DOES CORPORATE GOVERNANCE RELATE TO FIRM PERFORMANCE? CASE STUDY OF INDONESIA

• Main Author: Adinda Hasnanita Mihardj, Vania
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/40973
• Institution: Institut Teknologi Bandung

After the Asian financial crisis in 1997, the implementation of corporate governance in Indonesia was needed for companies registered in Indonesia. Corporate governance is needed to regulate and control the relationship between the management of the organization and all parties interested in the organization to improve company performance. Based on (Deakin and Konzelmann, 2004) the destruction of companies such as Adelfa, Tyco, and WorldCom are largely due to weak corporate governance. The effective corporate governance system makes the interests of managers and owners on the same track (Fama and Jensen, 1983). Therefore, this study investigates the relationship between corporate governance and company performance in Indonesia. This study uses panel data from 35 companies listed during 2015-2017 in Indonesia Stock Exchange (IDX). To reach the objective used multi linear regression with Return on Assets (ROA) as an indicator book value of firm performance. The result shows that the Ownership concentration(p-value = 0.082)** has a positive relationship with firm performance. On the other hand, proportion of military or police pensions on the board(p-value = 0.0097)* has a negative relationship with firm performance.