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Determinants of Corporate Performance of Listed Companies in Indonesia

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  • Agustinus, Prasetyantoko
  • Rachmadi, Parmono

Abstract

This paper is basically concerned with the factors determining corporate performance of listed companies in Indonesia, especially due to the 1997 financial crisis. The main results are fairly interesting in which firm size is positively related to firm profitability, but it is not related to market capitalization. It means that firm size is matter on the fundamental value of the firms, but it should not be important variable for market value of the firms. By employing panel data of 238 listed companies in Jakarta Stock Exchange (JSX) in the period 1994 – 2004 as the sample, we also find that macro factors are more important variables inducing firm performance, rather than firm-specific factors. It could be due to the 1997 great crisis. Our results also show that ownership factor matters on firm performance by the evidence that firms with majority foreign ownership have much higher performance in both measurements namely return on asset (ROA) and market capitalization growth than domestically-owned firms. Ordinary Least Square (OLS) is employed for the estimation procedure in this paper.

Suggested Citation

  • Agustinus, Prasetyantoko & Rachmadi, Parmono, 2008. "Determinants of Corporate Performance of Listed Companies in Indonesia," MPRA Paper 6777, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:6777
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    File URL: https://mpra.ub.uni-muenchen.de/6777/1/MPRA_paper_6777.pdf
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    References listed on IDEAS

    as
    1. Kristin J Forbes, 2002. "How Do Large Depreciations Affect Firm Performance?," IMF Staff Papers, Palgrave Macmillan, vol. 49(Special i), pages 214-238.
    2. Jia Liu, 2004. "Macroeconomic determinants of corporate failures: evidence from the UK," Applied Economics, Taylor & Francis Journals, vol. 36(9), pages 939-945.
    3. Mihir A. Desai & C. Fritz Foley & Kristin J. Forbes, 2004. "Financial Constraints and Growth: Multinational and Local Firm Responses to Currency Crises," NBER Working Papers 10545, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Khan, Muhammad Kamran & Nouman, Mohammad & Imran, Muhammad, 2015. "Determinants of financial performance of financial sectors (An assessment through economic value added)," MPRA Paper 81281, University Library of Munich, Germany.
    2. M. A. Lagesh & Maram Srikanth & Debashis Acharya, 2018. "Corporate Performance during Business Cycles: Evidence from Indian Manufacturing Firms," Global Business Review, International Management Institute, vol. 19(5), pages 1261-1274, October.
    3. Al Shahrani Saad M & Al Shahrani Saad M, 2016. "The Impact of Organizational Factors on Financial Performance: Building a Theoretical Model," International Journal of Innovation and Economic Development, Inovatus Services Ltd., vol. 2(7), pages 51-56, June.
    4. Angelica BUBOI (DANAILA) & Cristina Gabriela COSMULESE, 2023. "Effect of Market Capitalization on the Association between Firm Size and Corporative Performance of Listed Companies at Bucharest Stock Exchange in Romania," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 24(5), pages 815-825, December.
    5. Tarik Hossain, 2020. "Determinants of Profitability: A Study on Manufacturing Companies Listed on the Dhaka Stock Exchange," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(12), pages 1496-1508, December.
    6. Al Shahrani Saad M & Al Shahrani Saad M, 2016. "The Impact of Organizational Factors on Financial Performance: Building a Theoretical Model," International Journal of Management Science and Business Administration, Inovatus Services Ltd., vol. 2(7), pages 51-56, June.

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    More about this item

    Keywords

    firm performance; firm strategy and financial crisis;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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