The Influence of Corporate Governance Index and Related-Party Transactions on Company Value with Political Connections as a Moderation Variable: The Case of State-Owned Companies on the Indonesia Stock Exchange

Ima Widha Ratnasari, Gede Adi Yuniarta and Desak Nyoman Sri Werastuti
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Ima Widha Ratnasari: Universitas Pendidikan Ganesha, Indonesia
Gede Adi Yuniarta: Universitas Pendidikan Ganesha, Indonesia
Desak Nyoman Sri Werastuti: Universitas Pendidikan Ganesha, Indonesia

CECCAR Business Review, 2024, vol. 5, issue 4, 68-79

Abstract: Corporate governance and company value are essential issues in managing state-owned companies in Indonesia. This research examines the influence of corporate governance index and related-party transactions on the value of state-owned companies on the Indonesia Stock Exchange by analyzing the role of political connections as a moderating variable. The population of this research is all state-owned companies on the Indonesia Stock Exchange from 2015 to 2022. The research sample was obtained using a purposive sampling technique. Data analysis uses moderated regression analysis. This research found that, in the case of state-owned companies in Indonesia, the corporate governance index positively affected company value. In contrast, related-party transactions harmed company value. Political connections have not been proven to be a moderating variable in the influence of corporate governance index on company value. However, they are proven on the influence between related-party transactions and company value. Investors in the Indonesian capital market assess political connections in state-owned companies in Indonesia as increasing the risk that it will worsen the influence of related-party transactions and the value of state-owned companies.

Keywords: corporate governance; firm value; state-owned enterprises; related-party transactions; political connections (search for similar items in EconPapers)
JEL-codes: G30 G32 O16 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ahd:journl:v:5:y:2024:i:4:p:68-79

DOI: 10.37945/cbr.2024.04.07

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