How Do Female Directors Moderate the Effect of Family Control on Firm Value and Leverage? Evidence from Indonesia

Abstract

Corporate governance is enriched by the existence of female directors. Their presence adds value to corporate governance by incorporating different perspectives and experiences. Female directors play an important role in preventing corporate harm, daring to ask critical questions and controlling conflict among various stakeholders. This study aimed to explore the effect of family control (FC) in stimulating leverage and firm value and assess the moderating role of female directors between FC on leverage and firm value. The sample was collected from the Indonesian Stock Exchange of 1,171 data observations-years (2019–2021 period) of companies listed. This research also used a linear regression model to analyse the purpose of hypotheses. The findings of this study indicate that female directors do not moderate the relationship between FC on leverage and firm value. The results prove the opposite of the assumption that the presence of female directors can harmonise and balance the interests of majority and minority shareholders. Finally, this article also contributes to the literature by developing the moderating role of female directors.