and conclusion and is limited to 150 words. FULL PAPER: The overall length of the paper is limited to 4 pages. For publishing the pa-pers as e-book, a form 'Consent to Publish for Contributors to Books' has to be signed. The form will be pro-vided on the conference home-page. Please upload the signed 'Consent to Publish for Contributors to Books' online as well.

Table 1. Margin settings for A4 size paper and letter size paper.

______________________________________________ Setting A4 size paper Letter size paper ____________ _____________ cm inches cm inches ______________________________________________ Top 1.2 0.47" 0.32 0.13" Bottom 1.3 0.51" 0.42 0.17" Left 1.15 0.45" 1.45 0.57" Right 1.15 0.45" 1.45 0.57" All other 0.0 0.0" 0.0 0.0" Column width* 9.0 3.54" 9.0 3.54" Column spacing* 0.7 0.28" 0.7 0.28" _____________________________________________ * Column dialog box in Format menu.

old tag). It is best to first retype the first words man-ually and then to paste the correct text behind. When the new file contains all the text, the old tags in the text should be replaced by the new Balkema tags (see section 3). Before doing this apply automatic formatting (AutoFormat in Format menu).

2.3 Title, author and affiliation frame

Place the cursor on the T of Title at the top of your newly named file and type the title of the paper in lower case (no caps except for proper names). The title should not be longer than 75 characters). Delete the word Title (do not delete the paragraph end). Place the cursor on the A of A.B.Author(s) and type the name of the first author (first the initials and then the last name). If any of the co-authors have the same affiliation as the first author, add his name af-ter an & (or a comma if more names follow). Delete the words A.B. Author etc. and place the cursor on the A of Affiliation. Type the correct affiliation (Name of the institute, City, State/Province, Coun-try). Now delete the word Affiliation. If there are au-thors linked to other institutes, place the cursor at the end of the affiliation line just typed and give a re-turn. Now type the name(s) of the author(s) and after a return the affiliation. Repeat this procedure until all affiliations have been typed.

All these texts fit in a frame which should not be changed (Width: Exactly 187 mm (7.36"); Height: Exactly 73 mm (2.87") from top margin; Lock an-chor).

2.4 Abstract frame

If there are no further authors place the cursor one space behind the word ABSTRACT: and type your abstract of not more than 150 words. The top of the first line of the abstract will be 73 mm (2.87") from the top of the type area. The complete abstract will fall in the abstract frame, the settings of which should also not be changed (Width: Exactly 187 mm (7.36"); Height: Automatic; Vertical 73 mm (2.87") from margin; Lock anchor).

2.5 First line of text or heading

If your text starts with a heading, place the cursor on the I of INTRODUCTION and type the correct text for the heading. Now delete the word INTRODUC-TION and start with the text after a return. This text should have the tag First paragraph.

If your text starts without a heading you should place the cursor on the I of INTRODUCTION, change the tag to First paragraph and type your text after deleting the word INTRODUCTION.

3 LAYOUT OF TEXT 3.1 Text and indenting

Text is set in two columns of 9 cm (3.54") width each with 7 mm (0.28") spacing between the col-umns. All text should be typed in Times New Ro-man, 12 pt on 13 pt line spacing except for the paper title (18 pt on 20 pt), author(s) (14 pt on 16 pt), and the small text in tables, captions and references (10 pt on 11 pt). All line spacing is exact. Never add any space between lines or paragraphs. When a column has blank lines at the bottom of the page, add space above and below headings (see opposite column).

First lines of paragraphs are indented 5 mm (0.2") except for paragraphs after a heading or a blank line (First paragraph tag).

3.2 Headings

Type primary headings in capital letters roman (Heading 1 tag) and secondary and tertiary headings in lower case italics (Headings 2 and 3 tags). Head-ings are set flush against the left margin. The tag will give two blank lines (26 pt) above and one (13 pt) beneath the primary headings, 1½ blank lines (20 pt) above and a ½ blank line (6 pt) beneath the sec-ondary headings and one blank line (13 pt) above the tertiary headings. Headings are not indented and nei-ther are the first lines of text following the heading indented. If a primary heading is directly followed by a secondary heading, only a ½ blank line should be set between the two headings. In the Word pro-gramme this has to be done manually as follows: Place the cursor on the primary heading, select Para-graph in the Format menu, and change the setting for spacing after, from 13 pt to 0 pt. In the same way the setting in the secondary heading for spacing before should be changed from 20 pt to 7 pt.

3.3 Listing and numbering

When listing facts use either the style tag List signs or the style tag List numbers.

3.4 Equations

Use the equation editor of the selected word pro-cessing programme. Equations are not indented (Formula tag). Number equations consecutively and place the number with the tab key at the end of the line, between parantheses. Refer to equations by these numbers. See for example Equation 1 below:

From the above we note that sin θ = (x + y)z or:

K R c k t a = − +





1





2 4 1

τ

νtanδ (1)

where ca = interface adhesion; δ = friction angle at interface; and k1 = shear stiffness number.

For simple equations in the text always use super-script and subsuper-script (select Font in the Format menu). Do not use the equation editor between text on same line.

The inline equations (equations within a sen-tence) in the text will automatically be converted to the AMS notation standard.

3.5 Tables

Locate tables close to the first reference to them in the text and number them consecutively. Avoid ab-breviations in column headings. Indicate units in the line immediately below the heading. Explanations should be given at the foot of the table, not within the table itself. Use only horizontal rules: One above and one below the column headings and one at the foot of the table (Table rule tag: Use the Shift-minus key to actually type the rule exactly where you want it). For simple tables use the tab key and not the ta-ble option. Type all text in tata-bles in small type: 10 on 11 points (Table text tag). Align all headings to the left of their column and start these headings with an initial capital. Type the caption above the table to the same width as the table (Table caption tag). See for example Table 1.

3.6 Figure captions

Always use the Figure caption style tag (10 points size on 11 points line space). Place the caption un-derneath the figure (see Section 5). Type as follows: ‘Figure 1. Caption.’ Leave about two lines of space between the figure caption and the text of the paper.

3.7 References

In the text, place the authors’ last names (without in-itials) and the date of publication in parentheses (see examples in Section 5). At the end of the paper, list all references in alphabetical order underneath the heading REFERENCES (Reference heading tag). The references should be typed in small text (10 pt on 11 pt) and second and further lines should be

in-dented 5.0 mm (0.2") (Reference text tag). If several works by the same author are cited, entries should be chronological:

Larch, A.A. 1996a. Development ... Larch, A.A. 1996b. Facilities ... Larch, A.A. 1997. Computer ...

Larch, A.A. & Jensen, M.C. 1996. Effects of ... Larch, A.A. & Smith, B.P. 1993. Alpine ...

3.7.1 Typography for references

Last name, First name or Initials (ed.) year. Book title. City: Publisher.

Last name, First name or Initials year. Title of article. Title of

Journal (series number if necessary) volume number (issue

number if necessary): page numbers.

3.7.2 Examples

Grove, A.T. 1980. Geomorphic evolution of the Sahara and the Nile. In M.A.J. Williams & H. Faure (eds), The Sahara and

the Nile: 21-35. Rotterdam: Balkema.

Jappelli, R. & Marconi, N. 1997. Recommendations and preju-dices in the realm of foundation engineering in Italy: A his-torical review. In Carlo Viggiani (ed.), Geotechnical

engi-neering for the preservation of monuments and historical sites; Proc. intern. symp., Napoli, 3-4 October 1996.

Rot-terdam: Balkema.

Johnson, H.L. 1965. Artistic development in autistic children.

Child Development 65(1): 13-16.

Polhill, R.M. 1982. Crotalaria in Africa and Madagascar. Rot-terdam: Balkema.

3.8 Notes

These should be avoided. Insert the information in the text. In tables the following reference marks should be used: *, **, etc. and the actual footnotes set directly underneath the table.

3.9 Conclusions

Conclusions should state concisely the most im-portant propositions of the paper as well as the au-thor’s views of the practical implications of the re-sults.

4 PHOTOGRAPHS AND FIGURES

Number figures consecutively in the order in which reference is made to them in the text, making no dis-tinction between diagrams and photographs. Figures should fit within the column width of 90 mm (3.54") or within the type area width of 187 mm (7.36"). Figures, photographs, etc. can be in black/white or full color, but will be produced in the book in black/white only. Paste copies of the same size onto the typescript where you want them to appear in the text. Do not place them sideways on a page; howev-er if this cannot be avoided, no othhowev-er text (except the figure caption) should appear on that page. Figures, etc. should not be centered, but placed against the

left margin. Leave about two lines of space between the actual text and figure (including caption). Nev-er place any text next to a figure. Leave this space blank. The most convenient place for placing figures is at the top or bottom of the page. Avoid placing text between figures as readers might not notice the text. Keep in mind that everything will be reduced to 75%. Therefore, 9 point should be the minimum size of the lettering. Lines should preferably be 0.2 mm (0.1") thick. Keep figures as simple as possible. Avoid excessive notes and designations.

Figure 1. Caption of a typical figure. Photographs will be scanned by the printer. Always supply original photographs.

Photographs should be with good contrast and on glossy paper. Photographic reproductions cut from books or journals, photocopies of photographs and screened photographs are unacceptable. The pro-ceedings will be printed in black only. For this rea-son avoid the use of colour in figures and photo-graphs. Colour is also nearly always unnecessary for scientific work.

5 PREFERENCES, SYMBOLS AND UNITS Consistency of style is very important. Note the spacing, punctuation and caps in all the examples below.

− References in the text: Figure 1, Figures 2-4, 6,

8a, b (not abbreviated)

− References between parentheses: (Fig. 1), (Figs

2-4, 6, 8a, b) (abbreviated)

− USA / UK / Netherlands / the Netherlands instead

of U.S.A. / U.K. / The Netherlands

− Author & Author (1989) instead of Author and Author (1989)

− (Author 1989a, b, Author & Author 1987) instead

of (Author, 1989a,b; Author and Author, 1987)

− (Author et al. 1989) instead of (Author, Author & Author 1989)

− Use the following style: (Author, in press);

(Au-thor, in prep.); (Au(Au-thor, unpubl.); (Au(Au-thor, pers. comm.)

Always use the official SI notations:

− kg / m / kJ / mm instead of kg. (Kg) / m. / kJ. (KJ) / mm.;

− 20°16′32′′SW instead of 20° 16′ 32′′ SW

− 0.50 instead of 0,50 (used in French text); 9000

instead of 9,000 but if more than 10,000: 10,000 instead of 10000

− 14_{C instead of C}14 _{/ C-14 and BP / BC / AD}

in-stead of B.P. / B.C. / A.D.

− × 20 instead of ×20 / X20 / x 20; 4 + 5 > 7

in-stead of 4+5>7 but –8 / +8 inin-stead of – 8 / + 8

− e.g. / i.e. instead of e.g., / i.e.,

6 SUBMISSION OF MATERIAL TO THE EDITOR

The camera-ready copy of the complete paper print-ed on a high resolution printer on one side of the pa-per as well as two copies of the papa-per should be sent to the editor after receiving the final acceptance no-tice. The paper should be sent together with the signed Copyright form. Include the original photo-graphs. Check whether the paper looks the same as this sample: Title at top of first page in 18 points, authors in 14 points and all other text in 12 points on 13 points line space, except for the small text (10 point on 11 point line space) used in tables, captions and references. Also check if the type width is 187 mm (7.36"), the column width 90 mm (3.54"), the page length is 272 mm (10.71") and that the space above the Abstact is exactly as in the sample. Write your name and the shortened title of the paper in pencil in the bottom margin of each page and num-ber the pages correctly.

7 DEADLINE

The above material should be with the editor before the deadline for submission. Any material received too late will not be published. Send the material by airmail or by courier well packed and in time. Be sure that all pages are included in the parcel.