Agency conflicts, firm value, and monitoring mechanisms: An empirical evidence from Indonesia

Figures & data

Figure 1. The relation between ownership structure and performance perceived from agency theory.

Table 1. Descriptive statistics of variables

	N	Minimum	Maximum	Mean	Std. Deviation
QRATIO	580	0.173	8.590	1.632	1.112
TOP1	580	20.510	93.060	47.596	16.397
TDTA	580	0.024	99.331	42.991	18.540
BLOCK	580	5.000	69.310	26.224	14.691
DPR	580	0.070	1516.330	46.858	104.845
DFOWN	580	0.000	1.000	0.336	0.473
TATO	580	0.000	6.178	0.995	0.750
LOGMCAP	580	2.576	8.960	6.354	0.759

¹N = number of observations = 580 firm-year observations. ²QRATIO = corporate value, TOP1 = ownership concentration of the largest shareholder or the first biggest ownership, BLOCK = coalition of all block shareholders excluding the first biggest ownership, TDTA = debt policy, DPR = dividend policy = dividend payout ratio, DFOWN = dummy variable of the foreign shareholder, TATO = total asset turnover, LOGMCAP = firm size.

Table 2. The correlation coefficient between independent variables

	TOP1	TDTA	BLOCK	DPR	DFOWN	TATO	LOGMCAP	VIF
TOP1	1							1.469
TDTA	−0.119	1						1.122
BLOCK	−0.535	0.027	1					1.429
DPR	0.70	−0.046	0.039	1				1.020
DFOWN	0.16	−0.153	−0.027	0.048	1			1.030
TATO	0.087	0.249	−0.001	−0.044	−0.002	1		1.169
LOGMCAP	0.042	−0.056	−0.084	0.041	0.027	−0.261	1	1.084

VIF is variance inflation factor.

Table 3. Heteroscedasticity test with park test

Independent and Moderating Variables	Heteroscedasticity test (Park test). Dependent Variable: Log(res2)
	Direct Effect (Fixed Effect)		Moderating Effect (Fixed Effect)
	Main Effect	Main Effect and Moderating Variable	Main Effect, Moderating Variable, and Interaction Effect
	Model 1	Model 2	Model 3
Constant	−3.717 (0.203)	−4.464 (0.180)	−2.236 (0.548)
Z1	0.018 (0.570)	0.024 (0.508)	−0.009 (0.841)
Z2	0.376 (0.342)	0.364 (0.360)	0.654 (0.382)
TDTA	-	−0.0007 (0.949)	0.0001 (0.992)
BLOCK	-	0.009 (0.727)	−0.053 (0.356)
DPR	-	0.002 (0.095)	−0.001 (0.764)
DFOWN	-	0.258 (0.737)	2.804 (0.284)
Z1*BLOCK	-	-	0.001 (0.245)
Z2*BLOCK	-	-	0.001 (0.961)
Z1*DPR	-	-	0.000 (0.960)
Z2*DPR	-	-	−0.000 (0.793)
Z1*DFOWN	-	-	−0.065 (0.326)
Z2*DFOWN	-	-	−0.504 (0.557)
TATO	0.203 (0.647)	0.213 (0.641)	0.099 (0.836)
LOGMCAP	−0.270 (0.495)	−0.252 (0.526)	−0.309 (0.446)
N	580	580	580

Figures in parentheses are p-value. Res2 = Resid^2.

Table 4. Piecewise regression models with panel least squares estimation technique

Independent Variables	Dependent Variable: Corporate value (QRATIO)
	Model 1 with Z1 = TOP1b30 Z2 = TOP1a30	Model 2 with Z1 = TOP1b40 Z2 = TOP1a40	Model 3 with Z1 = TOP1b50 Z2 = TOP1a 50	Model 4 with Z1 = TOP1b60 Z2 = TOP1a 60	Model 5 with Z1 = TOP1b70 Z2 = TOP1a70	Model 6 with Z1 = TOP1b80 Z2 = TOP1a80
Constant	−9.456*** (0.000)	−9.891*** (0.000)	−9.810*** (0.000)	−10.148*** (0.000)	−10.290*** (0.000)	−10.012*** (0.000)
TOP1b30	−0.012 (0.801)
TOP1a30	0.010 (0.261)
TOP1b40		0.005 (0.787)
TOP1a40		0.010 (0.342)
TOP1b50			0.003 (0.830)
TOP1a50			0.016 (0.294)
TOP1b60				0.013 (0.219)
TOP1a60				−0.012 (0.701)
TOP1b70					0.015* (0.080)
TOP1a70					−0.271** (0.011)
TOP1b80						0.009 (0.292)
TOP1a80						−0.044 (0.761)
TATO	0.871*** (0.000)	0.872***(0.000)	0.867*** (0.000)	0.876*** (0.000)	0.930*** (0.000)	0.875*** (0.000)
LOGMCAP	1.634*** (0.000)	1.631*** (0.000)	1.632*** (0.000)	1.629*** (0.000)	1.654*** (0.000)	1.631*** (0.000)
R^2	0.829	0.830	0.829	0.829	0.832	0.829
Adjusted R^2	0.752	0.752	0.752	0.752	0.756	0.751
F-statistic	10.687*** (0.000)	10.683*** (0.000)	10.692*** (0.000)	10.695*** (0.000)	10.905*** (0.000)	10.685*** (0.000)
DW Statistic	2.028	2.027	2.029	2.017	1.948	2.022
Hausman test - Random effect: Chi-Sq. Statistic	67.630*** (0.000)	67.309*** (0.000)	67.464*** (0.000)	67.413*** (0.000)	74.695*** (0.000)	67.728*** (0.000)
N	580	580	580	580	580	580

The asterisks ***, **, and * denotes significant at 1% level, 5% level, and 10% level, respectively. Figures in parentheses are the p-value. N = number of firm-year observations, 580 firm-years. QRATIO = corporate value. Z1 = ownership concentration of largest shareholders (TOP1) at low concentrations measured at different levels of concentration of ownership that is TOP1b30 (if TOP1 < 30%, TOP1b30 = 0–30%; if TOP1 ≥ 30%, TOP1b30 = 30%), TOP1b40 (if TOP1 < 40%, TOP1b40 = 0–40%; if TOP1 ≥ 40%, TOP1b40 = 40%), TOP1b50 ((if TOP1 < 50%, TOP1b50 = 0–50%; if TOP1 ≥ 50%, TOP1b50 = 50%)), TOP1b60 ((if TOP1 < 60%, TOP1b60 = 0–60%; if TOP1 ≥ 60%, TOP1b60 = 60%), TOP1b70 (if TOP1 < 70%, TOP1b70 = 0–70%; if TOP1 ≥ 70%, TOP1b70 = 70%), and TOP1b80 ((if TOP1 < 80%, TOP1b80 = 0–80%; if TOP1 ≥ 80%, TOP1b80 = 80%). Z2 = ownership concentration of largest shareholders at high concentrations measured at different levels of concentration of ownership, namely TOP1a 30 (if TOP1 < 30%, TOP1a30 = 0%; if TOP1 ≥ 30%, TOP1a 30 = TOP1–30%); TOP1a40 (if TOP1 < 40%, TOP1a40 = 0%; if TOP1 ≥ 40%, TOP1a 40 = TOP1–40%); TOP1a50 (if TOP1 < 50%, TOP1a50 = 0%; if TOP1 ≥ 50%, TOP1a50 = TOP1–50%); TOP1a > 60 (if TOP1 < 60%, TOP1a60 = 0%; if TOP1 ≥ 60%, TOP1a 60 = TOP1–60%), TOP1a70 (if TOP1 < 70%, TOP1a70 = 0%; if TOP1 ≥ 70%, TOP1a70 = TOP1–70%), and TOP1a 80 (if TOP1 < 80%, TOP1a80 = 0%; if TOP1 ≥ 80%, TOP1a80 = TOP1–80%). TATO = total asset turnover. LOGMCAP = the natural logarithm of market capitalization (firm size).

Table 5. Moderated regression model with panel least squares estimation technique

Independent and Moderating Variables	Dependent Variable: Corporate value (QRATIO)
	Direct Effect (Fixed Effect)		Moderating Effect (Fixed Effect)
	Main Effect	Main Effect and Moderating Variable	Main Effect, Moderating Variable, and Interaction Effect
	Model 1	Model 2	Model 3
Constant	−10.290*** (0.000)	−11.310*** (0.000)	−11.291*** (0.000)
Z1	0.015* (0.080)	0,025** (0.010)	0.027** (0.022)
Z2	−0.271** (0.011)	−0,260** (0.015)	−0.660*** (0.000)
TDTA	-	0,010*** (0.002)	0.011*** (0.000)
BLOCK	-	0.008 (0.260)	−0.001 (0.962)
DPR	-	−0.001** (0.021)	0.004*** (0.003)
DFOWN	-	0,175 (0.391)	0.798 (0.238)
Z1*BLOCK	-	-	0.0002 (0.571)
Z2*BLOCK	-	-	0.015** (0.030)
Z1*DPR	-	-	−0.0001*** (0.000)
Z2*DPR	-	-	0.0002*** (0.004)
Z1*DFOWN	-	-	−0.018 (0.296)
Z2*DFOWN	-	-	0.458*** (0.039)
TATO	0.930*** (0.000)	0.869*** (0.000)	0.807*** (0.000)
LOGMCAP	1.654***(0.000)	1.650*** (0.000)	1.642*** (0.000)
R^2	0.832	0.840	0.848
Adjusted R^2	0.756	0.763	0.773
F-Statistics	10.905*** (0.000)	11.083***(0.000)	11.307*** (0.000)
DW Statistic	1.948	1.985	1.957
Hausman test Test cross-section random effect: Chi-Sq. Statistic	74.695*** (0.000)	93.572*** (0.000)	109.304*** (0.000)
N	580	580	580

The asterisks ***, **, and * denotes significant at 1% level, 5% level, 10% level, respectively. Figures in parentheses are p-value. Z1 = ownership concentration of the largest shareholder at low concentrations (20% to 70%). Z2 = ownership concentration of the largest shareholders at high concentrations (70% or more).