The effect of good corporate governance and foreign ownership as a moderating variables on the board interlocking on financial performance

Natalie Winter(1), Werner Ria Murhadi(2*), Mudji Utami(3),

(1) 
(2) Universitas Surabaya
(3) Universitas Surabaya
(*) Corresponding Author

Abstract


The aims of this research is to analyze the effect of number of board interlocking, board size, family board participation, board independence, control variable such as firm size, firm age, and leverage, and moderate foreign ownership to number of board interlocking towards financial firm perfomance using ROA and Tobin’s Q as a proxy in non financial sector companies listed in Indonesia Stock Exchange (BEI) in period 2014-2018. This research uses quantitative approach with two least square regression analysis model. The sample used in this research is firms which are listed on the non financial in Indonesia Stock Exchange (IDX) on 2014-2018 period. The number of final samples used in this study were 366 business entities with 1830 observations. The findings result of this research indicate that concurrent commissioner positions have positive and significant effect towards ROA in non financial sector companies BEI on the period 2014-2018, while independent commissioners, family of commissioners, board size, and the interaction of multiple positions of commissioners with foreign ownership have insignificant effect towards ROA in non financial sector companies BEI on the period 2014-2018. Then variables independent commissioners, board size of commissioners, and the interaction of multiple positions of commissioner with foreign ownership have positive and significant effect towards Tobin’s Q in non financial sector companies BEI on the period 2014-2018, while the family of commissioners and concurrent commissioner positions have insignificant effect towards ROA in non financial sector companies BEI on the period 2014-2018.

Keywords


Corporate Governance; Board Interlocking; Foreign Ownership; Financial Firm Perfomance

Full Text:

PDF

References


Al-Matari EM, Al-Swidi A, BtFadzil F. 2014. The Effect on the Relationship Between Board of Directors Characteristics on Firm Performance in Oman: Empirical Study. Middle-East Journal of Scientific Research. 21(3): 556-574.

Arrow K. 1962. The economic implications of learning by doing. Review of Economic Studies. 29: 155-173.

Audrey C. 2018. Pengaruh Struktur Modal Terhadap Nilai Perusahaan dengan Ukuran dan Umur Perusahaan sebagai Variabel Moderator (Studi Kasus Tahun 2014-2016) pada Perusahaan Sub-Sektor Makanan dan Minuman yang Terdaftar di BEI. DIPONEGORO JOURNAL OF SOCIAL AND POLITIC. 1-16.

Chibber PK, Majumdar S. 1999. Foreign ownership and profitability : property rights, control and the performance of firms in India Industry. Journal of Law and Economics. 26(3): 209-238.

Dalton D, Daily C, Johnson J, Ellstrand A. 1999. Number of directors and financial performance: A meta-analysis. Academy of Management Journal. 42: 674-686.

Darmadi I. 2013. Analisis Faktor yang Mempengaruhi Manajemen Pajak dengan Indikator Tarif Pajak Efektif. Diponegoro Journal of Accounting. 2(4): 1-12.

Ertimur Y, Ferri F, Stubben S. 2010. Board of directors' responsiveness to shareholders: Evidence from shareholder proposals. Journal of Corporate Finance. 16(1): 53-72.

Farida YN, Prasetyo Y, Herwiyanti E. 2010. Pengaruh Penerapan Corporate Governance terhadap Timbulnya Earnings Management dalam Menilai Kinerja Keuangan pada Perusahaan Perbankan di Indonesia. Jurnal Bisnis dan Akuntas. 12: 69-80.

Fosu S, Danso A, Ahmad W, Coffie W. 2016. Information asymmetry, leverage and firm value: Do crisis and growth matter? International Review of Financial Analysis. 46: 140-150.

Hamdan A. 2018. Board Interlocking and Firm Perfomance : the Role of Foreign Ownership in Saudi Arabia. International Journal of Managerial Finance. 14(3): 266-281.

Horne JCV, John MW. 1997. Prinsip-Prinsip Manajemen Keuangan. Jakarta: Salemba empat.

Jensen M. 1993. The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems. Journal of Finance. 48(3): 831-880.

Jensen M. 1986. Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review. 76: 323-329.

Jovanonic B. 1982. `Selection and the Evolution of Industry'. Econometrica. 50: 649-670.

Kiel GC, Nicholson GJ. 2003. Boards that Work: A New Guide for Directors. Sydney: McGraw Hill.

Klapper L, Love I. 2004. Corporate governance, investor protection, and performance in emerging markets. Journal of Corporate Finance. 10 (5): 703-723.

Komalasari P, Nor M. 2014. Pengaruh Struktur Kepemilikan Keluarga, Kepemimpinan dan Perwakilan Keluarga terhadap Kinerja Perusahaan. Jurnal Akuntasi. 5(2): 133-150.

Kumar N, Kaur D. 2016. Firm Size and Profitability in Indian Automobile Industry: An Analysis. Pacific Business Review International. 8(7): 69-78.

Lipton M, Lorsch J. 1992. A modest proposal for improved corporate governance. Business Lawyer. 48: 59-77.

Makhlouf M, Laili N, Ramli N, Al-Sufy F, Basah M. 2018. Board of Directors, Firm Perfomance and the Moderating Role of Family Control in Jordan. Academy of Accounting and Financial Studies Journal. 22(5).

Omar T, Shelley M, Tice F. 2014. Do Well-Connected Directors Affect Firm Value?. Journal of Applied Finance. (2): 1-15.

Peng MW, Mutlu CC, Sauerwald SAKY, Wang DY. 2015. Board Interlocks and Corporate Perfomance Among Firms Listed Abroad. Journal of Management History. 21(2): 257-282.

Pombo C, Gutierrez LH. 2011. Outside Directors, Board Interlocks and Firm Perfomance : Empirical Evidence From Colombian Business Groups. Journal of Economics and Business. 63: 251-277.

Vesco DG, Beuren IM. 2016. Do the Board of Directors Composition and the Board Interlocking Influence on Performance ?. BAR, Rio de Janeiro. 13(2).

Vijnana A. 2017. The Relationship between Foreign Ownership and Firm Performance in India: An Empirical Analysis. 59(2): 152-162.

Vincent O, Nicole C. 2010. The relationship between firm performance and board characteristics in Ireland. European Management Journal. 28(5): 387-399.

BPK: Badan Pemeriksa Keuangan. 2007. Undang-Undang No. 40 tahun 2007 tentang Perseroan Terbatas. Jakarta: Badan Pemeriksa Keuangan.




DOI: https://doi.org/10.24123/jmb.v20i1.436

Article Metrics

Abstract view : 586 times
PDF - 199 times

Refbacks

  • There are currently no refbacks.


Bookmark and Share


Copyright (c) 2021 Natalie Winter

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License. ISSN: 1412-3789. e-ISSN: 2477-1783.

Google ScholarGoogle ScholarGARUDA - Garba Rujukan Digital
DOAJ
ROADROADEBSCO
mabis statistics