Good Corporate Governance and Concentrated Ownership Structure: A Juridical Analysis of Investor Protection Mechanisms

Abstract

Ownership structure is one of the fundamental factors influencing the effectiveness of Good Corporate Governance (GCG) implementation. The characteristics of ownership structures in Indonesian companies, which tend to be concentrated among certain groups, create various implications for monitoring mechanisms, minority shareholder protection, and the quality of corporate governance. This study aims to analyze the influence of ownership structure on the implementation of Good Corporate Governance from a juridical perspective and to examine the effectiveness of the legal framework governing such relationships in Indonesia. This research employs a normative legal research method using statutory and conceptual approaches. Data were collected through library research, including legislation, scholarly literature, and relevant previous studies. The findings indicate that managerial, institutional, public, and foreign ownership have different impacts on the implementation of GCG. Institutional and public ownership tend to enhance corporate transparency and accountability, while managerial ownership can reduce agency conflicts as long as it does not lead to an entrenchment effect. Foreign ownership has the potential to promote better governance practices through the transfer of international standards. Furthermore, the effectiveness of GCG implementation is also influenced by the quality of internal monitoring mechanisms, particularly independent commissioners and audit committees. From a juridical perspective, Indonesia has established an adequate regulatory framework through the Company Law, Capital Market Law, and various regulations issued by the Financial Services Authority (OJK). However, the effectiveness of these regulations largely depends on corporate compliance and the consistency of law enforcement. This study concludes that ownership structure and Good Corporate Governance are interrelated elements in establishing sound, sustainable corporate governance that protects the interests of all stakeholders.