TY - JOUR
T1 - POLITICAL CONNECTION, FOREIGN INSTITUTIONAL INVESTORS AND TUNNELING
T2 - EVIDENCE FROM INDONESIA
AU - Nuraina, Elva
AU - Nasih, Mohammad
AU - Agustia, Dian
N1 - Publisher Copyright:
© 2022 The Author(s). Published by Vilnius Gediminas Technical University.
PY - 2022/11/29
Y1 - 2022/11/29
N2 - The purpose of this study is to examine the moderating effect of foreign institutional investors on the relationship between political connection and tunneling. To achieve this goal, our study has examined all companies listed on the Indonesia Stock Exchange between 2015 and 2019, and obtained 1,571 firm-year observations. By using a quantitative approach and data analysis using moderated regression analysis, the results of this study indicate that foreign institutional investors play a role in weakening political connections to tunneling. This shows that foreign institutional investors have a role in reducing tunneling. These investors influence the behavior and performance of the company, so, even though the company has political ties, foreign institutional investors are less susceptible to political pressure and are more likely to negotiate to enhance the interests of minority shareholders, and protect their reputations. This finding has important implications for regulators to consider when evaluating the Investor Protection Act, in particular the protection of minority shareholder rights in companies with political ties.
AB - The purpose of this study is to examine the moderating effect of foreign institutional investors on the relationship between political connection and tunneling. To achieve this goal, our study has examined all companies listed on the Indonesia Stock Exchange between 2015 and 2019, and obtained 1,571 firm-year observations. By using a quantitative approach and data analysis using moderated regression analysis, the results of this study indicate that foreign institutional investors play a role in weakening political connections to tunneling. This shows that foreign institutional investors have a role in reducing tunneling. These investors influence the behavior and performance of the company, so, even though the company has political ties, foreign institutional investors are less susceptible to political pressure and are more likely to negotiate to enhance the interests of minority shareholders, and protect their reputations. This finding has important implications for regulators to consider when evaluating the Investor Protection Act, in particular the protection of minority shareholder rights in companies with political ties.
KW - foreign institutional investors
KW - minority shareholders
KW - political connection
KW - reputation
KW - tunneling
UR - http://www.scopus.com/inward/record.url?scp=85144699791&partnerID=8YFLogxK
U2 - 10.3846/btp.2022.16025
DO - 10.3846/btp.2022.16025
M3 - Article
AN - SCOPUS:85144699791
SN - 1648-0627
VL - 23
SP - 417
EP - 426
JO - Business: Theory and Practice
JF - Business: Theory and Practice
IS - 2
ER -