An Evaluation on The Effectiveness of State-Owned Holding Companies (SOH) In Improving the Performance of State-Owned Enterprises (SOEs): A Case Study of The Mining Sector in Indonesia

Abstract

Along with global economic growth, the need in improving the performance of State-Owned Enterprises is absolute, especially when dealing with agency problems in mining sector in Indonesia. Based on three research problems: 1) whether or not the mining sector SOE holding policy minimizes agency problems; 2) how the contract between principal and agent minimizes agency problems in mining sector holding; 3) whether or not there is an influence of holding on financial performance, the objectives of this study are, therefore, to evaluate    the effectiveness of the holding strategy in minimizing agency problems in SOEs in the mining sector by reviewing the contract between the principal and the agent in minimizing agency problems in the mining sector holding and to obtain empirical evidence comparing the performance of mining sector companies inside and outside the holding, and to find out ways to enhance SOE performance in order to recommend policy formulation to improve transparency, accountability, and efficiency in SOE management. By highlighting the complex relationships within principal-agency structures involving governments, parent companies, and SOEs, the study concludes that better governance to handle problems like political interference, conflicting goals, and lack of transparency paves the way for the concept of the parent company as an intermediary agent to balance conflicting goals and improve governance in SOEs