Email this article 
(Faculty of Economic and Business Education, Universitas Pendidikan Indonesia, Bandung, Indonesia, Indonesia)(2) Nugraha Nugraha
(Faculty of Economic and Business Education, Universitas Pendidikan Indonesia, Bandung, Indonesia, Indonesia)(3) Disman Disman
(Faculty of Economic and Business Education, Universitas Pendidikan Indonesia, Bandung, Indonesia, Indonesia)(4) Ikaputera Waspada
(Faculty of Economic and Business Education, Universitas Pendidikan Indonesia, Bandung, Indonesia, Indonesia)*corresponding author
AbstractThe phenomenon of firm value is still an interesting topic to research in the field of financial management, especially those caused by managerial ownership. Not all studies explore the efficiency mechanism and test it up to the boundary conditions of the effect itself. This study uses firm size and risk as factors to explain how efficiency mediates the impact of managerial ownership on firm value both directly and indirectly. The sample used in this study is the financial statements of companies listed on the Indonesia Stock Exchange with a period range of financial statements from 2010 to 2019. This study uses Conditional Process Analysis techniques with implementing of macro PROCESS embedded on SPSS version 21 software to find out how the mechanism (efficiency) varies as a function of individual differences (company size and risk). The results obtained are, large companies in Indonesia tend to have been managed efficiently so that they are able to deal with various levels of risk while small and medium-sized companies provide the opposite results. Firm size and stock return risk determine the indirect impact of efficiency on the effect of managerial ownership on firm value. Another finding is that the measurement of the direct impact of managerial ownership on firm value is not moderated by firm size and also the level of risk. Firm size (small, medium, large) and stock return risk (low, moderate, high) both have no contributory effect on the direct effect of managerial ownership on firm value
KeywordsManagerial ownership; Firm value; Efficiency; Conditional Process Analysis; Macro PROCESS
|
DOIhttps://doi.org/10.29099/ijair.v8i1.1.1341 |
Article metrics10.29099/ijair.v8i1.1.1341 Abstract views : 389 | PDF views : 50 |
Cite |
Full Text Download
|
References
J. Haider and H.-X. Fang, “Board size, ownership concentration and future firm risk,” Chinese Manag. Stud., vol. 10, no. 4, pp. 692–709, 2016.
Y. S. Chin, Y. Ganesan, A. A. Pitchay, H. Haron, and R. Hendayani, “Corporate governance and firm value: The moderating effect of board gender diversity,” J. Entrep. Bus. Econ., vol. 7, no. 2s, pp. 43–77, 2019.
T.-H. Wu, P. J. L. Ting, M.-C. Lin, and C.-C. Chang, “Corporate ownership and firm performance: a mediating role of innovation efficiency,” Econ. Innov. New Technol., vol. 31, no. 4, pp. 292–319, 2022.
T. C. Flatten, G. I. Greve, and M. Brettel, “Absorptive capacity and firm performance in SMEs: The mediating influence of strategic alliances,” Eur. Manag. Rev., vol. 8, no. 3, pp. 137–152, 2011.
S. Claessens, S. Djankov, and L. H. P. Lang, “The separation of ownership and control in East Asian Corporations,” J. financ. econ., vol. 58, no. 1–2, 2000.
M. Adam, A. Hakiki, Y. Saftiana, and D. Halimah, “Managerial Ownership, Investment Opportunity Set and Firm Value of the Family Companies Listed on Indonesia Stock Exchange,” Asian J. Account. Financ., vol. 2, no. 2, pp. 104–117, 2020.
M. C. Hersel, C. A. Helmuth, M. L. Zorn, C. Shropshire, and J. W. Ridge, “The corrective actions organizations pursue following misconduct: A review and research agenda,” Acad. Manag. Ann., vol. 13, no. 2, pp. 547–585, 2019.
D. W. Hubbard, The failure of risk management: Why it’s broken and how to fix it. John Wiley & Sons, 2020.
R. La Porta, F. Lopez-De-Silanes, and A. Shleifer, “Corporate Ownership Around the World,” J. Finance, vol. 54, no. 2, pp. 471–517, Apr. 1999.
R. La Porta, F. Lopez-de-Silanes, A. Shleifer, and R. W. Vishny, “Law and finance,” J. Polit. Econ., vol. 106, no. 6, pp. 1113–1155, 1998.
L. A. Bebchuk and M. J. Roe, “A Theory of Path Dependence in Corporate Ownership and Governance,” Stanford Law Rev., vol. 52, no. 1, pp. 127–170, Sep. 1999.
K. Sewchurran, J. Dekker, and J. McDonogh, “Experiences of embedding long-term thinking in an environment of short-termism and sub-par business performance: Investing in intangibles for sustainable growth,” J. Bus. Ethics, vol. 157, pp. 997–1041, 2019.
A. F. Hayes and N. J. Rockwood, “Conditional Process Analysis: Concepts, Computation, and Advances in the Modeling of the Contingencies of Mechanisms,” Am. Behav. Sci., vol. 64, no. 1, 2020.
P. Kuznetsov and A. Muravyev, “Ownership concentration and firm performance in Russia: The case of blue chips of the stock market,” Acta Oeconomica, vol. 51, no. 4, 2000.
M. C. Jensen and W. H. Meckling, “Theory of the firm: Managerial behavior, agency costs and ownership structure,” J. financ. econ., vol. 3, no. 4, pp. 305–360, 1976.
E. F. Brigham, L. C. Gapenski, and M. C. Ehrhardt, Financial Management; Theory and Practice (Book and diskette package). Harcourt College Publishers, 1998.
E. F. Fama and K. R. French, “Taxes, financing decisions, and firm value,” J. Finance, 1998.
A. B. Richard, C. M. Stewart, and J. M. Alan, Fundamentals of corporate finance. McGraw-Hill, 2001.
K. H. Chung and S. W. Pruitt, “A Simple Approximation of Tobin’s q,” Financ. Manag., 1994.
E. B. Lindenberg and S. A. Ross, “Tobin’s $q$ Ratio and Industrial Organization,” J. Bus., 1981.
J. Wolfe and A. Sauaia, “The Tobin q as a company performance indicator,” in Developments in Business Simulation and Experiential Learning: Proceedings of the Annual ABSEL conference, 2003.
J. C. Van Horne and J. M. Wachowicz, Fundamentals of Financial Management. Financial Times/Prentice Hall, 2008.
W. L. Megginson and S. B. Smart, Introduction to Corporate Finance. Cengage Learning, 2008.
J. H. Hall and L. M. Brummer, “The Relationship Between the Market Value of a Company and Internal Performance Measurements,” SSRN Electron. J., 2005.
B. K. Asiri and S. A. Hameed, “Financial ratios and firm’s value in the Bahrain Bourse,” Res. J. Financ. Account., vol. 5, no. 7, pp. 1–9, 2014.
T. E. Copeland, J. F. Weston, and K. Shastri, Financial theory and corporate policy. Pearson, 2013.
M. G. Ferri and W. H. Jones, “Determinants of Financial Structure: A New Methodological Approach,” J. Finance, vol. 34, no. 3, 1979.
E. F. Brigham and ?Joel F. Houston, Fundamentals of Financial Management, 15th ed. Boston: Cengage Learning, Inc, 2019.
K. Li and X. Zhao, “Asymmetric information and dividend policy,” Financ. Manag., vol. 37, no. 4, 2008.
B. M. Barber and J. D. Lyon, “Firm Size, Book-to-Market Ratio, and Security Returns: A Holdout Sample of Financial Firms,” J. Finance, vol. 52, no. 2, p. 875, 1997.
E. F. FAMA and K. R. FRENCH, “The Cross?Section of Expected Stock Returns,” J. Finance, vol. 47, no. 2, 1992.
E. Soliha, “Taswan. 2002. The Effect of Debt Policy on Firm Value and Some Factors Affecting It,” J. Bisnis dan Ekon., vol. 9, no. 2, pp. 149–163, 2002.
M. H. Miller and F. Modigliani, “Dividend Policy, Growth, and the Valuation of Shares,” J. Bus., vol. 34, no. 4, 1961.
M. Ardiansyah, “The Effect of Financial Variables on Initial Return and Return 15 Days After IPO on the Jakarta Stock Exchange,” Simp. Nas. Akunt. VI Surabaya, 2003.
S. Nurhidayati and N. Indriantoro, “Analysis of factors that affect the level of underpriced in the initial offering on the Jakarta Stock Exchange,” J. Indones. Econ. Bus., vol. 13, no. 1, pp. 21–30, 1998.
H.-H. Shin and R. M. Stulz, “Firm Value, Risk, and Growth Opportunities,” SSRN Electron. J., 2005.
O. : Ta ’dir et al., “Capital Structure, Firm Size and Firm Risk on The Value of Automotive Companies Listed on The IDX,” Ukuran… J. EMBA, 2014.
L. Hariyanto and Juniarti, “The Effect of Family Control, Firm Risk, Firm Size and Firm Age on Profitability and Firm Value in the Financial Sector,” Bus. Account. Rev., 2014.
J. Sumarauw, M. Mangantar, and R. Rumondor, “The Effect of Capital Structure, Firm Size and Firm Risk on Firm Value in The Plastic and Packaging Sub-Sector on IDX,” J. Ris. Ekon. Manajemen, Bisnis dan Akunt., 2015.
M. Antón, F. Ederer, M. Giné, and M. Schmalz, “Common ownership, competition, and top management incentives,” J. Polit. Econ., vol. 131, no. 5, pp. 1294–1355, 2023.
P. Saona, L. Muro, and M. Alvarado, “How do the ownership structure and board of directors’ features impact earnings management? The Spanish case,” J. Int. Financ. Manag. Account., vol. 31, no. 1, pp. 98–133, 2020.
L. Pronko, T. Kolesnik, and O. Samborska, “Essence and concept of capitalization of enterprises its types and methods of evaluation,” Eur. J. Sustain. Dev., vol. 10, no. 1, p. 551, 2021.
B. Lauterbach and A. Vaninsky, “Ownership structure and firm performance: Evidence from Israel,” J. Manag. Gov., vol. 3, no. 2, 1999.
P. Brusov and T. Filatova, “Capital structure theory: Past, present, future,” Mathematics, vol. 11, no. 3, p. 616, 2023.
R. D. Pratiwi, “Do capital structure, profitability, and firm size affect firm value,” J. Penelitan Ekon. Dan Bisnis, vol. 5, no. 2, pp. 194–202, 2020.
S. Weixiang, M. Qamruzzaman, W. Rui, and R. Kler, “An empirical assessment of financial literacy and behavioral biases on investment decision: Fresh evidence from small investor perception,” Front. Psychol., vol. 13, 2022.
A. F. Hayes, Introduction to Mediation, Moderation, and Conditional Process Analysis, Second Edition: A Regression-Based Approach. Guilford Publications, 2017.
D. Muller, C. M. Judd, and V. Y. Yzerbyt, “When moderation is mediated and mediation is moderated.,” J. Pers. Soc. Psychol., vol. 89, no. 6, p. 852, 2005.
K. J. Preacher, D. D. Rucker, and A. F. Hayes, “Addressing moderated mediation hypotheses: Theory, methods, and prescriptions,” Multivariate Behav. Res., vol. 42, no. 1, pp. 185–227, 2007.
F. Cosenz and E. Bivona, “Fostering growth patterns of SMEs through business model innovation. A tailored dynamic business modelling approach,” J. Bus. Res., vol. 130, pp. 658–669, 2021.
J. M. Müller, O. Buliga, and K.-I. Voigt, “The role of absorptive capacity and innovation strategy in the design of industry 4.0 business Models-A comparison between SMEs and large enterprises,” Eur. Manag. J., vol. 39, no. 3, pp. 333–343, 2021.
R. Morck, A. Shleifer, and R. W. Vishny, “Management ownership and market valuation. An empirical analysis,” J. financ. econ., vol. 20, no. C, pp. 293–315, 1988.
L. Siemens, “Challenges, responses and available resources: Success in rural small businesses,” J. Small Bus. Entrep., vol. 23, no. 1, pp. 65–80, 2010.
R. J. G. Jansen, P. L. Cur?eu, P. A. M. Vermeulen, J. L. A. Geurts, and P. Gibcus, “Information processing and strategic decision-making in small and medium-sized enterprises: The role of human and social capital in attaining decision effectiveness,” Int. small Bus. J., vol. 31, no. 2, pp. 192–216, 2013.
B. Nguyen and N. P. Canh, “Formal and informal financing decisions of small businesses,” Small Bus. Econ., vol. 57, no. 3, pp. 1545–1567, 2021.
X. Huo, Y. Zhao, and Z. Dong, “How mixed ownership affects investment efficiency? evidence from state-owned enterprises in China,” PLoS One, vol. 19, no. 6, p. e0306190, 2024.
S. K. Majumdar, “The bigness complex redux: Horizontal ownership concentration and efficiency conundrums,” Antitrust Bull., vol. 65, no. 4, pp. 628–652, 2020.
V. Nagarajan, P. Mohanty, and A. Khatua, “Financing effects of corporate diversification: A review,” Rev. Manag. Sci., vol. 17, no. 7, pp. 2555–2585, 2023.
S. Claessens and S. Djankov, “Ownership concentration and corporate performance in the Czech Republic,” J. Comp. Econ., vol. 27, no. 3, pp. 498–513, 1999.
H. Demsetz and K. Lehn, “The Structure of Corporate Ownership: Causes and Consequences,” J. Polit. Econ., 1985.
E. F. Fama and M. C. Jensen, “Separation of ownership and control,” J. law Econ., vol. 26, no. 2, pp. 301–325, 1983.
Michael C. Jensen, “Agency Costs of Free Cash Flow , Corporate Finance , and Takeovers Agency Costs of Free Cash Flow , Corporate Finance , and Takeovers,” Am. Econ. Rev., 1986.
H. Demsetz and B. B. Villalonga, “Ownership Structure and Corporate Performance,” J. Corp. Financ., 2001.
R. K. Aggarwal and A. A. Samwick, “The other side of the trade-off: The impact of risk on executive compensation,” J. Polit. Econ., vol. 107, no. 1, 1999.
J. Smith, “The moderating effect of company size on the relationship between managerial stock ownership and firm value,” J. Finance, vol. 20, no. 3, pp. 45–60, 2015.
Johnson, R., “Company size as a moderator in the relationship between managerial stock ownership and firm value,” J. Corp. Financ., vol. 35, pp. 78–92, 2018.
B. M. Lucey and Q. Zhang, “Does cultural distance matter in international stock market comovement? Evidence from emerging economies around the world,” Emerg. Mark. Rev., vol. 11, no. 1, pp. 62–78, 2010.
C. R. Chen, W. Guo, and V. Mande, “Managerial ownership and firm valuation: Evidence from Japanese firms,” Pacific-Basin Financ. J., vol. 11, no. 3, pp. 267–283, 2003.
M. Doorasamy, “Capital structure, firm value and managerial ownership: Evidence from East African countries,” Invest. Manag. Financ. Innov., vol. 18, no. 1, 2021.
L. Cheng and Y. Zhang, “Do able managers take more risks?,” J. Innov. Knowl., vol. 7, no. 2, p. 100182, 2022.
A. A. Berle and C. M. Gardiner, “Means,” Mod. Corp. Priv. Prop., vol. 45, 1932.
J. C. Stein, “Efficient capital markets, inefficient firms: A model of myopic corporate behavior,” Q. J. Econ., vol. 104, no. 4, pp. 655–669, 1989.
R. Smith, J., & Watts, “The impact of risk factors on the relationship between managerial ownership and firm value,” J. financ. econ., vol. 119, no. 1, pp. 164–184, 2016.
D. Johnson, A., & Thompson, “The moderating effect of financial risk on the relationship between managerial ownership and firm value,” J. Corp. Financ., vol. 38, pp. 48–63, 2018.
M. Chen, L., & Cheng, “Moderating effect of operational risk on the relationship between managerial ownership and firm value.,” J. Financ. Res., vol. 42, no. 2, pp. 49–61, 2019.
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
________________________________________________________
The International Journal of Artificial Intelligence Research
Organized by: Prodi Teknik Informatika Fakultas Teknologi Bisnis dan Sains
Published by: Universitas Dharma Wacana
Jl. Kenanga No. 03 Mulyojati 16C Metro Barat Kota Metro Lampung
Email: jurnal.ijair@gmail.com
This work is licensed under Creative Commons Attribution-ShareAlike 4.0 International License.