Research Article
Political Connection and Board Characteristic’s effect on Financial Performance: Evidence from Indonesian Banking Firm
@INPROCEEDINGS{10.4108/eai.10-8-2022.2320876, author={Maulida Nurul Innayah and Bima Cinintya Pratama}, title={Political Connection and Board Characteristic’s effect on Financial Performance: Evidence from Indonesian Banking Firm}, proceedings={Proceedings of the 3rd International Conference of Business, Accounting, and Economics, ICBAE 2022, 10-11 August 2022, Purwokerto, Central Java, Indonesia}, publisher={EAI}, proceedings_a={ICBAE}, year={2022}, month={8}, keywords={political connection board characteristic performance}, doi={10.4108/eai.10-8-2022.2320876} }- Maulida Nurul Innayah
Bima Cinintya Pratama
Year: 2022
Political Connection and Board Characteristic’s effect on Financial Performance: Evidence from Indonesian Banking Firm
ICBAE
EAI
DOI: 10.4108/eai.10-8-2022.2320876
Abstract
This study investigates how political connection and board characteristic affect the financial performance of Indonesian banking firms. The population used in this study was the Indonesian banking sector, as determined by company annual reports. Purposive sampling was the method of sampling that was employed in this study. The 164 company-years of observation for 41 listed Indonesian banks from 2017 to 2020 make up the study's sample. According to Resource Dependence Theory, which explains why politically connected banks are viewed as high-quality assets because they are more likely to obtain support from their political connections in the event of financial difficulties, the study's findings were in line with this theory. This study also discovered that board characteristics, such as the participation of foreign directors and women on the board, have no effect on the financial performance of Indonesian banks. According to the study's statistics, women and foreign directors are among the minority of people who have no influence over financial performance. There are some inherent limitations in this study. The results of this study cannot necessarily be generalized to businesses in other industries because it only includes a sample of businesses that are involved in the banking sector. The demographics of the directors were also examined in this study, specifically the gender and nationality diversity represented by the number of women and foreigners on the board