THE EFFECT OF POLITICAL CONNECTIONS ON FINANCIAL PERFORMANCE: AN EMPIRICAL STUDY OF STATE-OWNED ENTERPRISES LISTED ON THE INDONESIAN STOCK EXCHANGE

Anggi Putri Kusuma Wardini; Alia Wulan Febrianti; Erik Nugraha; R. Rita Avianty

doi:10.61397/mfc.v3i3.520

Authors

Anggi Putri Kusuma Wardini Universitas Sangga Buana YPKP
Alia Wulan Febrianti Universitas Sangga Buana YPKP
Erik Nugraha Universitas Sangga Buana YPKP
R. Rita Avianty Universitas Sangga Buana YPKP

DOI:

https://doi.org/10.61397/mfc.v3i3.520

Keywords:

Political connections, financial performance, corporate governance, ROA

Abstract

This study examines the influence of political connections on the financial performance of state-owned enterprises (SOEs) listed on the Indonesia Stock Exchange. Political connections are considered an external factor that may provide firms with strategic advantages, such as access to government projects, regulations, and financial support, but may also create governance risks. The research employed a quantitative method with a descriptive-associative approach, using panel data from 15 SOEs over the 2020–2023 period. Data were collected from annual reports and financial statements, while financial performance was measured by Return on Assets (ROA). The results of regression analysis indicate that political connections have a positive and significant effect on financial performance, implying that the presence of politically connected individuals within the board of directors or commissioners enhances efficiency and profitability. These findings confirm the hypothesis that political connections play a strategic role in shaping SOEs’ financial outcomes. The study concludes that while political connections can be an intangible asset, their benefits should be balanced with strong corporate governance to minimize risks of political dependency and conflicts of interest.

References

Ali, F., Hasan, H., & Machmud, M. (2022). Pengaruh Rasio Likuiditas, Solvabilitas, dan Aktivitas Terhadap Profitabilitas Pada PDAM. Amsir Management Journal, 3(1), 60–77. https://doi.org/10.56341/amj.v3i1.190

Azizah, F., & Al Amin, M. (2020). Pengaruh Koneksi Politik Terhadap Kinerja Perusahaan. Indonesian Journal of Accounting and Governance, 4(1), 1–17. https://doi.org/10.36766/ta16sf09

Hazim, R., & Mediawati, E. (2023). Influence of Political Connections and Efficiency on Financial Performance and Its Implications on Firm Value. Journal of Developing Economies, 8(2), 412–430. https://doi.org/10.20473/jde.v8i2.47848

Jensen, M. C., & Meckling, W. H. (1976). THEORY OF THE FIRM: MANAGERIAL BEHAVIOR, AGENCY COSTS AND OWNERSHIP STRUCTURE Michael. Journal of Financial Economics, 3, 305–360. https://doi.org/10.1057/9781137341280.0038

Malini, H., & Puspa, E. (2022). Political Connections Influence on State-Owned Enterprise Performances in Indonesia. Proceedings of the 6th Series of the National Business Seminar of the Master of Management Study Program, 1–11. https://pascasarjanafe.untan.ac.id/wp-content/uploads/2022/09/SEMNAS-MM-2022-HELMA-AND-PUSPA.pdf

Nugrahanti, Y. W., & Nurfitri, I. (2022). Koneksi Politik dan Nilai Perusahaan: Apakah Mekanisme Corporate Governance Memiliki Peran? AFRE (Accounting and Financial Review), 5(2), 106–116. https://doi.org/10.26905/afr.v5i2.7762

Patriarini, W. E. (2020). Pengaruh Koneksi Politik terhadap Nilai Perusahaan. E-Jurnal Akuntansi, 30(6), 1550. https://doi.org/10.24843/EJA.2020.v30.i06.p16

Pfeffer, J., & Salancik, G. R. (2003). The external control of organizations: A resource dependence perspective. Stanford University Press.

Pramudia, D. R., Anam, H., Azizil Yudaruddin, Y., & Saraswati, W. (2025). Pengaruh Koneksi Politik, Mekanisme Tata Kelola, Ukuran Perusahaan Terhadap Kinerja Perusahaan Sektor Perbankan yang Tercatat di Bursa Efek Periode (2021-2023). Jurnal KRISNA: Kumpulan Riset Akuntansi, 16(2), 403–410. https://doi.org/https://doi.org/10.22225/kr.16.2.2025.403-410

Pratiwi, D., & Hariyati, H. (2024). Pengaruh Koneksi Politik dan Corporate Governance terhadap Kinerja Keuangan. Jurnal Akuntansi AKUNESA, 12(2), 142–152. https://doi.org/10.26740/akunesa.v12n2.p142-152

Rahmawati, U., Ardiatus Subekti, G., Prasaja, M., Cahyanindyah, P., & Fitri Komariyah, E. (2022). Pengaruh Koneksi Politik Terhadap Kinerja Keuangan Pada Perusahaan Manufaktur di Indonesia. Jurnal Akuntansi Dan Ekonomi Bisnis, 11(2), 46–54. https://doi.org/10.33795/jaeb.v11i2.391

Suryadi, J. F. P., Oktavendi, T. W., & Harventy, R. D. (2024). Pengaruh Koneksi Politik, Komite Risiko, dan Kepemilikan Keluarga Terhadap Profitabilitas Perusahaan. Jurnal Manajemen Dinamis, 2(2), 50–58. https://doi.org/10.59330/jmd.v2i2.48

Utamaningsi, L. (2020). Perusahaan Keluarga, Koneksi Politik & Kinerja Perusahaan. Jurnal Ilmiah Universitas Batanghari Jambi, 20(1), 68. https://doi.org/10.33087/jiubj.v20i1.840