THE DETERMINANTS OF BOARD COMPOSITION: EVIDENCE FROM INDONESIA. CORPORATE OWNERSHIP AND CONTROL JOURNAL (FORTHCOMING).
Drs. Muhammad Agung Prabowo, M.Si., Ph.D., Ak. Lahir di Nganjuk, 1 Mei
1966. Pria yang memiliki NIP 196605011994121001 adalah staf pengajar di
Fakultas Ekonomi UNS. Riwayat pendidikan tinggi yang berhasil
diselesaikannya adalah tahun 1991 lulus sarjana (S-1) dari Universitas Gadjah
Mada untuk bidang ilmu Akumtansi, tahun 2002 lulus Magister (S-2) dari
Universitas Gadjah Mada untuk bidang ilmu: Ilmu Akuntansi, dan berhasil
meraih gelar Doktor (S-3) dari Curtin University of Technology, Australia pada
tahun 2010. Beberapa ringkasan disajikan dalam bahasa English sebagai
berikut.
BOARD COMPOSITION AND FIRM PERFORMANCE: A LITERATURE
REVIEW. This paper discusses the empirical studies investigating the association
between board composition and organizational outcome. The board composition is
the most important attribute of the board institution as such a composition
determines board’s characteristics, structure and process. The paper explores the
motivation and contribution of previous studies that serves as a basis for defining
the significance of a replication work. The paper also presents the outcome
approach adopted by previous works. An avenue for further research is presented
in the last sections Independent directors and firm performance in family
controlled firms: evidence from Indonesia (with John Simpson).
ASIAN-PACIFIC ECONOMIC LITERATURE. We analyze the relationship
between board structure and firm performance in family-controlled firms using a
sample of Indonesian non-financial companies. We find that the share of
independent directors on the board has an insignificant relationship with firm
performance. We suspect that the result is driven by the lack of institutional
reforms in relation to the appointment of independent directors. Our analysis
shows strong empirical support for the proposition that family control (family
ownership and family involvement on the board) is negatively related to firm
performance. However, the significant effect of family ownership disappears
when family involvement on the board is taken into the model. This result
indicates that family ownership is more detrimental to firm performance whenever
the family is highly involved in control decisions. Our results suggest that
Indonesia needs to implement governance reforms that prevent majority owners
from exercising excessive control over firms.
THE DETERMINANTS OF BOARD COMPOSITION: EVIDENCE FROM
INDONESIA. CORPORATE OWNERSHIP AND CONTROL JOURNAL
(FORTHCOMING). The study investigates the impact of agency problem and the
distribution of corporate control on board composition using a dataset consisting of
190 listed firms in Indonesia. The conceptual framework is derived from agency
theory assuming that board composition is endogenously determined by firm’s
specific environment. The study reveals that corporate control, instead of agency
problem, drives the composition of the board. The different types of large
shareholders are found to pursue different strategies in relation to the board
composition. While domestic institutional shareholders rely on the representation
of independent directors, foreign investors and controlling family prefer to
structure a particular board leadership. The finding suggests that the battle for
corporate control between foreign investor and the controlling family begins with
the structure of board leadership, rather than the representation of independent
director.
DO DIFFERENT DEVICES OF CORPORATE CONTROL MATTER? EVIDENCE
FROM INDONESIA (WITH FRANK GUO FEI AND JOHN L SIMPSON). We
extend family-based governance literature by examining the effect of controlling
family ownership and the family involvement in management on firm performance
in Indonesia. The investigation hinges upon the framework where the family,
instead of individuals, serves as the unit of analysis. The family ownership and the
involvement in management are negatively related to firm performance. However,
the negative effect of family ownership decreases when the involvement is taken
into account simultaneously. This finding has two important implications on the
governance research. First, the entrenchment effect of family involvement in
management is higher than the family ownership per se. Second, the family
involvement in management might serve as a good proxy that better measure the
family control. The interaction effect of both variables is negatively related to firm
performance providing supportive evidence to the claim that ownership
concentration by family is more detrimental when the controlling owners appoint
their family member to serve in management. Thus, control-enhancing mechanism
is more likely to create entrenchment effect, rather than to provide alignment
channel, in Indonesia.
1966. Pria yang memiliki NIP 196605011994121001 adalah staf pengajar di
Fakultas Ekonomi UNS. Riwayat pendidikan tinggi yang berhasil
diselesaikannya adalah tahun 1991 lulus sarjana (S-1) dari Universitas Gadjah
Mada untuk bidang ilmu Akumtansi, tahun 2002 lulus Magister (S-2) dari
Universitas Gadjah Mada untuk bidang ilmu: Ilmu Akuntansi, dan berhasil
meraih gelar Doktor (S-3) dari Curtin University of Technology, Australia pada
tahun 2010. Beberapa ringkasan disajikan dalam bahasa English sebagai
berikut.
BOARD COMPOSITION AND FIRM PERFORMANCE: A LITERATURE
REVIEW. This paper discusses the empirical studies investigating the association
between board composition and organizational outcome. The board composition is
the most important attribute of the board institution as such a composition
determines board’s characteristics, structure and process. The paper explores the
motivation and contribution of previous studies that serves as a basis for defining
the significance of a replication work. The paper also presents the outcome
approach adopted by previous works. An avenue for further research is presented
in the last sections Independent directors and firm performance in family
controlled firms: evidence from Indonesia (with John Simpson).
ASIAN-PACIFIC ECONOMIC LITERATURE. We analyze the relationship
between board structure and firm performance in family-controlled firms using a
sample of Indonesian non-financial companies. We find that the share of
independent directors on the board has an insignificant relationship with firm
performance. We suspect that the result is driven by the lack of institutional
reforms in relation to the appointment of independent directors. Our analysis
shows strong empirical support for the proposition that family control (family
ownership and family involvement on the board) is negatively related to firm
performance. However, the significant effect of family ownership disappears
when family involvement on the board is taken into the model. This result
indicates that family ownership is more detrimental to firm performance whenever
the family is highly involved in control decisions. Our results suggest that
Indonesia needs to implement governance reforms that prevent majority owners
from exercising excessive control over firms.
THE DETERMINANTS OF BOARD COMPOSITION: EVIDENCE FROM
INDONESIA. CORPORATE OWNERSHIP AND CONTROL JOURNAL
(FORTHCOMING). The study investigates the impact of agency problem and the
distribution of corporate control on board composition using a dataset consisting of
190 listed firms in Indonesia. The conceptual framework is derived from agency
theory assuming that board composition is endogenously determined by firm’s
specific environment. The study reveals that corporate control, instead of agency
problem, drives the composition of the board. The different types of large
shareholders are found to pursue different strategies in relation to the board
composition. While domestic institutional shareholders rely on the representation
of independent directors, foreign investors and controlling family prefer to
structure a particular board leadership. The finding suggests that the battle for
corporate control between foreign investor and the controlling family begins with
the structure of board leadership, rather than the representation of independent
director.
DO DIFFERENT DEVICES OF CORPORATE CONTROL MATTER? EVIDENCE
FROM INDONESIA (WITH FRANK GUO FEI AND JOHN L SIMPSON). We
extend family-based governance literature by examining the effect of controlling
family ownership and the family involvement in management on firm performance
in Indonesia. The investigation hinges upon the framework where the family,
instead of individuals, serves as the unit of analysis. The family ownership and the
involvement in management are negatively related to firm performance. However,
the negative effect of family ownership decreases when the involvement is taken
into account simultaneously. This finding has two important implications on the
governance research. First, the entrenchment effect of family involvement in
management is higher than the family ownership per se. Second, the family
involvement in management might serve as a good proxy that better measure the
family control. The interaction effect of both variables is negatively related to firm
performance providing supportive evidence to the claim that ownership
concentration by family is more detrimental when the controlling owners appoint
their family member to serve in management. Thus, control-enhancing mechanism
is more likely to create entrenchment effect, rather than to provide alignment
channel, in Indonesia.