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.: Home > International Journal of Management and Business Research > 2013 > Volume 3 Number 4 > 1 D. L. Warganegara ; 1 Y. R. I. Hutagaol; 2 M. A. Saputra; 3 Y. Anggraini

State-Owned Enterprises and Corporate Governance Strength: Evidence from Indonesia

1 D. L. Warganegara ; 1 Y. R. I. Hutagaol; 2 M. A. Saputra; 3 Y. Anggraini
1Department of Accounting and Finance, BINUS Business School Bina Nusantara University, Jakarta, Indonesia. 2KPMG, Jakarta, Indonesia. 3Commonwealth Bank, Jakarta, Indonesia.
Abstract :

Background: This study investigates whether state-owned enterprises (SOEs) in Indonesia implement stronger corporate governance than do non-SOEs. It can be argued that as a large dedicated institutional investor, the Indonesian government has an incentive to strengthen corporate governance in SOEs and possesses the ability to bear the cost of implementing stronger governance.
Research Methods: The sample of the study consists of 76 Indonesia Stock Exchange-listed firms that are included in the Kompas 100 index, ten of which are SOEs. Two scoring systems have been employed to gauge the strength of their governance.
Results: It has been consistently found that SOEs implemented stronger governance compared to non-SOEs.
Conclusion: The findings of this study, however, may have a geographical limitation as they may only apply to Indonesia or may exhibit a methodical limitation due to the assumption that a higher score index is directly proportional to  stronger governance. Regardless of the limitations, however, the results of this study can be used as a case study which underscores the active involvement of governments or large dedicated institutional investors in enforcing stronger corporate governance in public companies.

Keywords :
Corporate governance; State-Owned Enterprises (SOEs); Indonesia Stock Exchange

Date Deposited : 28 Mar 2016 13:53

Last Modified : 28 Mar 2016 15:03

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Volume 3, Number 4, - 2013

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