Ownership Structure, Capital Structure and Firm Performance: A Case in Indonesia

Abstract

This paper aims to investigate the significant relationships among ownership sructure (including institutional ownership and insider ownership), capital structure and performance of thirty manufacturing companies listed in Indonesia Stock Exchange from 2010 to 2016. Firm performance was measured by ROA, MBV and Tobin’s q. We used panel data regression with 210 observations. The results showed that there was a significant relationship between institutional ownership and performance measured by MBV and Tobin’s q, but it was not significant when measured by ROA. Meanwhile, there was no significant relationship between insider ownership and performance measured by ROA, MBV and Q ratio. The results illustrated that ROA was negatively influenced by capital structure, but MBV and Q ratio were not influenced by capital structure. Furthermore, liquidity as the control variable had positive effect on ROA. Econ/ /omic growth had positive effect on firm performance although firm size had no effect on firm performance.