THE EFFECT OF CONTROLLING OWNERSHIP ON FIRM PERFORMANCE: THE MODERATING ROLE OF ESG PERFORMANCE AND INDUSTRY EFFECT (Tobacco and Energy)

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Lumoindong, Joseph Eugene (2025) THE EFFECT OF CONTROLLING OWNERSHIP ON FIRM PERFORMANCE: THE MODERATING ROLE OF ESG PERFORMANCE AND INDUSTRY EFFECT (Tobacco and Energy). Undergraduate thesis, institute ipmi.

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Abstract

A company's primary objective is to generate profit for its owners. However, this goal is often hindered by agency conflicts. This study examines the impact of controlling ownership on the performance of 42 companies listed on the Indonesia Stock Exchange (IDX) from 2020 to 2022, using ESG performance and industry effects as moderating variables. The methodology is based on stakeholder theory, with controlling ownership categorized into family ownership, foreign ownership, and state-owned ownership. Accounting performance is assessed through return on equity (ROE) and net profit margin (NPM), while market performance is measured by Tobin's Q and stock performance. ESG performance is gauged using Refinitiv (LSEG). The findings show mixed effects: family-owned companies negatively impact ROE but positively influence NPM, State-owned enterprises negatively impact ROE. Foreign-owned enterprises also negatively affect ROE. The study further explores the moderating role of ESG practices, revealing that improved ESG performance moderate the negative impact of ROE in family and state-owned companies. For state-owned and foreign-owned companies, ESG moderates and reduces both the negative ownership effect towards ROE. The results of this study has several implications, as it may provide insights into the relationship between ownership structure and the financial performance of Indonesian companies for investors, corporate management, hedge fund management, and future research. For theoretical implications, it finds how ESG reduces the effect of agency cost within the emerging market in Indonesia.

Item Type: Thesis (Undergraduate)
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: Thesis > Bachelor of Business Administration
Depositing User: sandra margaretha
Date Deposited: 27 Feb 2025 08:40
Last Modified: 27 Feb 2025 08:40
URI: http://repository.ipmi.ac.id/id/eprint/2698

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