Corporate Governance Framed by Local Culture: Ownership’s Power, Less-Independency Monitoring of Commissioners Board and Audit Committee
Journal Title: International Journal of Current Science Research and Review - Year 2025, Vol 8, Issue 01
Abstract
This study aims to discuss the involvement of local cultural factors in corporate governance. The involvement of local cultural factors results in two phenomena: (1) controlling the power of owners and (2) reduced independence of the board of commissioners and audit committee in monitoring CEO and board performance. Design/methodology/approach – This qualitative study employs in-depth interviews and focus group discussions with respondents from five private and state-owned enterprises. Interviews and discussions were conducted with CEOs, commissioners, audit committee members, and owners. Findings – The study reveals (1) owners exert significant controlling power over CEOs and boards, influencing strategic decisions and distorting professional performance. (2) Non-interventionist owners utilize the board of commissioners and audit committee for indirect control, reducing independence. (3) Controlling power of ownership is more dominant in private enterprises than state-owned enterprises, reflecting Indonesia’s local culture, where CEOs and boards are perceived as “staff” accountable to owners. (4) Lack of independence among commissioners and audit committees is more prevalent in private enterprises due to cultural influences.
Authors and Affiliations
Krisna Damayanti, Muhammad Arsalan Khan,
Keywords
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- EP ID EP755054
- DOI 10.47191/ijcsrr/V8-i1-21
- Views 18
- Downloads 0
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