CEO traits and dividend persistence as determinants of accounting information’s value relevance

Abstract

This study examines how CEO characteristics (tenure, family affiliation, origin) and dividend persistence influence the value relevance of accounting information (VR) in Indonesian listed firms, where family ownership and weak enforcement may affect market responsiveness to governance signals. Using a balanced panel of 226 publicly listed firms (1,130 firm-year observations) from 2018 to 2022, we measure VR using firm-specific R2 from Ohlson [1] regressions. A two-step robust System GMM estimator with collapsed instruments is applied to address dynamic panel bias, endogeneity, and unobserved heterogeneity. Findings reveal that prolonged CEO tenure significantly diminishes value relevance, reflecting entrenchment risks within Indonesia’s family-controlled firms. EO origin, family CEO status, and dividend persistence show positive but statistically insignificant relationships with VR, indicating that governance traits alone may not differentiate market valuations under Indonesia’s institutional context. Practical implications highlight the need for governance reforms to curb CEO entrenchment and regulations to enhance financial reporting quality, market responsiveness, and investor protection within Indonesia’s unique institutional framework.