Related Party Transactions and Corporate Governance in  Business Group: Evidence from Indonesia

Perdana Wahyu Santosa; Sovi Ismawati Rahayu; Zainal Zawir Simon; Martua Eliakim Tambunan

doi:10.14414/jebav.v25i1.2719

Authors

Perdana Wahyu Santosa Universitas YARSI http://orcid.org/0000-0002-0221-3910
Sovi Ismawati Rahayu YARSI University, Jakarta, Indonesia
Zainal Zawir Simon YARSI University, Jakarta, Indonesia
Martua Eliakim Tambunan Program Master of Management Christian University of Indonesia, Jakarta, Indonesia

DOI:

https://doi.org/10.14414/jebav.v25i1.2719

Keywords:

Related party transaction, Corporate governance, Business group, Firm size

Abstract

This paper aims to offer new evidence as to how sub-related party transactions (RPTs) can be related to corporateÂ governance for Indonesia's business group. We address an ongoing theoretical tension and some recent research inÂ the RPTs literature by focusing on revenue, expenses, loans, and receivables. Business groups are classified by sizeÂ or market capitalization. This paper examines whether RPTs in the business group relate with domestic/foreignÂ shareholders, independent board/commissioner, and firm size as controlling factors. The business groups wereselected through purposive sampling that met the analysis criteria with their typology in the population of businessÂ groups listed on IDX. We used panel data analysis for four models. This relationship is more pronounced than someÂ recent research for business group firms and firms with more highly concentrated foreign ownership regarding theÂ effect RPTs on revenue, expenses, loans, and receivables. Related to the controlling variable, firm size shows aÂ significant effect on every sub RPTs. The results may imply that foreign ownership exploits Indonesia with expensesÂ such as cross-border transactions of capital goods, intangible property (royalty), intra-firm services, and the cost ofÂ debt. Therefore, there is a need for a balanced interest for government and business in Indonesia via foreign directinvestment with corporate governance implementation and adaptive regulation.

Author Biography

Perdana Wahyu Santosa, Universitas YARSI

- Scopus ID: 54685033300- Vice Dean Faculty of Economics Universitas YARSI (2009-2013)- Chief Knowledge Officer/Head of Research CAPITAL PRICE (2010-2014)- Dean ofÂ Faculty of Economics Universitas YARSI (2021-20xx)- Commisioner of PT Kertas Padalarang (Persero) 2012-2017- Senior Lecturer in Finance, Capital Market, Investment, Managerial Accounting and Financial Statement AnalysisÂ - Teaching at SB IPB; SBM ITB; Universitas Padjadjaran (Part Time) 2010-PresentÂ Â

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