Title: Outside CEO, Board of Commissioners Control, Operating Cash Flow, Company Performance, CEO Tenure and Family Business Funding Policy
Author: Ahmad Aziz Putra Pratama
Item Type : Thesis (Thesis)
Affiliations: Master of Management Science Study Program, Faculty of Economics and Business, Universitas Airlangga , Surabaya, Indonesia
Publisher: Universitas Airlangga
Abstract
Family businesses possess a unique phenomenon, drawing researchers' interest in observing them. This is because the majority of companies in Indonesia and other countries are family-based. Over time, some family-owned companies have chosen to appoint CEOs outside the family circle to lead their management. This study used a sample of 240 non-financial family businesses listed on the Indonesia Stock Exchange (IDX) with 1,605 observations. Data were obtained through the companies' financial and annual reports from 2008 to 2018. The purpose of this study was to examine the influence of outside CEOs on family firm debt levels and the moderating effects of family member control on the board of commissioners, operating cash flow, company performance, and CEO tenure on the influence of outside CEOs on family firm debt levels. The dependent variable in this study was the family firm debt level, while the independent variable was the outside CEO. The moderating variables in this study were family member control on the board of commissioners, operating cash flow, company performance, and CEO tenure. This study used multiple linear regression and moderated regression analysis (MRA) methods. The results of this study indicate that family firms led by outside CEOs have lower debt levels compared to those led by family CEOs. Family control on the board of commissioners, operating cash flow, company performance, and CEO tenure mitigate the negative influence of outside CEOs on family firm debt levels. These findings represent a novelty in the financial management literature.
Keywords: family firm's debt level, outside CEO, board of commissioners, operating cash flow, firm's performance, CEO tenure