University of Twente Student Theses


Determinants of firm financial performance in Indonesia and the Netherlands: A comparison

Nikolaus, Viktoria (2015) Determinants of firm financial performance in Indonesia and the Netherlands: A comparison.

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Abstract:This study examines determinants of firm performance of Indonesian and Dutch firms over the period of 2009-2013. Firm performance is measured by Tobin’s Q and its relationship with leverage, ownership concentration and inflation is tested. Additionally the effect of the control variables growth and size is analysed. The aim of this study is to provide an understanding of how a firm’s financial performance is affected by these determinants in those two countries. The sample consisted of 276 Indonesian and 62 Dutch firms of non-financial sectors. Results show that leverage is a strong predictor of Tobin’s Q in both countries. Ownership concentration lead to differing results; in Indonesia, a higher concentration seems to improve performance. The Dutch results however suggest a negative relationship between concentration and financial performance when compared to firms with a dispersed ownership. Inflation, which is high in Indonesia, has a negative influence. The more moderate inflation rate of the Netherlands leads to a positive, although not significant, effect. Growth has shown to be another important indicator with a positive effect on performance. For size, the effect on performance has shown a significant negative influence only in the Netherlands.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:International Business Administration BSc (50952)
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