The negative impact of family ownership structure on firm value in the context of Indonesia

A number of studies concluded that family ownership structure
increased firm’s performance and also firm value. However, the benefit of
family ownership will elapse when the opportunity to expropriate minority
exists (Jiang and Peng, 2011). According to Claessen et al. (2000), higher
entrenchment occurred in Indonesia, together with Philippines and Thailand.
As of 16.6% of Indonesia’s public companies was controlled by family as a
single majority shareholder, on the other hand, the low law enforcement and the
lowest corruption index are another fact in Indonesia. In such a condition it is
expected that family ownership has a negative impact on firm value. Using big
capitalisation public companies listed in Indonesia Stock Exchange (IDX) as a
research sample, this study supports the hypothesis that there is a negative
impact of family ownership on firm value, at the significance level of 10%.