The Role of Political Connections on Family Firms’ Performance: Evidence from Indonesia

Int. J. Financial Stud. 2019, 7, 55; doi:10.3390/ijfs7040055

14 Pages Posted: 21 Apr 2020

See all articles by Iman Harymawan

Iman Harymawan

Universitas Airlangga

Mohammad Nasih

affiliation not provided to SSRN

Muhammad Madyan

Airlangga University

Diarany Sucahyati

Airlangga University

Date Written: September 23, 2019

Abstract

The purpose of this study is to investigate the relationship of firms with family ownership and their performance in Indonesia and further examine on how political connections affect this relationship. This study used 933 samples from 413 companies listed on the Indonesia Stock Exchange (IDX) in the period between 2014 and 2016. Using ordinary least square (OLS) regression, the results shows that firms without family ownership (non-family firms) have better performance than firms with family ownership (family firms) in Indonesia. Furthermore, the findings also show that the performance of family firms significantly improve when the firms are affiliated with political connections. Our findings imply that establishing political connections in family firms will increase the performance of the firms.

Keywords: family firms, political connections, firm performance, emerging countries

Suggested Citation

Harymawan, Iman and Nasih, Mohammad and Madyan, Muhammad and Sucahyati, Diarany, The Role of Political Connections on Family Firms’ Performance: Evidence from Indonesia (September 23, 2019). Int. J. Financial Stud. 2019, 7, 55; doi:10.3390/ijfs7040055, Available at SSRN: https://ssrn.com/abstract=3561518

Iman Harymawan (Contact Author)

Universitas Airlangga ( email )

JL. Airlangga no 4
Surabaya, East Java 60286
Indonesia

HOME PAGE: http://www.feb.unair.ac.id

Mohammad Nasih

affiliation not provided to SSRN

Muhammad Madyan

Airlangga University ( email )

Jl. Darmawangsa Dalam 2
Surabaya, 60286
Indonesia

Diarany Sucahyati

Airlangga University ( email )

Jl. Darmawangsa Dalam 2
Surabaya, 60286
Indonesia

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