THE EFFECT OF FINANCIAL INSTITUTION OWNERSHIP ON FIRM VALUE

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Abstract

This research aims to examine the effect of financial institution ownership (bank institution and non-bank institution) on firm value and also whether there is a difference of the effect between financial institution ownership in form of bank institution and non-bank institution on firm value. Total observations are 270 listed firms on Indonesia Stock Exchange in 2012-2014, resulting to 809 observations. The result of this research shows that financial institution ownership in the form of bank institution has no influence on firm value while financial institution ownership in the form of non-bank institution has a positive influence on firm value. This research shows that the influence of financial institution ownership in form of non-bank institution is greater than influence of financial institution ownership in form of bank institution on firm value. Regulator of financial institution could create new rules to encourage investment by non-bank institutions in public companies for effective monitoring and increase firm value. This research reveals the effect on financial institution ownership in form of bank and non-bank institution rather than institutional ownership on firm value in Indonesia that has not been discussed by other researches.

Keywords: Financial Institution Ownership in form of Bank Institution, Financial Institution Ownership in form of Non-Bank Institution, Firm Value

Date received: 21 July 2016

Date accepted: 15 November 2016

How to cite this paper: Wimelda, L., & Siregar, S. (2017). The effect of financial institution ownership on firm value. Corporate Ownership & Control, 14(2), 114-122. https://doi.org/10.22495/cocv14i2art11