CEO-Family vs. CEO-Nonfamily: Who is a Better Value Creator in Family Business?

By Santi Yopie and Iskandar Itan

This study aimed to determine the effect of corporate governance on firm value of family companies listed in the Indonesia Stock Exchange (IDX). Family business Independent variables used in this study are CEO-family, audit committee, board size, independent commissioners, managerial ownership, and the control variables which used in this study are financial leverage, firm size, and return on assets.

The results of this study indicate that CEO-family has negative significant impact on firm value. The family firm which is managed by a nonfamily member can contribute higher firm value than a family firm which is managed by family members. The audit committee and board size have a significant positive impact on firm value in the family firm. These results also indicate that independent commissioners and managerial ownership have no significant effect on firm value in the family firm.

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