The Influence of the Ceo Popularity on Performance of Banking Companies at the Earlier Stages of Covid-19

Volume 18 Issue 1 Volume 18, Issue 1, 2021 Article 1

7-31-2021

THE INFLUENCE OF THE CEO POPULARITY ON PERFORMANCE OF BANKING COMPANIES AT THE EARLIER STAGES OF COVID-19

Dian Kusuma Wardhani Airlangga University

Wiwik Supratiwi Airlangga University

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Recommended Citation Wardhani, Dian Kusuma and Supratiwi, Wiwik (2021) "THE INFLUENCE OF THE CEO POPULARITY ON PERFORMANCE OF BANKING COMPANIES AT THE EARLIER STAGES OF COVID-19," Jurnal Akuntansi dan Keuangan Indonesia: Vol. 18 : Iss. 1 , Article 1. Available at: https://scholarhub.ui.ac.id/jaki/vol18/iss1/1

This Article is brought to you for free and open access by the Faculty of Economics & Business at UI Scholars Hub. It has been accepted for inclusion in Jurnal Akuntansi dan Keuangan Indonesia by an authorized editor of UI Scholars Hub. Jurnal Akuntansi dan Keuangan Indonesia, June 2021, Vol. 18, Iss. 1, pg. 1-14 1

Jurnal Akuntansi dan Keuangan Indonesia Volume 18 Issue 1, June 2021

THE INFLUENCE OF THE CEO POPULARITY ON PERFORMANCE OF BANKING COMPANIES AT THE EARLIER STAGES OF COVID-19

Dian Kusuma Wardhani Airlangga University [email protected]

Wiwik Supratiwi Airlangga University [email protected]

Abstract

This study aims to obtain empirical evidence about the influence of CEO popularity on banking performance at the earlier stages of the COVID-19 pandemic in Indonesia. The CEO popularity significantly improve based on their achievements in the public mass media. The study sample consisted of 108 banking companies listed on the Indonesia Stock Exchange in Q1 - Q3 2020. Panel data regression with a common influence model approach was used for analysis, while the company performance was measured using Tobin's Q. The result showed that CEO popularity in the banking sector positively affects company performance. Therefore, hiring popular CEO helps obtain better company performance. Keywords: CEO popularity, company performance, CEO characteristics.

Abstrak

Penelitian ini bertujuan untuk mendapatkan bukti empiris tentang pengaruh popularitas CEO terhadap kinerja perusahaan perbankan pada awal pandemi Covid-19 di Indonesia. Popularitas CEO diperoleh dengan intensitas pemberitaan prestasi mereka di media masa publik. Sampel penelitian ini terdiri atas 108 perusahaan perbankan yang terdaftar di Bursa Efek Indonesia untuk periode Q1 – Q3 Tahun 2020. Penelitian ini menggunakan teknik analisis regresi data panel dengan pendekatan common effect model. Kinerja perusahaan diukur menggunakan Tobin’s Q. Temuan penelitian ini menunjukkan bahwa popularitas CEO di sektor perbankan berpengaruh positif pada kinerja perusahaan. Oleh karena itu, penelitian ini menunjukkan bahwa mempekerjakan CEO populer merupakan salah satu upaya untuk mendapatkan kinerja perusahaan yang lebih baik.

Kata kunci: Popularitas CEO, kinerja perusahaan, karakteristik CEO.

BACKGROUND the news in the public mass media usually indicate the popularity of the CEO (Love et In the current state of information al. 2017). The public always emphasizes disclosure, individuals in the public leadership and how they produce high spotlight include celebrities or government company performance (Lin et al. 2020). officials. However, the Chief Executive Furthermore, the intensity of the public Officers (CEO) also attract public attention, spotlight was higher at the earlier stages of gaining more popularity. The intensity of

2 Jurnal Akuntansi dan Keuangan Indonesia, June 2021, Vol. 18, Iss. 1, pg. 1-14 the COVID-19 pandemic. This is because The positive influence of the CEO the community was more active in obser- popularity on the company performance at ving and responding to all efforts made by the earlier stages of the COVID-19 the company CEO. It is vital for popular pandemic can be shown by the rewards CEO to demonstrate the ability to maintain won. For instance, President Director of growth of the company and high perfor- Bank Rakyat Indonesia (Persero), a public mance amid uncertain conditions. company, won several awards, including The influence of a CEO popularity on the Best CEO in Banking Transformation in company performance at the earlier stages Consumer News and Business Channel of the COVID-19 pandemic can be Indonesia Award 2020, and the CEO Best explained by agency theory and the upper Talent Development at the 9th Award for echelon. According to agency theory, CEO State-Owned Enterprises (BUMN) 2020, is motivated to be disciplined and provide and Top National Banker 2020 from potential information to owners when they Investor Magazine (Banjarnahor 2020; have high popularity (Gibbons and Murphy Pratama 2020). The awards increased the 1992; Jensen and Meckling 1992). 1976; coverage of Sunarso's leadership in the Pucheta-Martínez and Gallego-Álvarez public mass media and strengthened the 2019). Their efforts to provide relevant positive image of the leadership both at the details at the earlier stages of the pandemic national and regional Asia Pacific levels reduced information asymmetry between (Maulana 2020). In response to the owners and managers. This helped mini- restrictions on activities related to COVID- mize agency problems and maintain the 19, Sunarso took steps to organize and dis- popularity (Kaur and Singh 2018). tribute micro-credit through the BRISPOT According to echelon theory, CEO application. For this reason, the credit leadership is influenced by personal distribution process for public companies characteristics that reflect their respective Bank Rakyat Indonesia (Persero) remained cognitive abilities (Zein et al. 2016). The contactless. Non-performing loans of up to personal characteristics affect the choice of Q3 2020 were recorded, 3.12% lower than strategic decisions and the responses to the the national figure of 3.15% (Shandy 2020). company's operational problems, which Apart from the positive image, influences the level of performance later Sunarso's popularity positively affected the (Abatecola and Cristofaro 2018). Upper company performance. In 2020, the echelon theory explains that a popular CEO company recorded a net profit of Rp 10,200 have communication skills and high crisis trillion, higher than the estimated profit of sensitivity. For this reason, one works Rp 9,440 trillion. This surge was attributed comprehensively and carefully while choo- to the operational adjustment due to sing management strategies because the COVID-19 conditions (Uly 2020). The quality and effectiveness of the strategy positive influence was also shown by the directly affect the level of company perfor- increase in commission-based and other mance and their image before stakeholders operating income to Rp 13.740 trillion, a (Gamache and McNamara 2019; Hambrick growth of 13.4% (YoY) (Kunjana 2020). and Mason 1984). To minimize the risk due Furthermore, Sunarso's popularity as CEO to the uncertainty of the COVID-19 led to increased shares from the beginning pandemic, the popular CEO select the best of the year to Q3 2020, up 16.25%. A trade strategy by maximally accommodating all transaction value of Rp. 358.87 billion was stakeholder interests to maintain the com- also recorded. (Sidik 2020). pany performance in a positive area to The experience of Persero shows that maintain its popularity (Altarawneh et al. the popularity of CEO is profitable. This is 2020; Chatterjee and Hambrick 2007). because of the superior management skills and a good sense of crisis. Stakeholders of

Jurnal Akuntansi dan Keuangan Indonesia, June 2021, Vol. 18, Iss. 1, pg. 1-14 3 every company responded well to the This study aims to obtain empirical COVID-19 pandemic are responded well evidence regarding the influence of CEO by stakeholders, leading to performance popularity on company performance in the growth amid a pandemic (Lok and Lee early days of COVID-19. The sample 2020). The popularity of CEO increases includes banking companies listed on the public awareness regarding the companies Indonesia Stock Exchange (IDX) with an they lead, attracting new investors and observation period of Q1 - Q3 2020. motivating employees to continue striving Banking is chosen because it is a sector that to be the best in their industry (Lee et al. gets strict supervision from the government 2020). Additionally, the popularity of a and financial authorities. Furthermore, the CEO also affects their career, business co- effect of the performance of banking com- nnections, and a large amount of remune- panies is felt faster in the real economy and ration obtained from company management faster CEO rotation than in other sectors (Harymawan et al. 2020; Kanapathippillai (Altunbaş et al. 2019; Pucheta-Martínez et al. 2019; Wu et al. 2018). and Gallego-Álvarez 2019). The announce- Popularity opens up opportunities for ment of the first positive case of COVID-19 new job offers, which may eventually lead on March 2, 2020 (Q1) and the imposition to multiple positions in other companies of activity restrictions that affected all (Brown et al. 2019). Because of many company operations, the uncertainty regar- management responsibilities, a CEO ding when the pandemic will end, and the become very busy with divided attention. continuous decline in the JCI after the first Lacking effective strategies may lead to a case was revealed influenced the perfor- decline in performance levels, especially mance of banking companies listed on the during this COVID-19 pandemic (Hand- IDX (Sugianto 2020). This study focused schumacher et al. 2019; Saleh et al. 2020). on the early period of the COVID-19 According to the previous study, when the pandemic in Indonesia because of the CEO is busy, the corporation performance challenge the CEO of banking companies may decline. The relationship tends to be faced in maintaining the performance of stronger where the company growth is high, their respective companies. and the CEO tenure is short (Harymawan et The previous study discussed several al. 2019). characteristics of a CEO, such as busyness CEOs with high popularity often have that negatively affect the company's acc- strong leadership power that earns them ounting performance (Harymawan et al. respect from directors (Fang et al. 2020). 2019), power, and narcissism which This power effect affects their expertise in positively affect the accounting perfor- solving problems and the company performance (Fang et al. 2020; Uppal 2020), and mance. However, their popularity and the positive influence of over-confidence excess power may have had a bad effect on the accounting and market performance because of making them arrogant. In of the company (Reyes et al. 2020). The general, arrogant popular CEOs feel like novelty of this study is to examine other rulers and may pressure the directors under characteristics of a CEO, specifically them. They often engage in earnings mana- popularity and its effect on company per- gement practices to keep pace with compe- formance. This is an interesting subject titors and maintain their popularity in the because it still receives less attention from company's industrial sector (Lin et al. researchers, yet it may have positively 2020). According to Weng and Chen affected the performance of company per- (2017), CEO popularity does not affect formance at the earlier stages of the company performance because the COVID-19 pandemic. Furthermore, the company's reputation might be the same study contributes to the banking literature irrespective of the popularity. by identifying the issues currently in the

4 Jurnal Akuntansi dan Keuangan Indonesia, June 2021, Vol. 18, Iss. 1, pg. 1-14 spotlight of the Indonesian community, principal and agent shareholders (Laher specifically the popularity of a CEO and the 2020). extent to which their leadership affects the performance of the companies they lead Upper Echelon Theory during the pandemic. According to this theory, the perfor- This study only captures positive mance of an organization is a reflection of news that publishes the achievements or the cognitive abilities of the top leadership innovations of the CEO of a banking (Hambrick 2007; Hambrick and Mason company to optimize the performance at the 1984). The theory suggests that the CEO earlier stages of the COVID-19 pandemic. leadership is influenced by the breadth of The findings indicate that the popularity of knowledge, beliefs, and characteristics a CEO has a positive effect because the (Kaur and Singh 2018; Saeed and Ziaulhaq personal characteristics, such as a sense of 2019). These characteristics shape and crisis and the high prudence principle to determine the way of thinking in making maintain their image, lead to a better and strategic company decisions (Abatecola more effective quality strategy for main- and Cristofaro 2018). Therefore, it is taining the company performance during important to study their characteristics the pandemic. These results support Lee et because they the performance of companies al. (2020) by providing additional evidence and profits (Altarawneh et al. 2020; on the management practices of banking Chatterjee and Hambrick 2007). In the companies that popular a CEO has a better current era of information disclosure, the ability, commitment, and work motivation popularity influences the choice of strategic to produce high performance. During the decisions and determines company perfor- COVID-19 pandemic, which was full of mance. This characteristic is increasingly in uncertainty, the performance of the sample the spotlight during the COVID-19 pande- companies was well maintained, and the mic because of the need to maintain com- rights of shareholders were still fulfilled. pany performance during the pandemic. A The study also expands knowledge regar- popular CEO has a better mana-gerial, ding the characteristics of CEO popularity communication, and knowledge skills and and its effect on company performance, can read market situations quickly. There- especially in the early days of COVID-19. fore, their strategic decisions are of high quality and help maintain and improve LITERATURE REVIEW AND company performance during a pandemic HYPOTHESES FORMULATION (Hambrick 2007; Shahab et al. 2020).

Agency Theory Hypothesis Formulation Agency relationship occurs when the A CEO plays important roles in owner entrusts the manager (agent) to take organizational structure, including to lead some action and delegates decision-making and be responsible for all operational authority to the agent (Jensen and Meckling activities and performance (Chen and Keefe 1976). This theory holds that high popu- 2020). Along with the development of larity motivates a CEO to be disciplined in human thought, the role of the CEO is their work because of providing potential interpreted as being a mentor and directing information to the owner or em-ployer to the success of the organization. maintain their popularity (Bai et al. 2019). Popularity is generally obtained from Openness and delivery of potential accoun- the intensity of high-frequency reporting of table information to shareholders are essen- achievements in the public mass media, tial, especially during the COVID-19 including television, newspapers, or the pandemic. This is because it can minimize internet (Love et al. 2017; Tseng et al. agency problems that may arise due to 2017). The intensity of this news was differences in interests between the

Jurnal Akuntansi dan Keuangan Indonesia, June 2021, Vol. 18, Iss. 1, pg. 1-14 5 higher at the earlier stages of COVID-19 by the announcement of the first positive because the public was actively monitoring case of COVID-19 in Indonesia on March 2 and responding quickly to all efforts made 2020 (Q1) and the continued decline in the by the company CEO. According to Lee et JCI after the first case was revealed to the al. (2020), the popularity of a CEO is public (Sugianto 2020). Banking compa- advantageous because public awareness of nies were chosen because the impact of the company existence improves with their their performance is felt more quickly in presence in public media. This is in line real economic conditions, faster CEO turn- with Bai et al. (2019), which stated that the over, and tighter supervision by regulators good image built from the CEO popularity on banking operations and performance attracts new investors' attention. Further- (Altunbaş et al. 2019; Fang et al. 2020). The more, the popularity positively affects data was obtained from the published career, business connections, and large quarterly financial statements on the remuneration from the management www.IDX.co.id or the company's website. (Harymawan et al. 2020; Kanapathippillai CEO popularity data was obtained from the et al. 2019). sites www.swa.co.id and All the positive effects mentioned www.cnbcindonesia.com by looking at the earlier force popular CEO to deliver better number of CEO reports on the two sites results to maintain their companies' growth during the observation period. The news and high performance amidst many uncer- captured from the two sites was only tain conditions due to the impact of the positive and related to the CEO's achieve- pandemic. Theoretically, agency theory ments or innovations in creating maximum thinking explains that the company mana- company performance at the earlier stages gement role will be higher when led by a of the COVID-19 pandemic. The initial popular CEO. This is because of the moti- population totaled 138 observations from vation to work appropriately because to 46 banking companies listed on the IDX. provide potential information to owners Companies that do not publish quarterly (Jensen and Meckling 1976; Laher 2020). financial statements were excluded from According to the upper echelon theory, a the sample because they lacked complete popular value and cognitive characters data for research needs, leaving 126 produce higher quality and effective stra- observations. Furthermore, observational tegic decisions. This helps maintain the data with a z-score above 3 or -3 were company performance during the COVID- excluded because they were outliers. A 19 pandemic (Abatecola and Cristofaro final sample of 108 observations was 2018). Based on the views of the two obtained (Ghozali 2016). theories, previous study as well as the phenomenon in Bank Rakyat Indonesia Definition of Operational and Measurement (Persero) public companies, the proposed of Variables hypothesis is: Dependent Variable H1: The popularity of the CEO The dependent variable of this study positively affects the company performance at the earlier stages of is the company performance measured by COVID-19. Tobin's Q. Since the measurement assesses the company performance in a dynamic STUDY METHODS market perspective, it is expected to provide good results and reflect the actual perfor- Data and Sample mance of banking companies during the The study sample includes the COVID-19 pandemic (Lim et al. al. 2019). banking companies listed on the IDX in the Tobin's Q measurement refers to Pucheta- first to third quarters (Q1 – Q3) of 2020. Martínez and Gallego-Álvarez (2019) by The selection of this period was motivated adding up the market capitalization value of

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Table 1 Measurement of Variables

Variable Method Firm Performance (FP) Tobins’Q = (market capitalization value of the company's stock + total book value of debt) / total book value of assets. Popularitas of the CEO Number of positive news regarding the company CEO on the (POPULARITY) www.swa.co.id and www.cnbcindonesia.com pages. Leverage (LEV) Total debt / total assets. Company Size (FS) Ln total assets. CEO Tenure (TENURE) Ln number of days served as CEO of the company. Non-Performing Loan (NPL) Percentage of total bad loans / total credit. the shares with the total book value of the Control Variable debt divided by the book value of the total Several control variables were used in assets. the study model to avoid bias. The selection of control variables is based on the previous Independent Variable research, including leverage (LEV), com- The independent variable is the pany size (FS), CEO tenure (TENURE), popularity of the CEO. This is the popu- and Non-performing loans (NPL) (Bai et al. larity of a managing director based on the 2019; Harymawan et al. 2019; Ramlall intensity of reporting their achievements in 2018). LEV is total debt divided by total the public mass media (Koh 2011; Love et assets, while FS is the company size al. 2017). Its measurement refers to Love et indicated by the natural logarithm of its al. (2017) by counting positive news related total assets. The TENURE is calculated by to the CEO in public mass media pages the natural logarithm of days served as CEO accessed online through www.swa.co.id of the company, while NPL is measured as and www.cnbcindonesia.com. SWA a percentage of total bad loans compared to Magazine, accessed through total loans. To provide a more specific www.swa.co.id, writes positive news understanding of the variables, the related to the CEO success in producing operationally defined variables are shown high performance and actively conducts in Table 1. independent research on the company performance. It regularly holds award Empirical Model events to appreciate outstanding company This study aims to obtain empirical directors in Indonesia (SWA 2020). CNBC evidence regarding the effect of the Indonesia actively holds the CNBC Awards popularity of the CEO on company perfor- as an appreciation for the high performance mance. The analysis technique used the (CNBC Indonesia 2020). This television panel data regression method with a channel was chosen because it is the largest common effect model. This method com- and integrated economic media in bines cross-sectional and time-series data Indonesia. Since it is also affiliated with (Beyaztas and Bandyopadhyay 2020). It CNBC International, it covers the global increases the degree of freedom, greater realm. The two online public mass media data variance, and reducing collinearity were used to obtain positive news regarding between variables to produce efficient eco- the leadership of the CEO in the nationally nometric estimates (Das 2020; Latimaha et and globally. This is because of their al. 2019). The following regression model credibility, which reports and appreciates was used to test the hypothesis: the performance of business actors indepen- 퐹푃푖,푡 = 훽0 + 훽1 푃푂푃푈퐿퐴푅퐼푇푌푖,푡 + 훽2퐿퐸푉푖,푡 dently through a rigorous and comprehen- + 훽 퐹푆 + 훽 푇퐸푁푈푅퐸 sive assessment process. 3 푖,푡 4 푖,푡 + 훽 푁푃퐿 + 휀 5 푖,푡 푖,푡

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Table 2 Descriptive Statistics of Study Sample

Variable N Min Max Mean Std. Deviation Dependent Variable Tobin’s Q 108 0,001 392,182 5,719 37,950 Independent Variable POPULARITY 108 0,000 612,000 87,491 116,229 Control Variable LEV 108 0,042 0,936 0,764 0,199 FS 108 26,783 37,803 31,413 2,003 TENURE 108 1,945 9,260 6,469 1,466 NPL 108 0,130 5,080 2,054 1,198 Data source: Processed secondary data

Table 3 Best Model Determination

Test Sig Criteria Description Conclusion Chow 0,999 > 0,050 CE is better than FE Common Effect Hausman 0,948 > 0,050 RE is better than FE Random Effect LM 1,000 > 0,050 CE is better than RE Common Effect Data source: Processed secondary data where: the end of the observation period. Leverage 퐹푃푖,푡 : firm performance (LEV), company size (FS) and non- 훽0 : intercept performing loans (NPL) have an average 훽1,2,3,4,5 : regression coefficient value of 0.764; 31,413 and 2,054. 푃푂푃푈퐿퐴푅퐼푇푌푖,푡 : CEO popularity 퐿퐸푉푖,푡 : leverage Best Model Determination 퐹푆푖,푡 : company size This study uses panel data analyzed 푇퐸푁푈푅퐸푖,푡 : CEO tenure through three regression approaches, in- 푁푃퐿푖,푡 : Non-performing loans companu cluding common effects (CE), fixed effects 휀푖,푡 : error term (FE), and random effects (RE) (Latimaha et al. 2019). The Chow, Hausman, and Lag- RESULTS AND DISCUSSION range Multiplier (LM) tests were carried out to determine the best model. The results Descriptive statistics of the three tests are shown in Table 3 by Table 2 shows the results of displaying the companys performance descriptive statistics on the study sample, measurement using Tobin's Q. where the popularity of the CEO has an The Chow test has a significance average value of 87.491. The highest score value of 0.999 (significant at the 0.05 is owned by Bank BCA Company, meaning level), meaning that the common effects are that its CEO, Jahja Setiaatmadja, is the most better than the fixed effects. The signi- popular in terms of having the highest ficance value of the Hausman test is 0.948, number of news during the observation meaning that the random effects are better period. than the fixed effects. The significance The company performance as mea- value of the Lagrange Multiplier Test is sured using Tobin's Q based on the results 1,000, meaning that the common effects are of descriptive statistics has an average better than random effects. Therefore, the value of 5.719 with a standard deviation of common effects approach is used for 37.950. Herman Halim has the longest CEO hypothesis testing. tenure of 10419 days and served as CEO of Bank Maspion Company from 1991 until

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Table 4 Multicollinearity Test Results

Variable VIF TENURE 1,100 FS 1,360 LEV 1,140 NPL 1,130 POPULARITY 1,390 Mean 1,220 Data source: Processed secondary data

Table 5 Pearson Correlation Test Results

Variabel [1] [2] [3] [4] [5] [6] [1] Tobin’s Q 1,000

[2] POPULARITY 0,424*** 1,000

[3] LEV -0,022 0,068 1,000

[4] FS 0,100 0,485*** 0,161* 1,000

[5] TENURE 0,063 0,024 0,273*** -0,026 1,000

[6] NPL -0,096 - 0,085 -0,190** -0,079 1,000

0,299***

Note: This table shows the results of the Pearson Correlation test. The sample includes 108 banking companies listed on the IDX for the Q1-Q3 year 2020. Signs *, ** and ** are significant at the 10%, 5% and 1% levels. Multicollinearity and Pearson Correlation at the start of COVID-19. The hypothesis Tests testing showed a significant value at the 1% The multicollinearity test was carried out level, meaning that the popularity of the using the variance inflation factor (VIF) test, CEO significantly affects company perfor- referring to Lee et al. (2020). Based on Table 4, mance. The coefficient for the popularity the VIF of all variables is below the value of 10, variable is 0.163, indicating a positive rela- meaning that this study is free from multico- tionship between popularity of the CEO and llinearity problems. company performance. This study hypo- Table 5 shows the results of the person thesis is accepted, meaning that the popu- correlations test. Positive or negative signs indi- larity positively affected company per- cate the direction and strength of the relationship formance at the earlier stages of COVID- based on the level of significance. According to 19. The overall test for the independent this table, the popularity of the CEO is positively variables showed an R2 value of 0.200, related to company performance. meaning that the ability of the independent variable to explain the dependent variable Hypothesis Testing and Discussion was 20%. Other variables outside of this Table 6 shows the results of the panel study influenced the remaining 80%. regression method hypothesis testing with This study supports and contributes to the common effects model. This study the upper echelon theory proposed by hypothesizes that the popularity of the CEO Hambrick and Mason (1984) by providing positively affected company performance evidence that the popularity of CEO affects

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Table 6 Analysis Results of Common Effect Model Panel Regression

Variabel Coef. Std. Err t Constant 59,740 62,569 0,950 POPULARITY 0,163 0,034 4,770* LEV -10,813 17,978 -0,600 FS -2,347 1,953 -1,200 TENURE 1,730 2,407 0,720 NPL 1,237 2,986 0,410 Prob > chi2 0,000 R2 0,200 108 N Data source: Processed secondary data Description: Dependent Variable Tobin's Q Significant at 1% level strategic choices, responses, and ways of accountability to stakeholders (Vitanova working. The results strengthen previous 2019). In line with the idea of agency research that the popularity of the CEO theory, openness reduces information asy- increases public awareness of the company mmetry between management and share- existence, which attracts new investors and holders to minimize the potential for motivates them to work better to produce agency problems because shareholders superior performance (Bai et al. 2019; have high confidence in the management of Kanapathippillai et al. 2019; Lee et al. 2020 popular CEO (Laher 2020). From Table 6, ). The popularity is one of the indicators all control variables do not affect the considered by management in the CEO performance of banking companies. recruitment. This is because the leadership increase stock prices and improved perfor- Robustness Analysis mance. Robustness analysis was conducted During the COVID-19 pandemic, the to test the performance of the alternative performance of companies with popular company. Following Cheng et al. (2010), CEO was well maintained, hence the rights the alternative for measuring company per- of shareholders were still fulfilled. The formance used in this study is earnings per average value of Tobin's Q is 5.719 or share (EPS). This measurement was selec- greater than one (>1), indicating that the ted because EPS is one of the performance company is valued 5 times greater than the measurements in accounting (Habibniya listed company assets. This value also and Dsouza 2018). EPS data is obtained shows that the market gives more value or from quarterly reports published. reacts positively to the company, apart from Robustness testing was carried out indicating market confidence in the perfor- using a panel data regression model with a mance of banking companies during the random effect approach. The additional test pandemic. was treated the same as the main model. This study showed that the popularity Therefore, all control variables were also reflects the ability and quality of the CEO retained in the new regression model. The and is not a mere tokenism practice. results of robustness analysis showed that Popular CEO has high work standards and the popularity of the CEO is significant at power in leading management. They the 1% level, meaning that it has a signi- always try to provide essential details and ficant effect on company performance as maintain information disclosure to maintain measured by EPS. This influence relation- a good image, though it is also a form of ship also indicates a positive direction because the popularity of the CEO

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Table 7 Robustness Analysis

Variabel Coef. Std. Err t Constant -365,875 104,325 -3,510* POPULARITY 0,478 0,061 7,770* LEV 22,746 31,173 0,730 FS 11,746 3,236 3,630* TENURE -0,431 4,256 -0,100 NPL -4,614 5,297 -0,870 Mean EPS 52,913 N 108 Data source: Processed secondary data Description: Dependent Variable Tobin's Q Significant at 1% level

Table 8 Causality Test Results

Causality Wald test Conclusion POPULARITY Tobin’s Q 0.000* Yes Tobin’s Q POPULARITY 0.529 No Data source: Processed secondary data Significant at 1% level coefficient has a positive value of 0.478. al. (2017), a Granger causality test was The significance value of popularity in the conducted by exploring vector autoregre- additional analysis is the same as the main ssive (VAR) to determine a causal relation- model. This means the influence of the ship. From Table 8, the significance value popularity of the CEO on company per- of Tobin's Q on popularity shows the formance as measured by accounting and number 0.529 or > 0.1, meaning that the market perspectives is equally strong. company performance does not affect the The EPS ratio describes the stock popularity of the CEO. Also, there is no price of banking companies compared to causal relationship between company the profits recorded in the income statement performance and popularity of the CEO. and comprehensive income (Habibniya and

Dsouza 2018). EPS has an average value of CONCLUSION 52,913, meaning that the average share of banking companies in the research sample This study aimed to obtain empirical generates a profit of IDR 52,913 per share. evidence of the effect of the popularity of A positive value indicates that banking the CEO on the company performance at companies with popular CEO during the the earlier stages of the COVID-19 COVID-19 pandemic still perform well. pandemic in Indonesia. The results show The good performance is proven based on that the popularity positively affects the the calculation of accounting information performance of banking company at the and market value in the main model by earlier stages of COVID-19. This is in line measurement using Tobin's Q. The addi- with Lee et al. (2020), which stated that tional analysis support and strengthen the popular a CEO has a better company mana- previous tests and proves that the results of gement abilities, commitment, and work this study are robust. motivation to produce high performance. Furthermore, this study also During the pandemic, the performance of examined whether there is a causal rela- the company was well maintained, and the tionship between company performance rights of shareholders were fulfilled. The and the popularity. Referring to Olaniyi et popularity of the CEO showed a good

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