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http://dx.doi.org/10.13106/jafeb.2020.vol7.no11.827

Corporate Governance and Firm Performance: An Empirical Study from Indonesian Manufacturing Firms  

HERMUNINGSIH, Sri (Department of Management, Universitas Sarjanawiyata Tamansiswa)
KUSUMA, Hadri (School of Accounting, Universitas Islam Indonesia)
CAHYARIFIDA, Rahma Anzalia (School of Accounting, Universitas Islam Indonesia)
Publication Information
The Journal of Asian Finance, Economics and Business / v.7, no.11, 2020 , pp. 827-834 More about this Journal
Abstract
The use of different proxies to measure good corporate governance (GCG) may be a probable cause of the mixed results. Therefore, the application of a new single measure to enhance comparable empirical studies is required. The purpose of this study is to examine the relationship between corporate governance and firm's performance. This study involved all manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2014 to 2016 through purposive sampling with specific criteria. out of 144 qualified companies, 110 companies could be processed because of completed data in the form of financial information from their financial statements during the research period. The data were obtained from the official websites of IDX. This study applies a new measure of the corporate governance: the efficiency of the GCG. The corporate governance is calculated by relating inputs of components of the corporate governance and outputs of sales, assets and firm equity capital. By using financial data from firms listed on the Indonesian Capital Market, this study finds that the corporate governance significantly improved firm's performance. More importantly, the study confirms and supports the new single measure of the GCG. This result is very important to avoid dealing with different indicators of the corporate governance.
Keywords
Corporate Governance; Financial Performance; Firm Size; Firm Age;
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Times Cited By KSCI : 8  (Citation Analysis)
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