Foreign Ownership and Financial Firms Performance: Empirical Evidence Indonesia Financial Services Industry

Abstract: The aim of the paper is to study the value created by foreign firms in Indonesia finance company industry over  the  period  2001-2011.  We  analysed  the  value  creation  of  foreign  firms  by  comparing  the  key financial performance to local shareholders. Foreign firms are the major players in banking industry and automotive  industry  with  market  share  more  than  90%  oin  both  two  wheeler  and  four  wheeler. Meanwhile,  the  automotive  manufacturers  and  dealers  are  the  one  who  provide  the  products  of financing for finance company. We analysed seven micro key financial variables (profitability, efficiency, growth, firm  size,  liquidity,  solvency  and  asset  quality).  We  use  parametric  panel  data  dummy regression.  The  empirical  results  show  that  finance  companies  owned  by  foreign  firms  are  more efficient, lower in profitability, bigger in size, higher in growth capability, lower in liquidity and higher in solvency.

Keywords: financial performance, foreign ownership, finance company, panel data, financial ratio

Author: Suwinto Johan, Hermanto Siregar,  Perdana Wahyu Santosa,Tubagus Nur Ahmad Maulana

Journal Code: jpmanajemengg120018

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