Understanding Managerial Ownership and Institutional Ownership

Oct 13, 2025 by magicalceylontours.com 18 views

The Effect of Managerial Ownership and Institutional Ownership on Equity Costs in Property and Real Estate Companies Listed on the Indonesia Stock Exchange (IDX)

Abstract

This study aims to examine the effect of managerial ownership and institutional ownership on equity costs in property and real estate companies listed on the Indonesia Stock Exchange (IDX). The data used in this study came from 26 property and real estate companies listed on the IDX during the 2011-2012 period. The results showed that there was no significant effect between managerial ownership and institutional ownership on equity costs. This study provides several recommendations that can help increase transparency and effectiveness of corporate governance in the property and real estate sector in Indonesia.

Introduction

The property and real estate sector is one of the most significant sectors in the Indonesian economy, contributing to the country's GDP and providing employment opportunities for millions of people. However, the sector is also known for its complex ownership structure, lack of transparency, and poor corporate governance. These factors can lead to equity costs that are higher than expected, making it difficult for companies to raise capital and for investors to make informed decisions.

Understanding Managerial Ownership and Institutional Ownership

Managerial ownership refers to the ownership of a company by its management team, including the CEO, directors, and other senior executives. Institutional ownership, on the other hand, refers to the ownership of a company by institutional investors, such as pension funds, mutual funds, and insurance companies. Both managerial ownership and institutional ownership can have a significant impact on a company's equity costs, as they can influence the company's financial decisions and risk management strategies.

Methodology

This study used a sample of 26 property and real estate companies listed on the IDX during the 2011-2012 period. The data used in this study came from various sources, including the companies' annual reports, financial statements, and other publicly available information. The study used a regression analysis to examine the relationship between managerial ownership, institutional ownership, and equity costs.

Results

The results of this study showed that there was no significant effect between managerial ownership and institutional ownership on equity costs. This means that the ownership structure of a company, whether it is managed by its management team or owned by institutional investors, does not have a significant impact on its equity costs.

Deeper Analysis

The results of this study may be caused by several factors:

*** Complex Ownership Structure: *** Property and real estate companies in Indonesia generally have a complex ownership structure, with various shareholders who have different interests. This makes it difficult to measure exactly the effect of managerial and institutional ownership on equity costs. ** The Influence of Other Factors: *** Equity costs are influenced by various other factors, such as macroeconomic conditions, company performance, and business risks. These factors may be more dominant in determining equity costs than managerial and institutional ownership. *** Lack of Transparency: *** Some property and real estate companies in Indonesia are still lacking in transparent in the disclosure of financial information. This makes it difficult for investors to assess the company's performance and risk, making it difficult to determine the effect of managerial and institutional ownership on equity costs.

Recommendation

This study provides several recommendations that can help increase transparency and effectiveness of corporate governance in the property and real estate sector in Indonesia:

**Increasing Transparency and Disclosure of Information: *** Property and Real Estate Companies in Indonesia must increase transparency and disclosure of their financial information to the public, including information about ownership structure, financial performance, and business risk. *** Strengthening Corporate Governance: *** Property and Real Estate Companies must strengthen their corporate governance, including increasing the independence of the Board of Commissioners and increasing management accountability. **Increasing the Role of Supervisory Institutions: *** Supervisory institutions, such as Bapepam and OJK, must increase their role in overseeing the property and real estate sectors, including in ensuring company transparency and accountability.

Conclusion

This study shows that managerial and institutional ownership does not have a significant effect on equity costs on property and real estate companies on the IDX. However, this result needs to be further examined by considering more complex factors and by using more complete and up-to-date data. In addition, it is important to continue to increase transparency and company governance in the property and real estate sector in Indonesia in order to increase investor confidence and encourage the growth of this sector.

Limitation

This study has several limitations, including:

*** Limited Sample Size: *** The sample size of this study is limited to 26 property and real estate companies listed on the IDX. This may not be representative of the entire property and real estate sector in Indonesia. ** Limited Data Availability: *** The data used in this study is limited to the 2011-2012 period. This may not reflect the current situation of the property and real estate sector in Indonesia. *** Methodological Limitations: *** The study used a regression analysis to examine the relationship between managerial ownership, institutional ownership, and equity costs. This may not be the most appropriate method for examining this relationship.

Future Research

This study provides several avenues for future research, including:

*** Examining the Effect of Other Factors: *** Future studies can examine the effect of other factors, such as macroeconomic conditions, company performance, and business risks, on equity costs. ** Using More Complete and Up-to-Date Data: *** Future studies can use more complete and up-to-date data to examine the relationship between managerial ownership, institutional ownership, and equity costs. *** Examining the Effect of Corporate Governance: *** Future studies can examine the effect of corporate governance on equity costs, including the impact of independent directors, management accountability, and transparency.

References

[1] Bapepam (2012). Guidelines for Corporate Governance.
[2] OJK (2013). Regulation on Corporate Governance.
[3] IDX (2012). Listed Companies on the Indonesia Stock Exchange.
[4] Property and Real Estate Companies (2011-2012). Annual Reports and Financial Statements.
Frequently Asked Questions (FAQs) about the Effect of Managerial Ownership and Institutional Ownership on Equity Costs in Property and Real Estate Companies Listed on the Indonesia Stock Exchange (IDX)

Q: What is the purpose of this study?

A: The purpose of this study is to examine the effect of managerial ownership and institutional ownership on equity costs in property and real estate companies listed on the Indonesia Stock Exchange (IDX).

Q: What is managerial ownership?

A: Managerial ownership refers to the ownership of a company by its management team, including the CEO, directors, and other senior executives.

Q: What is institutional ownership?

A: Institutional ownership refers to the ownership of a company by institutional investors, such as pension funds, mutual funds, and insurance companies.

Q: What is equity cost?

A: Equity cost refers to the cost of raising capital through the issuance of new shares or the sale of existing shares.

Q: What are the main findings of this study?

A: The main findings of this study are that there is no significant effect between managerial ownership and institutional ownership on equity costs in property and real estate companies listed on the IDX.

Q: What are the possible reasons for the lack of significant effect?

A: The possible reasons for the lack of significant effect include:

Complex ownership structure: Property and real estate companies in Indonesia generally have a complex ownership structure, with various shareholders who have different interests.
The influence of other factors: Equity costs are influenced by various other factors, such as macroeconomic conditions, company performance, and business risks.
Lack of transparency: Some property and real estate companies in Indonesia are still lacking in transparency in the disclosure of financial information.

Q: What are the recommendations of this study?

A: The recommendations of this study are:

Increasing transparency and disclosure of information: Property and real estate companies in Indonesia must increase transparency and disclosure of their financial information to the public, including information about ownership structure, financial performance, and business risk.
Strengthening corporate governance: Property and real estate companies must strengthen their corporate governance, including increasing the independence of the Board of Commissioners and increasing management accountability.
Increasing the role of supervisory institutions: Supervisory institutions, such as Bapepam and OJK, must increase their role in overseeing the property and real estate sectors, including in ensuring company transparency and accountability.

Q: What are the limitations of this study?

A: The limitations of this study are:

Limited sample size: The sample size of this study is limited to 26 property and real estate companies listed on the IDX.
Limited data availability: The data used in this study is limited to the 2011-2012 period.
Methodological limitations: The study used a regression analysis to examine the relationship between managerial ownership, institutional ownership, and equity costs.

Q: What are the implications of this study?

A: The implications of this study are that property and real estate companies in Indonesia must increase transparency and accountability in their financial reporting and corporate governance practices in order to attract investors and raise capital.

Q: What are the future research directions?

A: The future research directions are:

Examining the effect of other factors: Future studies can examine the effect of other factors, such as macroeconomic conditions, company performance, and business risks, on equity costs.
Using more complete and up-to-date data: Future studies can use more complete and up-to-date data to examine the relationship between managerial ownership, institutional ownership, and equity costs.
Examining the effect of corporate governance: Future studies can examine the effect of corporate governance on equity costs, including the impact of independent directors, management accountability, and transparency.

Q: What are the practical implications of this study?

A: The practical implications of this study are that property and real estate companies in Indonesia must:

Increase transparency and disclosure of financial information
Strengthen corporate governance practices
Improve the quality of financial reporting and accounting practices
Enhance the role of supervisory institutions in overseeing the property and real estate sectors

Q: What are the policy implications of this study?

A: The policy implications of this study are that the government and regulatory bodies must:

Strengthen the regulatory framework for property and real estate companies
Improve the quality of financial reporting and accounting practices
Enhance the role of supervisory institutions in overseeing the property and real estate sectors
Provide support and incentives for property and real estate companies to improve their corporate governance practices.