The Ownership, Remuneration, Corporate Governance, and Financial Performance of Indonesian State-Owned Enterprises

Abstract

The purpose of this research is to investigate the relationship between ownership, remuneration, corporate governance, and the financial performance of Indonesian state-owned enterprises (SOEs). The research population is all state-owned enterprises listed in the Indonesia Stock Exchange, and the samples were selected using purposive sampling. Using generally least square multiple regression analysis, this study finds that public ownership has a positive and significant effect on financial performance. Independent board of commissioners and independent audit committee have a significant positive effect on financial performance, but the size of board of commissioners and the size of audit committee have no effect on performance. The board of commissioners' remuneration has a negative effect on performance, while directors' remuneration has a positive effect on performance. The results also imply that remuneration at executive level has a positive impact on performance, but at supervisory level it has no effect, except adding to the burden. Leverage, as measured by debt to assets ratio, has a negative effect on performance.