Family Ownership Structure and Firm Value. case Study on Big-Cap Public Companies

Some previous researches proved the positive association between family ownership and firm value or companies performance. Contrary with these results, Jiang and Peng (2011) found that Indonesia is one of the country in which family ownership structure has a negative association with firm value. Moreover, Claessen et al. (2000), stated that as of 16.6 of Indonesia’s public companies are controlled by a single majority shareholder. Claessens et al. (2000) also stated that higher entrenchment occurred in Indonesia together with Philipina and Thailand. Besides that the low law enforcement and the lowest corruption index in Indonesia (Jiang Peng 2011), add opportunity to the majority to expropriate the minority. Therefore, this research aims to prove that there is a negative association between family ownership structure and firm value in which negative entrenchment of the majority to minority exists. This study shows that family ownership has a significant negative effect on firm value at significance level of 10.