THE RELATIONSHIP BETWEEN ETHICAL COMMITMENT INDEX, CORPORATE GOVERNANCE, AND FINANCIAL PERFORMANCE IN INDONESIA

• Main Author: Amanda (NIM 19014010), Medina
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/23022
• Institution: Institut Teknologi Bandung

ecently, Corporate Governance (CG) and business ethics become a major consideration in corporate strategies, especially in emerging market where the application of both issues are not executed well (Peters et al., 2011). By entering the globalization era with borderless business activities, Indonesian companies face more milestones in the global marketplace. This era is in line with the advancement to th issues since the bad application of these two will lead companies to the financial performances dipped, revenue losses, bad reputation, and even bankruptcy (Mascarenhas, 2015). Indonesia has the lowest score of corporate governance compare to others countries in Asia. It can be seen from the data in Ranking Asian Market on CG Quality (Asian Corporate Governance Association ACGA), 2014), Indonesia score was in the loweosition compare to other countries in Asia. Besides corporate governance, Indonesia also has a problem related to ethics. It is proven by the fact that Indonesia’s declining 2 ranking to the 90th free corruption country in ASEAN (Mazrieva, 2017). To <br /> <br /> esolve those issue, Indonesia has done many intentions such as released an Indonesia’s Code of Good <br /> <br /> Corporate Governance on 2006 as a guideline for companies to do business appropriately and issued a <br /> <br /> Law No. 40 of 2007 Article 74 paragraph (1), which regulates the obligations of the Company Limited <br /> <br /> <br /> <br /> (Company Law) to carry out Corporate Social Responsibility (CSR). These intentions expect Indonesia companies can increase corporate governance as well as their commitment to business ethicsCrisis, financial performance decline, lost trust, and another bad effect from bad corporate governance and ethics have pushed the issue to the center of the stage. At this moment, ethics and corporate governance become a consideration and attention for both company and investor. By analyzing the relationship of corporate governance and ethical commitment index toward financial performances in <br /> <br /> Indonesia. It will provide an overview of business ethics company in Indonesia and its impact on society <br /> <br /> hrough policies and financial performance. Furthermore, it also can be a reference for investors and individuals who pay attention to a company's business ethics and corporate governance in making decisions on their investment. Based on this factor and know that prior studies regarding ethical commitment ethics toward financial performances has never been conducted in Indonesia, it motivates