The role of political connections on family firms' performance: Evidence from Indonesia

The purpose of this study is to investigate the relationship of firms with family ownership and their performance in Indonesia and further examine on how political connections affect this relationship. This study used 933 samples from 413 companies listed on the Indonesia Stock Exchange (IDX) in the...

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Bibliographic Details
Published in:International journal of financial studies 2019-12, Vol.7 (4), p.1-14
Main Authors: Harymawan, Iman, Nasih, Mohammad, Madyan, Muhammad, Sucahyati, Diarany
Format: Article
Language:English
Subjects:
emerging countries
family firms
firm performance
political connections
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Summary:The purpose of this study is to investigate the relationship of firms with family ownership and their performance in Indonesia and further examine on how political connections affect this relationship. This study used 933 samples from 413 companies listed on the Indonesia Stock Exchange (IDX) in the period between 2014 and 2016. Using ordinary least square (OLS) regression, the results shows that firms without family ownership (non-family firms) have better performance than firms with family ownership (family firms) in Indonesia. Furthermore, the findings also show that the performance of family firms significantly improve when the firms are affiliated with political connections. Our findings imply that establishing political connections in family firms will increase the performance of the firms.
ISSN:2227-7072
2227-7072
DOI:10.3390/ijfs7040055