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The Influence of Corporate Governance Index and Related-Party Transactions on Company Value with Political Connections as a Moderation Variable: The Case of State-Owned Companies on the Indonesia Stock Exchange

Author

Listed:
  • Ima Widha RATNASARI

    (Universitas Pendidikan Ganesha, Indonesia)

  • Gede Adi YUNIARTA

    (Universitas Pendidikan Ganesha, Indonesia)

  • Desak Nyoman Sri WERASTUTI

    (Universitas Pendidikan Ganesha, Indonesia)

Abstract

Corporate governance and company value are essential issues in managing state-owned companies in Indonesia. This research examines the influence of corporate governance index and related-party transactions on the value of state-owned companies on the Indonesia Stock Exchange by analyzing the role of political connections as a moderating variable. The population of this research is all state-owned companies on the Indonesia Stock Exchange from 2015 to 2022. The research sample was obtained using a purposive sampling technique. Data analysis uses moderated regression analysis. This research found that, in the case of state-owned companies in Indonesia, the corporate governance index positively affected company value. In contrast, related-party transactions harmed company value. Political connections have not been proven to be a moderating variable in the influence of corporate governance index on company value. However, they are proven on the influence between related-party transactions and company value. Investors in the Indonesian capital market assess political connections in state-owned companies in Indonesia as increasing the risk that it will worsen the influence of related-party transactions and the value of state-owned companies.

Suggested Citation

  • Ima Widha RATNASARI & Gede Adi YUNIARTA & Desak Nyoman Sri WERASTUTI, 2024. "The Influence of Corporate Governance Index and Related-Party Transactions on Company Value with Political Connections as a Moderation Variable: The Case of State-Owned Companies on the Indonesia Stoc," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 5(4), pages 68-79, April.
    • Handle: RePEc:ahd:journl:v:5:y:2024:i:4:p:68-79
    DOI: 10.37945/cbr.2024.04.07
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    More about this item

    Keywords

    corporate governance; firm value; state-owned enterprises; related-party transactions; political connections;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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