The Importance of Good Corporate Governance in Privatization

Oct 13, 2025 by vinooalluri.com 127 views

Analysis of Differences in Profitability and Company Management Before and After Privatization that Realizes Good Corporate Governance: Empirical Studies in the Telecommunications Sector SOEs in Indonesia

Introduction

Privatization is a strategic step taken by governments to improve company efficiency and performance, especially in highly competitive sectors such as telecommunications. In this context, this study aims to analyze significant differences in the profitability and management of PT Telkom Tbk, one of the State-Owned Enterprises (BUMN) in Indonesia, before and after the privatization process. The emphasis of this study lies in the application of the principles of Good Corporate Governance (GCG) which is expected to affect the company's overall performance.

The Importance of Good Corporate Governance in Privatization

Good Corporate Governance (GCG) is a set of principles and practices that aim to promote transparency, accountability, and responsibility in the management of companies. In the context of privatization, GCG is crucial in ensuring that companies are managed in a way that benefits all stakeholders, including shareholders, employees, customers, and the wider community. The application of GCG principles can lead to improved company performance, increased transparency, and better risk management.

Research Methodology

To achieve this goal, the research method used is the collection of profitability ratio and company annual reports. The data used in this study is secondary data obtained from documentation taken from the company's website and other sources. In addition, the data analysis method uses the verification approach, which includes the normality test and the pal test to compare the profitability ratio before and after privatization.

Research Result

The results showed that the management of PT Telkom Tbk's company experienced a significant increase after privatization. Nevertheless, there are no significant differences in the ratio of profitability after privatization. This shows that although privatization can provide benefits in terms of better management and corporate governance, other factors may also play a role in determining the level of profitability.

The Impact of Privatization on Company Management

The increase in company management reflects that PT Telkom Tbk has succeeded in applying GCG principles, which include transparency, accountability, and responsibility. These principles are very important to build the trust of stakeholders and create a conducive business environment. The successful implementation of GCG at PT Telkom Tbk shows that good management can support the sustainability and growth of companies in the telecommunications sector which is very dynamic.

The Limitations of Privatization in Improving Profitability

Although there is no significant increase in the ratio of profitability, this may be caused by various external factors, such as competitive market conditions and strict government regulations in the telecommunications sector. The long-term success of PT Telkom Tbk not only depends on privatization, but also to the company's ability to adapt to market changes and consumer needs.

The Importance of Periodic Analysis of Company Performance

This research also highlights the importance of periodic analysis of company performance after privatization. Good management is not only reflected in profitability, but also from how companies manage risk and create value for shareholders and the wider community.

Conclusion

Overall, this study confirms that privatization can be an effective instrument to improve company management, although the direct impact on profitability may vary. The successful implementation of GCG at PT Telkom Tbk shows that good management can support the sustainability and growth of companies in the telecommunications sector which is very dynamic. Therefore, other companies in the SOE sector also need to consider these aspects in formulating strategies and policies going forward.

Recommendations for Future Research

This study provides several recommendations for future research. Firstly, further research is needed to explore the impact of privatization on company performance in other sectors. Secondly, the study highlights the importance of periodic analysis of company performance after privatization, and future research should focus on developing a framework for periodic analysis of company performance. Finally, the study suggests that future research should explore the role of GCG in improving company performance in the telecommunications sector.

Limitations of the Study

This study has several limitations. Firstly, the study only focuses on PT Telkom Tbk, and future research should explore the impact of privatization on other companies in the SOE sector. Secondly, the study only uses secondary data, and future research should use primary data to provide more accurate results. Finally, the study only focuses on the impact of privatization on company management and profitability, and future research should explore the impact of privatization on other aspects of company performance.

Conclusion

In conclusion, this study provides valuable insights into the impact of privatization on company management and profitability in the telecommunications sector. The study confirms that privatization can be an effective instrument to improve company management, although the direct impact on profitability may vary. The successful implementation of GCG at PT Telkom Tbk shows that good management can support the sustainability and growth of companies in the telecommunications sector which is very dynamic. Therefore, other companies in the SOE sector also need to consider these aspects in formulating strategies and policies going forward.
Frequently Asked Questions (FAQs) on the Analysis of Differences in Profitability and Company Management Before and After Privatization that Realizes Good Corporate Governance: Empirical Studies in the Telecommunications Sector SOEs in Indonesia

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the significant differences in the profitability and management of PT Telkom Tbk, one of the State-Owned Enterprises (BUMN) in Indonesia, before and after the privatization process.

Q: What is the significance of Good Corporate Governance (GCG) in privatization?

A: Good Corporate Governance (GCG) is a set of principles and practices that aim to promote transparency, accountability, and responsibility in the management of companies. In the context of privatization, GCG is crucial in ensuring that companies are managed in a way that benefits all stakeholders, including shareholders, employees, customers, and the wider community.

Q: What research methodology was used in this study?

A: The research method used in this study is the collection of profitability ratio and company annual reports. The data used in this study is secondary data obtained from documentation taken from the company's website and other sources. In addition, the data analysis method uses the verification approach, which includes the normality test and the pal test to compare the profitability ratio before and after privatization.

Q: What were the results of this study?

A: The results showed that the management of PT Telkom Tbk's company experienced a significant increase after privatization. Nevertheless, there are no significant differences in the ratio of profitability after privatization.

Q: What are the implications of this study?

A: This study confirms that privatization can be an effective instrument to improve company management, although the direct impact on profitability may vary. The successful implementation of GCG at PT Telkom Tbk shows that good management can support the sustainability and growth of companies in the telecommunications sector which is very dynamic.

Q: What are the limitations of this study?

A: This study has several limitations. Firstly, the study only focuses on PT Telkom Tbk, and future research should explore the impact of privatization on other companies in the SOE sector. Secondly, the study only uses secondary data, and future research should use primary data to provide more accurate results. Finally, the study only focuses on the impact of privatization on company management and profitability, and future research should explore the impact of privatization on other aspects of company performance.

Q: What are the recommendations for future research?

A: This study provides several recommendations for future research. Firstly, further research is needed to explore the impact of privatization on company performance in other sectors. Secondly, the study highlights the importance of periodic analysis of company performance after privatization, and future research should focus on developing a framework for periodic analysis of company performance. Finally, the study suggests that future research should explore the role of GCG in improving company performance in the telecommunications sector.

Q: What are the implications of this study for policymakers and practitioners?

A: This study has several implications for policymakers and practitioners. Firstly, the study confirms that privatization can be an effective instrument to improve company management, although the direct impact on profitability may vary. Secondly, the study highlights the importance of GCG in ensuring that companies are managed in a way that benefits all stakeholders. Finally, the study suggests that policymakers and practitioners should consider the impact of privatization on company performance and the role of GCG in improving company performance.

Q: What are the implications of this study for the telecommunications sector?

A: This study has several implications for the telecommunications sector. Firstly, the study confirms that privatization can be an effective instrument to improve company management, although the direct impact on profitability may vary. Secondly, the study highlights the importance of GCG in ensuring that companies are managed in a way that benefits all stakeholders. Finally, the study suggests that the telecommunications sector should consider the impact of privatization on company performance and the role of GCG in improving company performance.

Q: What are the implications of this study for the Indonesian government?

A: This study has several implications for the Indonesian government. Firstly, the study confirms that privatization can be an effective instrument to improve company management, although the direct impact on profitability may vary. Secondly, the study highlights the importance of GCG in ensuring that companies are managed in a way that benefits all stakeholders. Finally, the study suggests that the Indonesian government should consider the impact of privatization on company performance and the role of GCG in improving company performance.