Nurazi, Ridwan and Santi , Fitri and Usman, Berto
(2015)
Tunnelling: Evidence From Indonesia Stock
Exchange.
Asian Academy of Management Journal of Accounting and Finance, 11 (2).
pp. 1-24.
ISSN 1823-4992
Abstract
This study investigates the relationships between corporate governance variables and
tunnelling activities in Indonesia. Using 2216 firm-year observations from 2005 to 2012,
we find that several corporate governance variables contribute to explaining the
phenomenon of tunnelling in Indonesia. The data reveal that approximately 276 firms
had experienced expropriation in the form of tunnelling, particularly expropriation from
majority to minority shareholders, which can be identified through the related party
transaction. We find that firms with family and state ownership tend to experience
tunnelling. This result is consistently revealed when we separate the data into eight
industries. We document that the SINGLE ownership variable, which depicts family
ownership, the STATE ownership variable, and the LEVERAGE variable have a positive
influence on TUNNELING. In contrast, the institutional (INST) ownership variable has a
negative influence on TUNNELING. However, BOARD_SIZE, OUTSIDERS, GROUP
ownership, and BIG FIVE auditor variables have no significant effect on TUNNELING
activities.
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