ANALYSIS OF CORPORATE GOVERNANCE IN PREDICTING THE PERFORMANCE OF LQ45 COMPANIES

Frandy Melvin Walean; Fanny Soewignyo

Authors

Frandy Melvin Walean Faculty of Economics and Business, Universitas Klabat
Fanny Soewignyo Faculty of Economics and Business, Universitas Klabat

Keywords:

board of commissioner size, corporate governance, company performance, return on assets, return on equity

Abstract

The aim of the research is to analyze the predictive ability of corporate governance on company performance. The research uses a sample of companies listed on the Indonesia Stock Exchange and listed consistently in the LQ 45 index from 2019 to 2021. Five hypotheses are tested using multiple regression analysis. The results of this research show that the greater the number of members of the board of directors, the higher the level of profitability as measured using the company's return on equity. Second, the greater the proportion of independent commissioners on the board of commissioners, the worse the company's performance as measured using return on equity. The results of this research show that a large number of directors has a positive impact on increasing the profitability of LQ45 Company. On the other hand, it was found that the greater number of independent commissioners on the board of commissioners had a negative impact on the company's level of profitability. These results can be of concern to the board of commissioners to pay attention to their role as commissioners. For regulators, determining the number of independent commissioners must be reconsidered if they cannot make a positive contribution to improving the company's performance.

Downloads

Download data is not yet available.

References

Abidin, Z. Z., Kamal, N. M., & Jusoff, K. (2009). Board structure and corporate performance in Malaysia. International Journal of Economics and Finance, 1(1), 150–164.

Aldamen, H., Duncan, K., Kelly, S., McNamara, R. & Nagel, S. (2011). Audit committee characteristics and firm performance during the global financial crisis. Accounting and Finance, 52, 971–1000.

Dalton, D. R., & Dalton, C. M. (2011). Integration of micro and macro studies in governance research: CEO duality, board composition, and financial kinerjance. Journal of Management, 37(2), 404–411.

Darmadi, S., & Gunawan, R. (2013). Underpricing, board structure, and ownership: An empirical examination of Indonesian IPO firms. Managerial Finance, 39(2), 181–200.

Devaki, A. (2017). Faktor-Faktor yang Mempengaruhi Return Saham pada Perusahaan LQ45 di Bursa Efek Indonesia. Jurnal Benefita, 2(2), 157–168.

Ghozali, I. (2011). Aplikasi Analisis Multivariate dengan Progam SPSS. Badan Penerbit Universitas Diponegoro

Horne, J. C. V. (2001). Financial Management and Policy. Prentice Hall

Huang, C. J. (2010). Board, ownership, and performance of banks with a dual board system: evidence from Taiwan. Journal of Management & Organization, 16(2), 219–234.

Indonesia Stock Exchange (2018). Indeks Saham. https://idx.co.id/id/data-pasar/data-saham/indeks-saham/.

Indonesia National Committee for Governance Policy. (2021). Pedoman Umum Governansi Korporat Indonesia (PUGKI) 2021. Komite Nasional Kebijakan Governansi.

Karim, A., & Purwanto, A. (2020). The relationship between good corporate governance and performance of most liquid stocks in Indonesia. Research in World Economy, 11(1), 137–142.

Kubicek, A., Strouhal, J., & Stamfestova, P. (2017). Impact of Board Structure on IPO Underpricing in Central Europe. International Advances in Economic Research, 23, 129–130.

Kumar, R. (2016). Strategic Financial Management Casebook. Academic Press

Lipton, M. dan Lorsch, J. W. (1992). A modest proposal for improved corporate governance. Business Lawyer, 48, 59–77.

Mcgee, R. W. (2009). Corporate governance in developing economies. Springer

McGuire, J., Dow, S., & Ibrahim, B. (2012). All in the family? Social finance and corporate governance in the family firm. Journal of Business Research, 65(11), 1643–1650.

Meidona, S. dan Yanti, R. (2018). Pengaruh Good Corporate Governance dan Kualitas Audit Terhadap Kinerja Keuangan Pada Perusahaan LQ 45 Yang Terdaftar DiBursa Efek Indonesia. Journal Indonesian Indovisi Institute, 1(1), 67–82.

Munawir. (2000). Analisa laporan keuangan. Liberty

Nurlisdiana, Y. (4 Juni 2020). Daftar 45 saham LQ45 tahun 2021 lengkap dan terbaru

https://sahamtop.com/45-saham-lq45-lengkap-dan-terbaru/

Otoritas Jasa Keuangan. (2015). POJK No 55 /POJK.04/2015 Tentang Pembentukan Dan Pedoman Pelaksanaan Kerja Komite Audit. Ojk.Go.Id, 1–29. http://www.ojk.go.id/id/kanal/iknb/regulasi/lembaga-keuangan-mikro/peraturan-ojk/Documents/SAL-POJK PERIZINAN FINAL F.pdf

Rouf, M. D. A. (2011). The relationship between corporate governance and value of the firm in developing countries: evidence from bangladesh. The International Journal of Applied Economics and Finance, 5(3), 1–8.

Setiawan, D., Taib, F. M., Phua, L. K., & Chee, H. K. (2019). IFRS and earnings management in Indonesia: The effect of independent commissioners. International Journal of Business and Society, 20(1), 37–59.

Soewignyo, F., & Soewignyo, T. I. (2015). The influence of talent factors on business performance. Issues in Social and Environmental Accounting, 9(1), 76-99.

Soewignyo, F., & Soewignyo, T. I. (2018). Audit committee, value creation efficiency and capital employed efficiency. Management, 6(1), 20-29.

Trahan, E. A. (2008). Mutual fund governance and fund performance. Corporate Ownership & Control, 5(4), 384–392.