Analysis of Abnormal Operating Performance Between Family Owned Firms and State Owned Firms in Indonesia and Malaysia

Abstract

Purpose: This study examines the financial performance of family owned firms and state owned firms listed in Bursa Malaysia and the Indonesia Stock Exchange.

Design/Methodology/Approach: This study employed abnormal operating performance to measure firm performance over a 15 year period from 1992 to 2007.

Findings: This study shows that the state owned firms outperformed the family owned firms in Indonesia and Malaysia. Hence, the family owned firms need to strategize on how to increase its competitive advantage in order to compete with the state owned firms especially if they are competing in similar industry. Based on abnormal operating performance result, for each type of ownership which have model that have influenced by changing in their internal company or changing within their industry, they need to consider all factors that can impact their performance.

Practical Implications: This study may assists the family owned and government involvement in company and their performance.

Originality/Value: This study contributes to the existing literature by providing a new data set on family and government owned companies in both countries.