Exploring the Relationship between Ownership Structure and Financial Performance: An Empirical Analysis of Indonesian Companies
Abstract
Ownership structure is one of the factors that influence management's decision-making, which in turn impacts the company's financial performance. This study aims to obtain empirical evidence regarding the effect of various types of ownership—including institutional, government, family, managerial, and foreign ownership—on financial performance in non-financial sector companies. The population in this study consists of all business entities listed on the IDX from 2018 to 2021. The sample size used in this study is 1,536 company-years, derived from 384 companies out of a total population of 2,781 on the IDX over four years. A purposive sampling technique was employed for selecting the sample. Researchers utilized a fixed effect model on the panel data structure for hypothesis testing analysis. The results showed that the presence of government, family, and foreign ownership improves the company's financial performance. Therefore, investors can consider ownership structure when making investment decisions.
Downloads
Download data is not yet available.
References
Alamsyah, M. F., & Yulianti. (2022). The effect of good corporate governance on the financial performance of property and real estate sub-sector companies listed on the Indonesia Stock Exchange. Asian Management and Business Review, 90–102. https://doi.org/10.20885/ambr.vol2.iss1.art8
Ali, C. Ben. (2020). Agency Theory and Fraud (Issue 1976).
Al-Janadi, Y., Abdul Rahman, R., & Alazzani, A. (2016). Does government ownership affect corporate governance and corporate disclosure?: Evidence from Saudi Arabia. Managerial Auditing Journal, 31(8–9), 871–890. https://doi.org/10.1108/MAJ-12-2015-1287
Alkurdi, A., hamad, A., Thneibat, H., & Elmarzouky, M. (2021). Ownership structure’s effect on financial performance: An empirical analysis of Jordanian listed firms. Cogent Business and Management, 8(1). https://doi.org/10.1080/23311975.2021.1939930
Altania, S., Tanno, A., Ekonomi dan Bisnis, F., Andalas, U., Kunci, K., Keuangan Perusahaan, K., & Manajerial, K. (2023). THE EFFECT OF MANAGERIAL OWNERSHIP AND INSTITUTIONAL OWNERSHIP ON COMPANY FINANCIAL PERFORMANCE. JIMEA | Jurnal Ilmiah MEA, 7(1), 2023.
Aluchna, M., & Kaminski, B. (2017). Ownership structure and company performance: a panel study from Poland. Baltic Journal of Management, 12(4), 485–502. https://doi.org/10.1108/BJM-01-2017-0025
Boshnak, H. A. (2023a). Ownership structure and firm performance: evidence from Saudi Arabia. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-11-2022-0422
Boshnak, H. A. (2023b). Ownership structure and firm performance: evidence from Saudi Arabia. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-11-2022-0422
Diéguez-Soto, J., López-Delgado, P., & Mariño-Garrido, T. (2020). The influence of family ownership on acquisition activity: The moderating role of acquisition experience. Journal of Small Business Management, 59(4), 819–851. https://doi.org/10.1080/00472778.2020.1725813
Din, S. U., Arshad Khan, M., Khan, M. J., & Khan, M. Y. (2022). Ownership structure and corporate financial performance in an emerging market: a dynamic panel data analysis. International Journal of Emerging Markets, 17(8), 1973–1997. https://doi.org/10.1108/IJOEM-03-2019-0220
Eforis, C., & Uang, J.-Y. (2015). Corporate Governance and Firm Performance: The Moderating Effect of State Ownership. Proceedings of 4th Global Business and Finance Research Conference.
Fadrul, Budiyanto, & Ayik, N. F. (2021). The Effect of Ownership Structure and Corporate Social Responsibility on Financial Performance and Firm Value in Mining Sector Companies in Indonesian. International Journal of Economics Development Research, 2(2), 92–109.
Farooque, O. Al, Buachoom, W., & Sun, L. (2020). Board, audit committee, ownership and financial performance – emerging trends from Thailand. Pacific Accounting Review, 32(1), 54–81. https://doi.org/10.1108/PAR-10-2018-0079
Freeman, R. E., & Reed, D. L. (1983). Stockholders and Stakeholders: A New Perspective on Corporate Governance The Stakeholder Concept. In CALIFORNIA MANAGEMENT REVIEW: Vol. XXV (Issue 3).
Ikatan Akuntan Indonesia. (2022). PSAK 1: Penyajian Laporan Keuangan. Dewan Standar Akuntansi Keuangan Ikatan Akuntan Indonesia.
Iryanto, M. B. W., Permatasari, S. D., & Rahman, A. (2022). STRATEGY AS MODERATION AND AGENCY COST AS MEDIATION IN NON-FINANCIAL COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE IN 2016-2018. International Journal of Social Science, 1(6), 1041–1054. https://doi.org/10.53625/ijss.v1i6.2138
Jensen, M. C., & Meckling, W. H. (1976). Theory of The Firm: Managerial Behavior, Agency Cost and Owbership Structure. Journal of Financial Economics 3, 3, 305–360.
Kao, M. F., Hodgkinson, L., & Jaafar, A. (2019). Ownership structure, board of directors and firm performance: evidence from Taiwan. Corporate Governance (Bingley), 19(1), 189–216. https://doi.org/10.1108/CG-04-2018-0144
Kirimi, P. N., Kariuki, S. N., & Ocharo, K. N. (2022). Ownership structure and financial performance: Evidence from Kenyan commercial banks. PLoS ONE, 17(5 May). https://doi.org/10.1371/journal.pone.0268301
Kubo, K., & Phan, H. V. (2019). State ownership, sovereign wealth fund and their effects on firm performance: Empirical evidence from Vietnam. Pacific Basin Finance Journal, 58. https://doi.org/10.1016/j.pacfin.2019.101220
Kurvinen, M., Toyryla, I., & Murthy, D. N. P. (2016). Warranty Fraud Management: Reducing Fraud and Other Excess Costs in Warranty and Service Operations.
Kyere, M., & Ausloos, M. (2021). Corporate governance and firms financial performance in the United Kingdom. International Journal of Finance and Economics, 26(2), 1871–1885. https://doi.org/10.1002/ijfe.1883
Le, B. (2020). The impact of government ownership on the cost of debt and valuation of Vietnamese listed companies. Pacific Accounting Review, 32(2), 255–270. https://doi.org/10.1108/PAR-07-2019-0083
Mardiana, A., Daromes, F. E., & Santoso, J. (2023). EFFECT OF FINANCIAL PERFORMANCE AND FOREIGN OWNERSHIP ON COMPANY VALUES. Jurnal Sistem Informasi, Manajemen, Dan Akuntansi, 21(01), 92–108.
Mardnly, Z., Mouselli, S., & Abdulraouf, R. (2018). Corporate governance and firm performance: an empirical evidence from Syria. International Journal of Islamic and Middle Eastern Finance and Management, 11(4), 591–607. https://doi.org/10.1108/IMEFM-05-2017-0107
Mishra, R., & Kapil, S. (2017). Effect of ownership structure and board structure on firm value: evidence from India. Corporate Governance (Bingley), 17(4), 700–726. https://doi.org/10.1108/CG-03-2016-0059
Najahiyah, N., Aisjah, S., & Dzajuli, A. (2022). The effect of family ownership on company values mediated by financial performance and corporate governance. International Journal of Research in Business and Social Science (2147- 4478), 11(6), 148–156. https://doi.org/10.20525/ijrbs.v11i6.1923
Ong’onge, M., Okiro, K., & Nyamute, W. (2023). Government Ownership and Financial Performance of State Enterprises: Kenyan Perspective. African Journal Of Business And Management, 8(2), 17–30.
Pirzada, K., Mustapha, M. Z. Bin, & Wickramasinghe, D. (2015). Firm Performance, Institutional Ownership and Capital Structure: A Case of Malaysia. Procedia - Social and Behavioral Sciences, 211, 170–176. https://doi.org/10.1016/j.sbspro.2015.11.025
Piyasinchai, N. (Bell), Thananusak, T., & Hughes, M. (2023). Effects of Family Ownership and Professionalization on Firms’ Financial Performance and Sustainability Reputation. Entrepreneurship Theory and Practice, 0(0).
Price Waterhouse Cooper. (2014). Survey Bisnis Keluarga 2014 Indonesia. www.pwc.com/id
Radiawati, R. (2015). Mengintip untung rugi perusahaan keluarga. Merdeka.Com.
Rusnaeni, N., Gursinda, H., Sasongko, H., Rahman Hakim, D., & Pakuan, U. (2022). FINANCIAL PERFORMANCE, INSTITUTIONAL OWNERSHIP, SIZE, AND FIRM VALUE: A STRUCTURAL EQUATION MODELING APPROACH. Business and Accounting Research (IJEBAR) Peer Reviewed-International Journal, 6, 4. https://jurnal.stie-aas.ac.id/index.php/IJEBAR
Setiawan, Y. C., & Mettan, S. V. (2023). Audit Quality dan Value Relevance of Accounting Information. E-Jurnal Akuntansi, 33(12). https://doi.org/10.24843/EJA.2023.v33.i12.p01
Sheikh, N. A., Wang, Z., & Khan, S. (2013). The impact of internal attributes of corporate governance on firm performance: Evidence from pakistan. International Journal of Commerce and Management, 23(1), 38–55. https://doi.org/10.1108/10569211311301420
Soliman, M. M., & Elsalam, M. A. (2012). Corporate Governance Practices and Audit Quality: An Empirical Study of the Listed Companies in Egypt. World Academy of Science, Engineering and Technology International Journal of Economics and Management Engineering, 6(11).
Tran, Q. T. (2022). Foreign ownership and cost of debt financing: evidence from an emerging market. International Journal of Emerging Markets, 17(9), 2278–2289. https://doi.org/10.1108/IJOEM-09-2019-0750
Ueng, C. J. (2016). The analysis of corporate governance policy and corporate financial performance. Journal of Economics and Finance, 40(3), 514–523. https://doi.org/10.1007/s12197-015-9316-8
Yesi, N. W., & Putra, I. N. W. A. (2021). Analysis of Financial Health and Company Performance: a Comparative Study between Foreign and Non-Foreign Ownership Structures. American Journal of Humanities and Social Sciences Research, 5(5), 531–536. www.ajhssr.com
Ali, C. Ben. (2020). Agency Theory and Fraud (Issue 1976).
Al-Janadi, Y., Abdul Rahman, R., & Alazzani, A. (2016). Does government ownership affect corporate governance and corporate disclosure?: Evidence from Saudi Arabia. Managerial Auditing Journal, 31(8–9), 871–890. https://doi.org/10.1108/MAJ-12-2015-1287
Alkurdi, A., hamad, A., Thneibat, H., & Elmarzouky, M. (2021). Ownership structure’s effect on financial performance: An empirical analysis of Jordanian listed firms. Cogent Business and Management, 8(1). https://doi.org/10.1080/23311975.2021.1939930
Altania, S., Tanno, A., Ekonomi dan Bisnis, F., Andalas, U., Kunci, K., Keuangan Perusahaan, K., & Manajerial, K. (2023). THE EFFECT OF MANAGERIAL OWNERSHIP AND INSTITUTIONAL OWNERSHIP ON COMPANY FINANCIAL PERFORMANCE. JIMEA | Jurnal Ilmiah MEA, 7(1), 2023.
Aluchna, M., & Kaminski, B. (2017). Ownership structure and company performance: a panel study from Poland. Baltic Journal of Management, 12(4), 485–502. https://doi.org/10.1108/BJM-01-2017-0025
Boshnak, H. A. (2023a). Ownership structure and firm performance: evidence from Saudi Arabia. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-11-2022-0422
Boshnak, H. A. (2023b). Ownership structure and firm performance: evidence from Saudi Arabia. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-11-2022-0422
Diéguez-Soto, J., López-Delgado, P., & Mariño-Garrido, T. (2020). The influence of family ownership on acquisition activity: The moderating role of acquisition experience. Journal of Small Business Management, 59(4), 819–851. https://doi.org/10.1080/00472778.2020.1725813
Din, S. U., Arshad Khan, M., Khan, M. J., & Khan, M. Y. (2022). Ownership structure and corporate financial performance in an emerging market: a dynamic panel data analysis. International Journal of Emerging Markets, 17(8), 1973–1997. https://doi.org/10.1108/IJOEM-03-2019-0220
Eforis, C., & Uang, J.-Y. (2015). Corporate Governance and Firm Performance: The Moderating Effect of State Ownership. Proceedings of 4th Global Business and Finance Research Conference.
Fadrul, Budiyanto, & Ayik, N. F. (2021). The Effect of Ownership Structure and Corporate Social Responsibility on Financial Performance and Firm Value in Mining Sector Companies in Indonesian. International Journal of Economics Development Research, 2(2), 92–109.
Farooque, O. Al, Buachoom, W., & Sun, L. (2020). Board, audit committee, ownership and financial performance – emerging trends from Thailand. Pacific Accounting Review, 32(1), 54–81. https://doi.org/10.1108/PAR-10-2018-0079
Freeman, R. E., & Reed, D. L. (1983). Stockholders and Stakeholders: A New Perspective on Corporate Governance The Stakeholder Concept. In CALIFORNIA MANAGEMENT REVIEW: Vol. XXV (Issue 3).
Ikatan Akuntan Indonesia. (2022). PSAK 1: Penyajian Laporan Keuangan. Dewan Standar Akuntansi Keuangan Ikatan Akuntan Indonesia.
Iryanto, M. B. W., Permatasari, S. D., & Rahman, A. (2022). STRATEGY AS MODERATION AND AGENCY COST AS MEDIATION IN NON-FINANCIAL COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE IN 2016-2018. International Journal of Social Science, 1(6), 1041–1054. https://doi.org/10.53625/ijss.v1i6.2138
Jensen, M. C., & Meckling, W. H. (1976). Theory of The Firm: Managerial Behavior, Agency Cost and Owbership Structure. Journal of Financial Economics 3, 3, 305–360.
Kao, M. F., Hodgkinson, L., & Jaafar, A. (2019). Ownership structure, board of directors and firm performance: evidence from Taiwan. Corporate Governance (Bingley), 19(1), 189–216. https://doi.org/10.1108/CG-04-2018-0144
Kirimi, P. N., Kariuki, S. N., & Ocharo, K. N. (2022). Ownership structure and financial performance: Evidence from Kenyan commercial banks. PLoS ONE, 17(5 May). https://doi.org/10.1371/journal.pone.0268301
Kubo, K., & Phan, H. V. (2019). State ownership, sovereign wealth fund and their effects on firm performance: Empirical evidence from Vietnam. Pacific Basin Finance Journal, 58. https://doi.org/10.1016/j.pacfin.2019.101220
Kurvinen, M., Toyryla, I., & Murthy, D. N. P. (2016). Warranty Fraud Management: Reducing Fraud and Other Excess Costs in Warranty and Service Operations.
Kyere, M., & Ausloos, M. (2021). Corporate governance and firms financial performance in the United Kingdom. International Journal of Finance and Economics, 26(2), 1871–1885. https://doi.org/10.1002/ijfe.1883
Le, B. (2020). The impact of government ownership on the cost of debt and valuation of Vietnamese listed companies. Pacific Accounting Review, 32(2), 255–270. https://doi.org/10.1108/PAR-07-2019-0083
Mardiana, A., Daromes, F. E., & Santoso, J. (2023). EFFECT OF FINANCIAL PERFORMANCE AND FOREIGN OWNERSHIP ON COMPANY VALUES. Jurnal Sistem Informasi, Manajemen, Dan Akuntansi, 21(01), 92–108.
Mardnly, Z., Mouselli, S., & Abdulraouf, R. (2018). Corporate governance and firm performance: an empirical evidence from Syria. International Journal of Islamic and Middle Eastern Finance and Management, 11(4), 591–607. https://doi.org/10.1108/IMEFM-05-2017-0107
Mishra, R., & Kapil, S. (2017). Effect of ownership structure and board structure on firm value: evidence from India. Corporate Governance (Bingley), 17(4), 700–726. https://doi.org/10.1108/CG-03-2016-0059
Najahiyah, N., Aisjah, S., & Dzajuli, A. (2022). The effect of family ownership on company values mediated by financial performance and corporate governance. International Journal of Research in Business and Social Science (2147- 4478), 11(6), 148–156. https://doi.org/10.20525/ijrbs.v11i6.1923
Ong’onge, M., Okiro, K., & Nyamute, W. (2023). Government Ownership and Financial Performance of State Enterprises: Kenyan Perspective. African Journal Of Business And Management, 8(2), 17–30.
Pirzada, K., Mustapha, M. Z. Bin, & Wickramasinghe, D. (2015). Firm Performance, Institutional Ownership and Capital Structure: A Case of Malaysia. Procedia - Social and Behavioral Sciences, 211, 170–176. https://doi.org/10.1016/j.sbspro.2015.11.025
Piyasinchai, N. (Bell), Thananusak, T., & Hughes, M. (2023). Effects of Family Ownership and Professionalization on Firms’ Financial Performance and Sustainability Reputation. Entrepreneurship Theory and Practice, 0(0).
Price Waterhouse Cooper. (2014). Survey Bisnis Keluarga 2014 Indonesia. www.pwc.com/id
Radiawati, R. (2015). Mengintip untung rugi perusahaan keluarga. Merdeka.Com.
Rusnaeni, N., Gursinda, H., Sasongko, H., Rahman Hakim, D., & Pakuan, U. (2022). FINANCIAL PERFORMANCE, INSTITUTIONAL OWNERSHIP, SIZE, AND FIRM VALUE: A STRUCTURAL EQUATION MODELING APPROACH. Business and Accounting Research (IJEBAR) Peer Reviewed-International Journal, 6, 4. https://jurnal.stie-aas.ac.id/index.php/IJEBAR
Setiawan, Y. C., & Mettan, S. V. (2023). Audit Quality dan Value Relevance of Accounting Information. E-Jurnal Akuntansi, 33(12). https://doi.org/10.24843/EJA.2023.v33.i12.p01
Sheikh, N. A., Wang, Z., & Khan, S. (2013). The impact of internal attributes of corporate governance on firm performance: Evidence from pakistan. International Journal of Commerce and Management, 23(1), 38–55. https://doi.org/10.1108/10569211311301420
Soliman, M. M., & Elsalam, M. A. (2012). Corporate Governance Practices and Audit Quality: An Empirical Study of the Listed Companies in Egypt. World Academy of Science, Engineering and Technology International Journal of Economics and Management Engineering, 6(11).
Tran, Q. T. (2022). Foreign ownership and cost of debt financing: evidence from an emerging market. International Journal of Emerging Markets, 17(9), 2278–2289. https://doi.org/10.1108/IJOEM-09-2019-0750
Ueng, C. J. (2016). The analysis of corporate governance policy and corporate financial performance. Journal of Economics and Finance, 40(3), 514–523. https://doi.org/10.1007/s12197-015-9316-8
Yesi, N. W., & Putra, I. N. W. A. (2021). Analysis of Financial Health and Company Performance: a Comparative Study between Foreign and Non-Foreign Ownership Structures. American Journal of Humanities and Social Sciences Research, 5(5), 531–536. www.ajhssr.com
Published
2024-05-27
How to Cite
SETIAWAN, Yan Christianto.
Exploring the Relationship between Ownership Structure and Financial Performance: An Empirical Analysis of Indonesian Companies.
E-Jurnal Akuntansi, [S.l.], v. 34, n. 5, may 2024.
ISSN 2302-8556.
Available at: <https://ojs.unud.ac.id/index.php/akuntansi/article/view/114579>. Date accessed: 21 nov. 2024.
doi: https://doi.org/10.24843/EJA.2024.v34.i05.p02.
Issue
Section
Artikel
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
