Abstract
This study analyses the impact between two internal governance mechanisms, consist of board composition and concentrated ownership and corporate performance of Indonesian non-financial listed companies based on market return and accounting return. Results show accounting return performance measurement indicates significant influence with board composition but this result is inconsistent with prediction based on market return performance measurement. This seems to suggest that independent commissioner is an effective mechanism in monitoring performance as suggested by agency theory although the market perceives otherwise. Concentrated ownership is found to be significant in both performance measurements, implying that concentrated ownership is an effective governance mechanism in mitigating agency problems. The results have important policy implications.
Keywords: independent commissioner, concentrated ownership, corporate performance
This study analyses the impact between two internal governance mechanisms, consist of board composition and concentrated ownership and corporate performance of Indonesian non-financial listed companies based on market return and accounting return. Results show accounting return performance measurement indicates significant influence with board composition but this result is inconsistent with prediction based on market return performance measurement. This seems to suggest that independent commissioner is an effective mechanism in monitoring performance as suggested by agency theory although the market perceives otherwise. Concentrated ownership is found to be significant in both performance measurements, implying that concentrated ownership is an effective governance mechanism in mitigating agency problems. The results have important policy implications.
Keywords: independent commissioner, concentrated ownership, corporate performance
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