Determinants of Corporate Performance of Listed Companies in Indonesia

Agustinus Prasetyantoko () and Parmono Rachmadi

MPRA Paper from University Library of Munich, Germany

Abstract: This paper is basically concerned with the factors determining corporate performance of listed companies in Indonesia, especially due to the 1997 financial crisis. The main results are fairly interesting in which firm size is positively related to firm profitability, but it is not related to market capitalization. It means that firm size is matter on the fundamental value of the firms, but it should not be important variable for market value of the firms. By employing panel data of 238 listed companies in Jakarta Stock Exchange (JSX) in the period 1994 – 2004 as the sample, we also find that macro factors are more important variables inducing firm performance, rather than firm-specific factors. It could be due to the 1997 great crisis. Our results also show that ownership factor matters on firm performance by the evidence that firms with majority foreign ownership have much higher performance in both measurements namely return on asset (ROA) and market capitalization growth than domestically-owned firms. Ordinary Least Square (OLS) is employed for the estimation procedure in this paper.

Keywords: firm performance; firm strategy and financial crisis (search for similar items in EconPapers)
JEL-codes: E32 L2 (search for similar items in EconPapers)
Date: 2008-01
New Economics Papers: this item is included in nep-cse and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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