STAP International Journal of Accounting and Business Intelligence

ISSN: 3105-3726

Corporate Governance and Financial Performance: The Moderating Role of Ownership Concentration in Indonesian Industrial Firms (2019–2024)

by 

Ahmad Fheikh

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Published: 2026/02/05

Abstract

This study investigates the relationship between corporate governance mechanisms and financial performance, with particular emphasis on the moderating role of ownership concentration, in industrial firms listed on the Indonesia Stock Exchange (IDX) over the period 2019–2024. Using a quantitative explanatory design and panel data methodology, the study analyzes a final sample of 146 industrial firms, yielding 876 firm-year observations. Corporate governance is operationalized through board independence, board size, CEO duality, and audit committee characteristics, while financial performance is measured using accounting-based and market-based indicators, namely ROA, ROE, and Tobin’s Q. The empirical results reveal that board independence and audit committee effectiveness are positively associated with financial performance, whereas CEO duality and ownership concentration exhibit negative effects. More importantly, the findings demonstrate that ownership concentration significantly moderates the relationship between corporate governance mechanisms and financial performance, such that high ownership concentration weakens the positive impact of governance structures. These results support the entrenchment view of concentrated ownership and highlight the conditional effectiveness of corporate governance in emerging-market contexts. By focusing on the Indonesian industrial sector and a recent post-2019 period, this study contributes to the corporate governance literature by explaining heterogeneous governance–performance outcomes through an ownership-based contingency perspective. The findings offer important implications for theory, practice, and policy, emphasizing that effective governance reforms must address not only board structures but also underlying ownership and control dynamics.

Keywords

Corporate Governance; Financial Performance; Ownership Concentration; Board Characteristics; Audit Committee; Industrial Firms; Indonesia; Emerging Markets; Panel Data.

Corporate Governance and Financial Performance: The Moderating Role of Ownership Concentration in Indonesian Industrial Firms (2019–2024) is licensed under CC BY 4.0CCBY

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