Damayanti, Tri and Lindrianasari, Lindrianasari and Komalasari, Agrianti and Dewi, Fajar Gustiawaty and Gamayuni, Rindu Rika (2018) Entrenchment Effect and Financial Performance in Indonesia Family Listed Companies. GMP Press and Printing, Review of Integrative Business and Economics Research,.

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Abstract

The goal of this study is to investigate the impact of family ownership and control in non financial family listed companies in Indonesia. The conceptual framework derived from agency theory which have consequences in making agency problems. The rights of controlling shareholders supported to expropriate minority interest and created agency problem II. We analyzed 375 family listed firms using panel data method. The result shows that family ownership have negative effect on financial performance. The negative effect reflected controlling shareholders’ entrechment effect. The entrechment effect and the practice of combined two tier system reflect the implication of agency problem II, which explained why family control have no impact on financial performance. The implication of agency problem II also represent in the negative impact of leverage as control variable. It is captured as the debt covenant incentive opportunities, which is not controlling shareholders’ interest. Our findings can be useful for investment decision making for minority investors. It also can be interpreted how agency theory works in Indonesia family listed companies dealing with exchange rate depreciation. A key finding of this research is controlling shareholders’ behavior in the low of monetary condition that tend to do entrechment.

Item Type: Other
Subjects: H Social Sciences > HG Finance
Divisions: Fakultas Ekonomi dan Bisnis (FEB) > Prodi Akuntansi
Depositing User: Prof. Dr. Lindrianasari
Date Deposited: 24 Jul 2020 01:00
Last Modified: 24 Jul 2020 01:00
URI: http://repository.lppm.unila.ac.id/id/eprint/23373

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