D. L. Warganegara; Y. R. I. Hutagaol; M. A. Saputra; Y. Anggraini
Volume 3, Issue 4 , October 2013, , Pages 325-335
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 ...
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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.