THE RELATIONSHIP BETWEEN OWNERSHIP CONCENTRATION, ENVIRONMENTAL PERFORMANCE AND FIRM PERFORMANCE EVIDENCE FROM INDONESIA
UTOMO, MOHAMAD NUR
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In this study the relationships between ownership concentration and environmental performance and firm performance are examined. Companies manufacturing and mining sectors are listed in the Indonesia Stock Exchange as the sample in this study. Environmental performance is measured using Performance Rating Program (PROPER) by the Ministry of Environment and Forestry of the Republic Indonesia. Ownership concentration is measured by the percentage ownership of largest shareholders the first three (at least 5 percent) of the outstanding shares. Firm performance is measured by proxy ROA and Tobins Q. The findings indicate that there is no relationship between ownership concentration and environmental performance. Additionally Ownership concentration positively related to firm performance, and environmental performance is positively related to firm performance (in measurement of Tobins Q but not in ROA). The overall findings support agency theory and legitimacy theory. Environmental performance can be a strategy to increase firm performance.