THE IMPACT OF FOREIGN OWNERSHIP TOWARDS COMPANY PERFORMANCE IN THE CAPITAL MARKET STUDY CASE OF MANUFACTURING COMPANY LISTED IN INDONESIA STOCK EXCHANGE (IDX) PERIOD 2008-2012

Abstract

This research aims to identify and gives the empirical proven of significant influences in partial and simultaneously of foreign ownership to company performance. In addition, this research also identifies type of foreign ownership which gives significant impact toward ROA and Tobin’s Q as the company performance measurement. This study employed panel data (pooled data) analysis on a sample of 32 manufacturing companies listed in IDX covering the 5 year time period from 2008-2012. The research was conducted with SPSS version 20. Based on the test for normality, multicollinearity, heteroscedasticity and autocorrelation test indicated that the available data has been qualified to use the model of multiple regression equation for this research. The results of further analyzed, which employ dummy variables for different foreign ownership types, FORMED (25%-50%) and FORHIGH (51%-100%), are also provided. The results indicated that majority foreign-owned companies (FORHIGH) with the beta coefficient equals to 0.908 (closer with dummy 1) perform better than minority foreign-owned companies (FORMED) in terms of market ratio valuation (Tobin’s Q). When return on assets is employed as a performance measure, it is observed that FORHIGH is also performing better than FORMED. The result also showed that all independent variable has influence simultaneously to dependent variable and control variables and the most significant influence toward ROA and Tobin’s Q is FORHIGH. Furthermore, the capability of the independent variables and control variables to explain dependent variable is 38% for ROA and Tobin’s Q is 34.7%, while the rest is influenced by other factors outside this research.