Bad Board Governance, Family Domination, Agency Problems, and Its Evidence in Indonesian Listed Companies

Authors

  • Ratna Nilam Muchtar

Abstract

The ownership structure of the Indonesian Listed Companies tends to be concentrated, and family is the dominunt controller. The family domination causes agency problem to non-family investor. By investigating the same sample of listed companies in Jakarta Stock Exchange in 1996 and in 2000, this research discovers that the reduction of family ownership will decrease agency problem. The optimal portion, the reduction of family ownership 20, 0%. However, after achieving that portion, the reduction of family ownership will increase the agency problem. This research also ï¬nds that family is not the best controller. Meanwhile the bonding mechanism that affectively reduce agency problem is the increasing of dividend payment, not be increasing of debt. Key words : agency problem, family ownership domination, bonding affectivity.

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How to Cite

Muchtar, R. N. (2013). Bad Board Governance, Family Domination, Agency Problems, and Its Evidence in Indonesian Listed Companies. The International Journal of Accounting and Business Society, 12(2), 17–30. Retrieved from https://ijabs.ub.ac.id/index.php/ijabs/article/view/158