Ownership Structure and Performance of Public Companies Listed in the Indonesian Stock Exchange

Abstract. The aim of this study is to find out if the concentration of the biggest shareholder, the control rights and the ratio ofcash flow rights-control rights of the controlling shareholders contributed to profitability. This study uses purposive samplingtechnique in collecting the data and linear panel regression in analysing the panel data. The result of this study shows that theownership concentration of the biggest shareholders has positive impact to company profitability as big shareholders havebigger incentive and thus better chance to do supervision upon the management. The study also found that the control rightsconcentration of controlling shareholders have negative effect to profitability since more concentrated power of the controllingshareholders made the shareholders position stronger and may incline them to gain individual profit which in turn will reducethe company’s profit. On the contrary, higher ratio of cash flow rights to-control rights contributed positively to profitabilitybecause higher cash flow rights will tend to prevent the controlling shareholders from expropriating the company’s assets.Keywords: ownership structure, controlling shareholder, profitabilit