The Impact of firm structural ownership (insider and outsider) on firm performance: the moderating role internal governance mechanisms

Oleh :
Priskila Indriyani - - Fak. Ekonomi dan Bisnis

Firm structural ownership is capital composition among debt and securities including inside shareholders and outside shareholders. Insider ownership or inside shareholder is one of firm’s shares structural ownership, which owned by CEO (Chief Executive Officer), executive directors, and his/her immediate family member, and the outsider ownership or outside shareholder is individual and institutional investor. Institutional commonly called as sophisticated investor. The consequence of the separation of ownership and control over its modern corporate operation is the existence of agency conflict. Corporate governance generally refers to the set of mechanisms that influence the decisions made by managers when there is a separation of ownership and control. The main consequence of dispersedly owned firms is that there exits a separation between the owners of the firm (principals) and those who control the firm's daily operations (agents or managers). The corporate governance concept arise as an effort to limit management’s action which only try to achieve their own interest with creating a mechanism and controlling tool to keep the stakeholders interest in balance and create an efficient company. The firm performance in this paper consist of accounting and market based performance. The result of this paper for the impact of ownership structure to firm perfoamance is mixed for the insider and outsider to each performance ratio. The result of this paper related to the impact of ownership to firm performance based on statistical result are neither accounting (ROA, ROE, EPS) nor market (abnormal return) performance are impacted by insider ownership, outsider ownership impacts only on accounting performance in EPS model.