The Effect of Foreign Ownership on Firm Performance with Political Connections as a Moderating Variable: A Study of Infrastructure Companies Listed on the Indonesia Stock Exchange During 2020–2024

Herwindo Bagus Saputro; Siti Mutmainah

doi:10.31538/iijse.v9i2.10474

Herwindo Bagus Saputro Universitas Diponegoro, Semarang, Indonesia
Siti Mutmainah Universitas Diponegoro, Semarang, Indonesia

DOI: https://doi.org/10.31538/iijse.v9i2.10474

Keywords: Indonesia Stock Exchange, Return on Assets, Random Effect Model, Infrastructure Sector

Abstract

This study examines the effect of foreign ownership on firm performance with political connections as a moderating variable in infrastructure companies listed on the Indonesia Stock Exchange during 2020–2024. Firm performance is measured using Return on Assets (ROA). This study employs a quantitative approach using panel data regression analysis with 207 unbalanced panel observations selected through purposive sampling. The Random Effect Model (REM) was selected as the best estimation model based on the Chow Test, Lagrange Multiplier Test, and Hausman Test. The results indicate that foreign ownership has a positive and significant effect on firm performance, suggesting that foreign investors contribute to improving corporate profitability. However, political connections do not significantly moderate the relationship between foreign ownership and firm performance. In addition, leverage negatively affects firm performance. These findings highlight the important role of foreign ownership and capital structure in determining firm performance in the Indonesian infrastructure sector.

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