The Effect of Board of Commissioners on Family Firms Performance in Indonesia

This study aims to examine the effect of internal corporate governance mechanisms namely the board of commissioners and independent commissioners on family firm performance. This study used return on equity (ROE) as measurement for firm performance. The samples of this study were 122 family controlled companies which were listed in Indonesia Stock Exchange from 2010 to 2014. The finding reveals that independent commissioners have a positive relationship with firm performance. The larger number of independent commissioner can provide unbiased views and strategy that were not found in family directors. However, the board of commissioners size have no significant relationship with firm performance. The board commissioners who stay for a long time in the company may build a good relationship with directors which may impact on the decision-making and independent judgement of board commissioners in terms of enhancing the firm performance. Further, these finding also enrich the literatures and knowledge on family firm's performance in Indonesia.