The Influence of Corporate Governance and Ownership Structure on Firm Performance
Keywords:
board size, company performance, independent board of commissioners, institutional ownership, ownership concentrationAbstract
This study investigates the critical interplay among corporate governance mechanisms, ownership structure, and firm performance in Indonesia's manufacturing sector, a vital component of the post-pandemic emerging-market economy. It addresses a significant literature gap by empirically testing whether internationally prescribed governance norms function as intended in a local environment characterized by concentrated ownership and distinct institutional realities, where the universal applicability of agency theory remains underexplored. Utilizing a quantitative panel data methodology, the analysis is based on a robust final sample of 510 firm-year observations from manufacturing companies listed on the Indonesia Stock Exchange (IDX). The findings reveal a divergence from conventional expectations. While larger board size and higher ownership concentration significantly diminish accounting-based performance (ROA), the presence of independent commissioners and institutional ownership adversely affects market-based valuation (Tobin's Q). Scientifically, this integrated analysis contributes to theory by challenging universal governance prescriptions, highlighting the prevalence of principal-principal conflicts and the potential inefficacy of symbolic governance adoption in specific institutional settings. The research underscores the imperative of developing context-sensitive governance frameworks.
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