Overview

Original Research

CEO RIVALRY WITHIN THE INDONESIAN FAMILY BUSINESSES: EXAMINING SUCCESSION CHALLENGES FROM AN ALTRUISTIC STANDPOINT

MAHATMA KUFEPAKSI 1, and IRHAM LIHAN 2.

Vol 19, No 05 ( 2024 )   |  DOI: 10.5281/zenodo.11108858   |   Author Affiliation: Professor of Finance, Senior Lecturer, Faculty of Economics and Business, Department of Management, the Univesity of Lampung, Bandar Lampung, Indonesia 1; Assistant Professor of Finance, Senior Lecturer, Faculty of Economics and Business, Department of Management, the Univesity of Lampung, Bandar Lampung, Indonesia 2.   |   Licensing: CC 4.0   |   Pg no: 29-43   |   Published on: 02-05-2024

Abstract

This research aims to evaluate the transfer of leadership from founder to descendant CEOs in Indonesian family-owned businesses, considering altruistic behaviors. The research method utilizes Return on Assets (ROA) as the dependent variable, employing founder and descendant CEO status as independent variables and taking into account control variables such as company size, sales growth, and capital structure. The study employs distinct regression models for founder and descendant CEOs, using financial data encompassing all family firms listed on the Indonesia Stock Exchange from 2006 to 2021, selected through purposeful data sampling. The research finds that founder CEOs negatively impact ROA, while descendant CEOs positively influence it. The results suggest that founders should transfer leadership earlier for a smoother generational transition, enabling descendants to contribute more effectively to the company's growth confirming the altruistic behaviors.

Keywords

CEO, Altruistic Succession, Prospect Theory.