Board Diversity Index on Performance of Indonesian Manufacturing
Companies: Moderating Role of Family Ownership
Dublin Core
Title
Board Diversity Index on Performance of Indonesian Manufacturing
Companies: Moderating Role of Family Ownership
Companies: Moderating Role of Family Ownership
Subject
Alignment effect, Blau index, Board diversity index, Entrenchment effect, Price-tobook value
Description
This study investigates the relationship between performance in Indonesian family-owned
manufacturing firms and their board diversity and ownership. Previous studies about firm
performance in Indonesia only focus on the individual diversity rather than considering the effect of
collective diversity aspects (constructed as an index) on its board. Previous studies focus only on the
individual elements of board diversity on its BOD, rarely on its BOC. Next, previous studies did not
consider the moderating role of its ownership towards the effect of board diversity on firm performance,
even though the family-owned firm is one of the most common forms of business in Indonesia. This
study employs price-to-book value (PBV) as a proxy for firm performance and Blau Index to construct
the board diversity index (BDI). The results show that the board diversity index positively influences
firm performance. Family ownership positively affects firm performance, signaling the alignment effect.
The results also show a linear relationship between family ownership and firm performance, contrary
to several previous studies where family ownership has a non-linear relationship with firm
performance. Lastly, the results also show the moderating role of family ownership positively
influences the board diversity effect on firm performance.
manufacturing firms and their board diversity and ownership. Previous studies about firm
performance in Indonesia only focus on the individual diversity rather than considering the effect of
collective diversity aspects (constructed as an index) on its board. Previous studies focus only on the
individual elements of board diversity on its BOD, rarely on its BOC. Next, previous studies did not
consider the moderating role of its ownership towards the effect of board diversity on firm performance,
even though the family-owned firm is one of the most common forms of business in Indonesia. This
study employs price-to-book value (PBV) as a proxy for firm performance and Blau Index to construct
the board diversity index (BDI). The results show that the board diversity index positively influences
firm performance. Family ownership positively affects firm performance, signaling the alignment effect.
The results also show a linear relationship between family ownership and firm performance, contrary
to several previous studies where family ownership has a non-linear relationship with firm
performance. Lastly, the results also show the moderating role of family ownership positively
influences the board diversity effect on firm performance.
Creator
Aditya Candra Pamarta*, Cynthia Afriani Utama
Source
https://jurnal.unmer.ac.id/index.php/jkdp/
Publisher
Faculty of Economics and Business, Universitas Indonesia
Date
2023-04-20
Contributor
Fajar bagus W
Format
PDF
Language
English
Type
Text
Files
Collection
Citation
Aditya Candra Pamarta*, Cynthia Afriani Utama, “Board Diversity Index on Performance of Indonesian Manufacturing
Companies: Moderating Role of Family Ownership,” Repository Horizon University Indonesia, accessed March 9, 2025, https://repository.horizon.ac.id/items/show/5068.
Companies: Moderating Role of Family Ownership,” Repository Horizon University Indonesia, accessed March 9, 2025, https://repository.horizon.ac.id/items/show/5068.