Universitas Gadjah Mada
Faculty of Economics and Business

Prof. Bambang Riyanto, LS, M.B.A, PhD. was officially inaugurated as Professor in Accounting from University of Gadjah Mada (UGM) in the Professor's Council Meeting held at the Senate Hall of University of Gadjah Mada on Thursday (07/16). The meeting was attended by the Chairperson of the Board of Professors, Professors, and attendees, the UGM academic community. The broadcast was live through the @UGMOfficial Youtube channel, the Inauguration of the Professor ran smoothly. With this, Prof. Bambang Riyanto officially became the 41st Professor of the total 46 Professors at the Faculty of Economics and Business UGM (FEB UGM). Prof. Bambang Riyanto also became the 484th Professor of 563 UGM Professors, both active and non-active. Inauguration of the Professor is evidence of efforts from Prof.'s Bambang Riyanto, who has served in the world of Education for a long time. Dean of the Faculty of Economics and Business UGM (FEB UGM), Eko Suwardi, Ph.D. expressed his pride and congratulations to Prof. Riyanto has been confirmed as one of the professors at FEB UGM. "Prof. Bambang Riyanto assumed a new position and added an expert in FEB, especially in the field of Accounting. Congratulations and success to Prof. Bambang Riyanto ", said Eko.

The Chair of the Professor Council Meeting this time was the Head of the UGM Professor Board, Prof. Drs. Koentjoro, MBSc., Ph.D. Bring the topics on good corporate governance and good government governance, Prof. Bambang Riyanto gave an Inauguration Speech by raising the title "Governance and Accountants: Challenges Ahead in Indonesia". Prof. Bambang started his speech by explaining about A Good Corporate Governance, especially from the External Governance Perspective. According to him, a governance is about directing corporate executive behavior so that policy priorities and resource uses are only for the prosperity of the shareholders, and there is no divergence of interests or any interest difference between executive and stockholders. This can happen because shareholders do not become managers of the company they have.

"Management of the company is turned over to the executive, and the owner has no longer any control over the utilization of the company's resources, so that information asymmetry occurs, in the form of hidden information and hidden action," he said.

Citing the agency theory, Prof. Bambang explained that the relationship between shareholders and executives is an equity contractual relationship, which means shareholders are principals who recruit executives as agents to manage the company. Therefore, principals and agents are the rational individuals who try to maximize their utility (utility maximizing actors), so it is very likely that agents will take actions that tend to maximize their own utility (self-serving behavior). According to him, if this is allowed to continue, it will lead to a good company's stock price being undervalued, while a bad company's stock price will be overvalued. Because, according to him, potential investors cannot distinguish the price of shares of companies that are well managed and those that are not, because the price of shares is determined based on the average price of a combination of good and bad companies. This will reduce the company's good incentives to sell its shares, so that in the end the capital market provides a lot of bad company shares, and on the other hand investor interest in investing in the capital market will also decrease.

Prof. Bambang explained in this regard, the accountant has an important role in building good corporate governance, not only as a public accountant, but also in his involvement as an internal auditor, audit committee, risk management team, and in preparing financial statements. He gave examples of various cases that occurred on the Indonesia Stock Exchange (IDX), such as the Kimia Farma case, PT. Garuda Indonesia, PT. Hanson International, which was still dominated by cases of profit markups. According to him, this indicates that accountants are still a source of weak corporate governance in the Indonesian capital market.

Prof. Bambang added that there are two aspects to encourage the emergence of competent leaders and the realization of good governance, including aspects of the planning system and aspects of the system of Responsibility and Accountability. In addition, there are two other factors that are no less important, namely law enforcement and market for labor. “Law enforcement must be applied for those who commit violations. They must be dealt immediately with fines that considers ethics and morals, so that it will make a deterrent.”. he said. Whereas market for labor is simply, according to him, the value of the conduct of an executive will be determined by the market mechanism. "If someone does not have good track records, or even has done 'self-serving behavior', then he will not sell (no one will recruit). Firm law enforcement and deterrent will push labor for market mechanisms to run well. ", Said Bambang.
He concluded his speech by emphasizing the importance of banning former perpetrators of crimes from becoming involved in government and political office, therefore, in directing a good government governance, it is necessary to strengthen the Corruption Eradication Commission and the prohibition of those who have dealt with law, especially corruption cases, to be prohibited from occupying political or governmental positions and revoked their political rights, "he concluded.

At the end of Prof. Inauguration speech, Bambang marked the inauguration process of Professor to Prof. Bambang Riyanto has ended. The Chairperson of the Professor Council closes the Professor Council Meeting by giving a closing statement. "The thoughts of Prof. Bambang is expected to be heard by policy makers, especially for the proposed roles and governance, so that it can be a policy that truly benefits and can be truly useful for the benefit of the people well ", closed Prof. Koentjoro.

The Big Family of the Faculty of Economics and Business congratulates Prof. Bambang Riyanto for his position as Professor in Accounting Science.

Source: Sony Budiarso/Leila Chanifah Z.
Picture: PR UGM