Implementation of corporate governance, family ownership, and family-aligned board: Evidence from Indonesia

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This study aims to examine the impact of family ownership on the composition of the board of directors and the number of family-affiliated directors. In addition, it analyzes how it affects corporate governance. Big capital and middle capital companies among the top 50 IICD (Indonesia Institute for Corporate Directorship) awards issuers from 2017 to 2019 make up the study population. The sample consists of 57 middle capital companies and 72 big capital companies. The link between the variables is examined using multiple linear regression. Both the partial coefficient test and the model accuracy test were performed. First, the study findings indicate that family-owned businesses have a higher proportion of family-affiliated board members and commissioners on their boards in big capital and middle capital companies. Second, while family ownership has a favorable impact on middle capital companies, it has a negative and significant impact on the application of corporate governance in big capital firms. Third, since big capital companies exhibit different signals than middle capital companies, it can be inferred that the number of directors and commissioners who are members of the same family affects the adoption of good governance practices and, consequently, the development of sound policies to deal with challenging issues that may arise within a company. This study is innovative in that it divides the sample into big capital and middle capital companies.

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    • Table 1. Sampling results
    • Table 2. Dependent, independent, and control variables
    • Table 3. Descriptive statistics (H1)
    • Table 4. Descriptive statistics (H2)
    • Table 5. Regression analysis results (H1)
    • Table 6. Regression analysis results (H2)
    • Conceptualization
      Erma Setiawati
    • Data curation
      Erma Setiawati, Eskasari Putri, Nashirotun Nisa
    • Formal Analysis
      Erma Setiawati, Eskasari Putri, Nashirotun Nisa
    • Funding acquisition
      Erma Setiawati
    • Investigation
      Erma Setiawati
    • Methodology
      Erma Setiawati
    • Project administration
      Erma Setiawati, Eskasari Putri, Nashirotun Nisa
    • Resources
      Erma Setiawati
    • Software
      Erma Setiawati, Eskasari Putri, Nashirotun Nisa
    • Supervision
      Erma Setiawati, Eskasari Putri, Nashirotun Nisa
    • Validation
      Erma Setiawati, Eskasari Putri, Nashirotun Nisa
    • Visualization
      Erma Setiawati, Eskasari Putri, Nashirotun Nisa
    • Writing – original draft
      Erma Setiawati
    • Writing – review & editing
      Erma Setiawati