Exploring the Relationship between Ownership Structure and Financial Performance: An Empirical Analysis of Indonesian Companies

  • Yan Christianto Setiawan Universitas Katolik Widya Mandala Surabaya

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
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: 14 nov. 2024. doi: https://doi.org/10.24843/EJA.2024.v34.i05.p02.
Section
Artikel