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The effect of family ownership on company values mediated by financial performance and corporate governance

Author

Listed:
  • Nihayatun Najahiyah

    (University of Brawijaya)

  • Siti Aisjah

    (University of Brawijaya)

  • Atim Dzajuli

    (University of Brawijaya)

Abstract

High family ownership in East Asia creates conflicts of interest between shareholders and minorities that affect the likelihood of value. This study examined the effect of family ownership on firm value. In addition, this study also examines the mediating role of financial performance and corporate governance in the relationship between family ownership and firm value. This research includes explanatory research with a quantitative method approach. Path analysis test is used to test the research hypothesis. The object used in this research is the basic and chemical industry sector in 2016-2019. The population in this study found 72 companies using 19 companies as research samples. This study uses a purposive sample method. The data collected is secondary data and analyzed by descriptive statistics. The results of the study prove that family ownership has a significant positive effect on firm value, family ownership has a significant positive effect on financial performance, family ownership has a significant positive effect on corporate governance, financial performance has a significant positive effect on firm value, corporate governance has a significant positive effect on firm value. Financial performance and corporate governance mediate the relationship of family ownership to firm value in the basic and chemical industry sector in 2016-2019. It should be emphasized that improving financial performance and implementing a good corporate governance system are the main keys to increasing company value. Key Words:Family Ownership, Firm Value, Financial Performance, Corporate Governance

Suggested Citation

  • Nihayatun Najahiyah & Siti Aisjah & Atim Dzajuli, 2022. "The effect of family ownership on company values mediated by financial performance and corporate governance," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(6), pages 148-156, September.
    • Handle: RePEc:rbs:ijbrss:v:11:y:2022:i:6:p:148-156
    DOI: 10.20525/ijrbs.v11i6.1923
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    References listed on IDEAS

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    1. Ilse Maria Beuren & Leandro Politelo & José Augusto Sousa Martins, 2016. "Influence of family ownership on company performance," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 12(5), pages 654-672, October.
    2. Ilse Maria Beuren & Leandro Politelo & José Augusto Sousa Martins, 2016. "Influence of family ownership on company performance," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 12(5), pages 654-672, October.
    3. Aziz Jaafar & Lynn Hodgkinson & Mao-Feng Kao, 2019. "Ownership Structure, Board of Directors and Firm Performance: Evidence from Taiwan," Working Papers 19011, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
    4. Ronald C. Anderson & David M. Reeb, 2003. "Founding-Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1327, June.
    5. Wagner, Dominik & Block, Joern H. & Miller, Danny & Schwens, Christian & Xi, Guoqian, 2015. "A meta-analysis of the financial performance of family firms: Another attempt," Journal of Family Business Strategy, Elsevier, vol. 6(1), pages 3-13.
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