The Impact of Ownership Struktur, Business Deversification and Company Size on Company Performance: A sem Approach

Masdupi, Erni (2014) The Impact of Ownership Struktur, Business Deversification and Company Size on Company Performance: A sem Approach. In: 4th Internatiobal Conference on Management (4th ICM 2014), 16-17 Juni 2014, Bali.

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Abstract

This study examines the influnce of ownership structure, business diversification and company size on company performance that listed in Indonesia Stock Exchange (IDX) in the periode of 2000-2011. Population of this study is all listed companies in IDX in the periode of analysis and based on purposive sampling 284 companies-years were selected. The final sample is 206 companies-years after outlier and normality tests was executed,. To answer the research queations, structural equation modeling was used. Confirmatory factor analysis (CFA) is employed to verify construct validity of the measurement model. The structural model then determines the impact of ownership structure, diversification of business and company size on company performance. The study found that the hypothesized measurement model fits the data as shown by the goodness of fit indices and the significant factor loadings. It means that the hypothesized measurement model fits on the data collected. The structural model indicated that ownership structure, which consists of insider ownership, institutional ownership and foreign ownership, did not have effect on company performance. Nevertheless, shareholder dispersion had a positive and significant influence on company performance. This showed that the public investors could be an effective monitoring agent to reduce agency conflict and increase company performance. Similarly, diversification of business was also found to be a negative and significant in influencing company performance. Company size negatively and significantly affected company performance. The listed companies in IDX could not reap benefit of diversification and company size.

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