The Impact of Corporate Governance Quality on Principal-Agent and Principal-Principal Conflict in Indonesia

This study analyzes the effect of corporate governance (CG) quality on principal-agent (PA) and principal-principal (PP) conflict in Indonesia while also controlling for potential endogeneity through use two-stage least squares (2SLS) regression. The results PA (measured by operating expense ratio asset utilization ratio) are consistent with notion that better CG leads to a lower level conflict. However, result PP is inconclusive. While higher positively related dividend payout ratio, which indicates level, does not have any significant wedge (difference between cash flow control right). Moreover, further robustness tests showed different aspects effects Better CSR has reducing Meanwhile, increase due board efficiency, internal management, remuneration. Furthermore, management remuneration reduces wedge. Interestingly, we find no relationship shareholders' relation all measures.