The value of political independent supervisory boards: Evidence from Indonesian dual board setting

Joni, Joni and Widjaja, Jahja Hamdani and Natalia, Maria and Salim, Ivan Junius (2021) The value of political independent supervisory boards: Evidence from Indonesian dual board setting. ACRN Journal of Finance and Risk Perspectives, 10. pp. 128-138. ISSN 2305-7394

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Abstract

We investigate whether political independent supervisory boards (political I-SBs) help companies to reduce their corporate risks in the setting of Indonesian two-tier board system. This study is different from other studies in several ways. First, while most prior studies examine the effectiveness of independent boards in one-tier board setting, we use dual board system. This system promotes the strategic role of political I-SBs. Second, we use two measures of corporate risks: operating and market risks. Based on 1,176 firm-year observations for operating risk analysis and 1,254 firm-year observations for market risk analysis, we find that firms with political I-SBs have lower operating and market risks than firms with nonpolitically connected independent SBs. We also control for endogeneity problem using GMM (Generalized Method of Moments) method, and the results are still consistent.

Item Type: Article
Uncontrolled Keywords: Political I-SBs; Corporate risks; Two-tier board system
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Depositing User: Perpustakaan Maranatha
Date Deposited: 23 Nov 2021 04:01
Last Modified: 25 Apr 2022 05:25
URI: http://repository.maranatha.edu/id/eprint/28354

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