Pengaruh Kepemilikan Negara Dan Asing Terhadap Corporate Risk Taking

Abstract

This study aimed to investigate the effect of state ownership and foreign ownership of corporate risk taking as well as the control variable return on assets (ROA) and the size of the companies that influence the corporate risk taking. The sample of this study was 181 companies from non-financial companies listed on the Indonesia Stock Exchange in 2010-2013. The analysis technique used is multiple linear regression analysis. The results obtained are state ownership significant negative effect on the corporate risk taking and foreign ownership is significant positive effect on corporate risk taking. In the control variable is return on assets (ROA) significant positive effect on corporate risk taking and the size of the company significant negative effect on corporate risk taking.

Does foreign ownership structure increase Indonesian firms’ risk-taking?

“…Our results empirically support the hypothesis that predicts the positive effect of foreign ownership on firms' risk-taking behavior. Besides, the finding is also consistent with previous studies (Boubakri et al, 2013;Chun & Lee, 2017;Kurniawati & Komalasari, 2016;Nguyen, 2012), that document that foreign investors of Indonesian firms are more aggressive in making investment-related decisions, thereby increasing firms' risk-taking decisions to generate higher profits. All control variables in the study (SIZE, ROA, EARNINGS, LEV, and FIRMAGE) also positively affect firms' risk-taking decisions.…”

“…Thus, foreign shareholders with (almost) full control over firms can effectively influence firms' risk-taking behavior. The findings empirically support prior studies that foreign ownership motivates firms to take higher risks for short-term profits (Chun & Lee, 2017;Kurniawati & Komalasari, 2016;Nguyen, 2012).…”

“…Additionally, managers may have to deal with conflicts of interest when making investment decisions because firms tend to reduce risks (more risk-averse). Conversely, shareholders usually prefer greater risks to meet personal interests (Kurniawati & Komalasari, 2016).…”

“…For instance, foreign shareholders increase Japanese firms' risk-taking behavior (Chun & Lee, 2017;Nguyen, 2012). Foreign shareholders also motivate Indonesian firms' managers to make more aggressive (riskier) investment decisions to generate higher profits (Kurniawati & Komalasari, 2016). But, another research documents that foreign shareholders encourage Indonesian firms to make less risky investment decisions (Langit & Adhariani, 2017).…”

“…Prior studies on firms' risk-taking behavior demonstrate inconsistent results. Most of them analyze the relationship between firms' ownership structure, such as family ownership, foreign ownership, institutional ownership, managerial ownership, and state ownership, on the level of firms' risk-taking behavior (Al-Tamimi, 2013; Barry et al, 2011;Boubakri et al, 2013;Chun & Lee, 2017;Firdaus & Adhariani, 2017;Ho et al, 2020;Kurniawati & Komalasari, 2016;Langit & Adhariani, 2017;Lee et al, 2018;Mahdavi et al, 2012;Nazir et al, 2018;Nguyen, 2012;Paligorova, 2010;Vo, 2016) For instance, Vietnamese state-owned enterprises (SOEs) increase their risktaking activities for managers' personal gains during the recession and pandemic, and greater foreign ownership mitigates the effect. In this regard, foreign owners focus on firms' long-term viability to avoid excessive risks (Ho et al, 2020).…”