Erma Setiawati

This study aims to examine the impact of family ownership on the composition of the board of directors and the number of family-affiliated directors. In addition, it analyzes how it affects corporate governance. Big capital and middle capital companies among the top 50 IICD (Indonesia Institute for Corporate Directorship) awards issuers from 2017 to 2019 make up the study population. The sample consists of 57 middle capital companies and 72 big capital companies. The link between the variables is examined using multiple linear regression. Both the partial coefficient test and the model accuracy test were performed. First, the study findings indicate that family-owned businesses have a higher proportion of family-affiliated board members and commissioners on their boards in big capital and middle capital companies. Second, while family ownership has a favorable impact on middle capital companies, it has a negative and significant impact on the application of corporate governance in big capital firms. Third, since big capital companies exhibit different signals than middle capital companies, it can be inferred that the number of directors and commissioners who are members of the same family affects the adoption of good governance practices and, consequently, the development of sound policies to deal with challenging issues that may arise within a company. This study is innovative in that it divides the sample into big capital and middle capital companies.

Type of the article: Research Article

Abstract
Financial restatements remain a significant concern because they reflect weaknesses in financial reporting quality, corporate transparency, and governance effectiveness, particularly in emerging markets. This study examines the effects of the Environmental, Social, and Governance (ESG) dimensions and ownership structures on the likelihood of financial restatements, as well as the moderating role of board independence. The study employs logistic regression and Moderated Regression Analysis (MRA) using 609 firm-year observations of manufacturing companies listed on the Indonesia Stock Exchange during 2017–2023. The findings indicate that none of the ESG dimensions, ownership structures, or their interaction with board independence show a statistically significant association with financial restatements at the 5% level, and the model’s explanatory power is limited (Nagelkerke R2 = 0.057). While these results should be interpreted with caution given the model’s limited explanatory capacity, they are consistent with the view that formal ESG and governance mechanisms may not yet operate as effective monitoring instruments in this emerging-market setting. The findings underscore the need for further research and stronger regulatory enforcement to strengthen the substantive role of governance in corporate reporting integrity. These findings have important implications for regulators, corporate boards, and investors in emerging markets, suggesting that voluntary ESG commitments and concentrated ownership structures alone are insufficient safeguards against reporting irregularities unless accompanied by credible enforcement and independent oversight mechanisms.