Board Member Duality and Its Relationship with Corporate Performance in State-owned Enterprises in Indonesia
This paper presents preliminary findings from a survey about board member duality and agency cost in state-owned enterprises in 2014 in Indonesia. Board member duality is defined as the appointment to the position of director in a parent company while at the same time also holding a position as a commissioner in its subsidiary company. Agency cost refers to the cost which arises as a consequence of an agent and principal relationship. The principal expects that agency cost incurred in the relationship, will, in turn, increase corporate performance. Director’s remuneration, as one of the proxies for agency costs, is tested together with several variables involved in the respondent attributes, namely gender, age, and education in order to find the best predictor of the dual director response regarding his/her role in parent and subsidiary governance. The preliminary finding reveals that Director’s remuneration is the best predictor of the dual director response against three propositions, namely (1) Dual directors use their experiences to the advantage of both companies; (2) Dual directors tend to choose the interests of the parent rather than those of its subsidiary; (3) Dual directors increase subsidiary performance.
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).