Political connection, blockholder ownership and performance

Lela Nurlaela Wati (), Hj. Ina Primiana (), Kashan Pirzada () and Rachmat Sudarsono ()
Additional contact information
Lela Nurlaela Wati: STIE Muhammadiyah Jakarta, Indonesia
Hj. Ina Primiana: Padjadjaran University, Indonesia
Kashan Pirzada: University Utara Malaysia, Malaysia
Rachmat Sudarsono: Padjadjaran University, Indonesia

Entrepreneurship and Sustainability Issues, 2019, vol. 7, issue 1, 52-68

Abstract: This paper aims to examine the effect of blockholder of political connected firm on the performance of conglomerates. The sample of this paper is all 66 conglomerates listed on the Indonesia Stock Exchange from 2006 to 2014. Regression panel data with General Least Square was used for this analysis. It was found that Family and state blockholder have positive and significant effect on firm value at all cut off (10%-50%), political connections in the family, state, and public blockholder have significant positive effect on firm value. The result of this paper indicates that the structure of companies’ ownership has contribution to determine the political connections in the conglomerates. The concentration of ownership in the company and family as controlling highest conglomerate in Indonesia as well as their involvement in politics implies that Indonesia has fallen into oligarchy state, in which the rules are held by a group of wealthy political elites.

Keywords: firm value; political connection; blockholder; Indonesia (search for similar items in EconPapers)
JEL-codes: M40 M41 M49 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ssi:jouesi:v:7:y:2019:i:1:p:52-68

DOI: 10.9770/jesi.2019.7.1(5)

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