Corporate Political Strategy and Market Valuation: Does Family Governance Matter in the Energy Sector?
Keywords:
Political Connection, Family Ownership, Market Valuation, Energy Sector
Abstract
This study examines the effect of political connection on the market performance of energy sector companies listed on the Indonesia Stock Exchange during the 2019–2024 period, with family ownership as a moderating variable. Market performance is proxied using Price-to-Book Value (PBV), reflecting investors’ perception of firm value. Political connection is measured using a dummy variable indicating whether a company has directors, commissioners, major shareholders, or state ownership with political ties. Family ownership is measured by the proportion of shares owned by founding families. This research employs panel data regression analysis with control variables including firm size, leverage, and firm age. The results indicate that political connection significantly affects market performance. Furthermore, family ownership moderates the relationship between political connection and market performance. The findings support Agency Theory and Stewardship Theory in explaining how political ties and ownership structure influence firm valuation in highly regulated industries such as the energy sector. This study contributes to the literature by providing updated empirical evidence from Indonesian energy companies in the post-pandemic recovery period.References
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Su, Z., Fung, H. G., Huang, D., & Shen, C. (2018). Political connections and firm value: Evidence from emerging markets. International Review of Economics & Finance, 53, 237–249.
Ung, L. J., Brahmana, R., & Puah, C. H. (2018). Family ownership and firm performance: Evidence from ASEAN countries. Emerging Markets Review, 36, 35–50.
Wang, Y., & Shailer, G. (2018). Ownership concentration and firm performance in emerging markets. Journal of Contemporary Accounting & Economics, 14(1), 35–55.
Zhou, W., & Peng, M. W. (2019). Political connections and corporate governance: Evidence from listed firms. Corporate Governance: An International Review, 27(5), 377–395.
Boubakri, N., Guedhami, O., Mishra, D., & Saffar, W. (2018). Political connections and the cost of equity capital. Journal of Corporate Finance, 50, 99–115. https://doi.org/10.1016/j.jcorpfin.2017.10.007
Chen, C. J. P., Li, Z., Su, X., & Sun, Z. (2017). Rent-seeking incentives and corporate political connections. Journal of Corporate Finance, 45, 667–689.
Faccio, M. (2016). Political connections and corporate performance. Annual Review of Financial Economics, 8, 349–373.
Gharbi, H., & Othmani, K. (2022). Family ownership and firm value in emerging markets. Cogent Economics & Finance, 10(1), 1–17.
Ha, N. T., Nguyen, T. T., & Tran, Q. T. (2022). Firm age, governance, and firm performance: Evidence from emerging markets. Cogent Economics & Finance, 10(1), 1–18.
Hillman, A. J. (2017). Corporate political activity: A review and research agenda. Journal of Management, 43(1), 16–44.
Leuz, C., & Oberholzer-Gee, F. (2016). Political relationships, global financing, and corporate transparency: Evidence from Indonesia. Journal of Financial Economics, 122(2), 424–446.
Nguyen, B. D., Rahman, M. H., & Zhao, R. (2020). Political connections and firm value: Evidence from emerging markets. International Review of Financial Analysis, 69, 101457.
Preuss, L., & Königsgruber, R. (2021). Political risk and corporate governance in emerging markets. Corporate Governance: An International Review, 29(5), 456–472.
Siregar, S. V., & Utama, S. (2019). Political connections and earnings quality: Evidence from Indonesia. Asian Review of Accounting, 27(2), 212–229.
Su, Z., Fung, H. G., Huang, D., & Shen, C. (2018). Political connections and firm value: Evidence from emerging markets. International Review of Economics & Finance, 53, 237–249.
Ung, L. J., Brahmana, R., & Puah, C. H. (2018). Family ownership and firm performance: Evidence from ASEAN countries. Emerging Markets Review, 36, 35–50.
Wang, Y., & Shailer, G. (2018). Ownership concentration and firm performance in emerging markets. Journal of Contemporary Accounting & Economics, 14(1), 35–55.
Zhou, W., & Peng, M. W. (2019). Political connections and corporate governance: Evidence from listed firms. Corporate Governance: An International Review, 27(5), 377–395.
Published
2026-06-30
How to Cite
Aji, Y. D. K., & Muazaroh, M. (2026). Corporate Political Strategy and Market Valuation: Does Family Governance Matter in the Energy Sector?. Kontigensi : Jurnal Ilmiah Manajemen, 14(1), 354-362. https://doi.org/10.56457/jimk.v14i1.947
Section
Articles
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