Abstract
The aims of this research is to analyze the effect of number of board interlocking, board size, family board participation, board independence, control variable such as firm size, firm age, and leverage, and moderate foreign ownership to number of board interlocking towards financial firm perfomance using ROA and Tobin’s Q as a proxy in non financial sector companies listed in Indonesia Stock Exchange (BEI) in period 2014-2018. This research uses quantitative approach with two least square regression analysis model. The sample used in this research is firms which are listed on the non financial in Indonesia Stock Exchange (IDX) on 2014-2018 period. The number of final samples used in this study were 366 business entities with 1830 observations. The findings result of this research indicate that concurrent commissioner positions have positive and significant effect towards ROA in non financial sector companies BEI on the period 2014-2018, while independent commissioners, family of commissioners, board size, and the interaction of multiple positions of commissioners with foreign ownership have insignificant effect towards ROA in non financial sector companies BEI on the period 2014-2018. Then variables independent commissioners, board size of commissioners, and the interaction of multiple positions of commissioner with foreign ownership have positive and significant effect towards Tobin’s Q in non financial sector companies BEI on the period 2014-2018, while the family of commissioners and concurrent commissioner positions have insignificant effect towards ROA in non financial sector companies BEI on the period 2014-2018.
Highlights
As the time goes by, strong business competition requires companies to develop a good management strategy
The objects used in the study are Indonesian non-financial sector companies listed on the Indonesia Stock Exchange (IDX) which have audited reports for 5 consecutive years for the 2014-2018 period
The results of research conducted by Chibber and Arbor found no significant correlation between foreign ownership and company performance at ownership levels below 51%
Summary
As the time goes by, strong business competition requires companies to develop a good management strategy. Mol (2001) has stated that board interlocking provides boards of commissioners with wealth of experiences that serve to increase the company's competitive advantage such as valuable information about customers; suppliers; human, financial and operational resources; strategic plans and other corporate innovations in the business arena. Such business acumen contributes to the competitive advantage that companies gain and it is the primary approach for many companies to prevent environmental uncertainty. Excessive board interlocking can undermine company performance because when viewed from the perspective of agency theory, board interlocking can result in the application of a kind of time pressure on its directors which affects the efficiency of the commissioners in monitoring company performance (Ficjh and Shivdasani, 2006)
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