Title: The negative impact of family ownership structure on firm value in the context of Indonesia

Authors: Juniarti

Addresses: Petra Christian University, Siwalankerto 121-131 Surabaya, East Java, Indonesia

Abstract: A number of studies concluded that family ownership structure increased firm's performance and also firm value. However, the benefit of family ownership will elapse when the opportunity to expropriate minority exists (Jiang and Peng, 2011). According to Claessen et al. (2000), higher entrenchment occurred in Indonesia, together with Philippines and Thailand. As of 16.6% of Indonesia's public companies was controlled by family as a single majority shareholder, on the other hand, the low law enforcement and the lowest corruption index are another fact in Indonesia. In such a condition it is expected that family ownership has a negative impact on firm value. Using big capitalisation public companies listed in Indonesia Stock Exchange (IDX) as a research sample, this study supports the hypothesis that there is a negative impact of family ownership on firm value, at the significance level of 10%.

Keywords: family ownership structure; firm value; expropriation; Indonesia; negative impact; family firms; family businesses; law enforcement; corruption.

DOI: 10.1504/IJBG.2015.072517

International Journal of Business and Globalisation, 2015 Vol.15 No.4, pp.446 - 460

Received: 22 Sep 2014
Accepted: 07 Jan 2015
Published online: 16 Oct 2015 *

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