The influence of corporate governance on company financial performance in the financial sector
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Oct 21, 2023
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Abstract
Every company definitely wants the company it manages or owns to have good and correct governance, because every organization wants this to create the governance they want. So here the role of corporate governance becomes important with the variables Board independence, audit committee, institutional ownership, board size and the number of board meetings in a company which can lead to comfort and protection for shareholders and investors, governance adopted in controlling an organization it will direct the policies or steps of an organization, so that the goal to be achieved in this study is to provide an explanation of the influence of board independence, audit committees, institutional ownership, number of board meetings and board size on company financial performance with the research method of panel data regression analysis and research This was carried out on 36 companies in the financial sector listed on the Indonesia Stock Exchange (IDX) from the 2017 period to the 2021 period and produced a simultaneous test that board independence, board size, audit committee, institutional ownership and number of board meetings jointly have an effect on financial performance with the control variables firm size and leverage while the results partially board independence, board size have a positive and significant effect while the audit committee and institutional ownership and the number of meetings have no effect on financial performance
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How to Cite
Hamdi, M. I. P., & Munandar, A. (2023). The influence of corporate governance on company financial performance in the financial sector. Enrichment : Journal of Management, 13(4), 2418-2432. https://doi.org/10.35335/enrichment.v13i4.1605
References
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Arora, A., & Sharma, C. (2016). Corporate governance and firm performance in developing countries: evidence from India. Emerald Insight, 16(2), 420–436. https://doi.org/10.1108/CG-01-2016-0018
Assenga, M. P., Aly, D., & Hussainey, K. (2018). The impact of board characteristics on the financial performance of Tanzanian firms. Emerald Insight, 18(6), 1089–1106. https://doi.org/10.1108/CG-09-2016-0174
Berthelot, S., Francoeur, C., & Labelle, R. (2012). Corporate governance mechanisms, accounting results and stock valuation in Canada. International Journal of Managerial Finance, 8(4), 332–343. https://doi.org/10.1108/17439131211261251
Chen, Z., Cheung, Y. L., Stouraitis, A., & Wong, A. W. S. (2005). Ownership concentration, firm performance, and dividend policy in Hong Kong. Pacific Basin Finance Journal, 13(4), 431–449. https://doi.org/10.1016/j.pacfin.2004.12.001
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Guest, P. M. (2009). The impact of board size on firm performance: Evidence from the UK. European Journal of Finance, 15(4), 385–404. https://doi.org/10.1080/13518470802466121
Gunawan, J., & Wijaya, H. (2019). Pengaruh Kepemilikan Institusional, Komite Audit Dan Ukuran Perusahaan Terhadap Kinerja Perusahaan. JMB : Jurnal Manajemen Dan Bisnis, 5(1), 1718–1727. https://doi.org/10.31000/jmb.v5i1.1990
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Ichsani, S., Ratu, A., Taswa, P., Aprianto, F., & Hermawan, H. (2021). Effect of Good Corporate Governance Mechanism on Company Profitability Ratios. 12(8), 1793–1805.
Jackling, B., & Johl, S. (2009). Board structure and firm performance: Evidence from India’s top companies. Corporate Governance: An International Review, 17(4), 492–509. https://doi.org/10.1111/j.1467-8683.2009.00760.x
Jiang, C., Feng, G., & Zhang, J. (2012). Corporate governance and bank performance in China. Journal of Chinese Economic and Business Studies, 10(2), 131–146. https://doi.org/10.1080/14765284.2012.673779
Karina, R., & Sufiana, S. (2020). Pengaruh Efektivitas Komite Audit, Kualitas Audit Dan Efektivitas Dewan Direksi Terhadap Manajemen Laba. Journal of Applied Managerial Accounting, 4(1), 42–59. https://doi.org/10.30871/jama.v4i1.1925
Kiel, G. C., & Nicholson, G. J. (2003). Board composition and corporate performance: How the Australian experience informs contrasting theories of corporate governance. Corporate Governance: An International Review, 11(3), 189–205. https://doi.org/10.1111/1467-8683.00318
Kiptoo, I. K., Kariuki, S. N., & Ocharo, K. N. (2021). Corporate governance and financial performance of insurance firms in Kenya. Cogent Business and Management, 8(1), 1–18. https://doi.org/10.1080/23311975.2021.1938350
Kumar, N., & Singh, J. P. (2013). Effect of board size and promoter ownership on firm value : some empirical findings from India. Corporate Governance, 13(1), 88–98. https://doi.org/10.1108/14720701311302431
Kyereboah-Coleman, A., Biekpe, N., Africa, S., & of Finance, P. (2006). the Relationship Between Board Size, Board Composition, Ceo Duality and Firm Performance: Experience From Ghana. Corporate Ownership & Control, 4(2), 114–122.
Mak, Y. T., & Kusnadi, Y. (2005). Size really matters: Further evidence on the negative relationship between board size and firm value. Pacific Basin Finance Journal, 13(3), 301–318. https://doi.org/10.1016/j.pacfin.2004.09.002
Malik, M. S., & Makhdoom, D. D. (2016). Does corporate governance beget firm performance in Fortune Global 500 companies? Corporate Governance (Bingley), 16(4), 747–764. https://doi.org/10.1108/CG-12-2015-0156
Nawaz Khan, S., Hussain, R. I., Ur-Rehman, S., Maqbool, M. Q., Engku Ali, E. I., & Numan, M. (2019). The mediating role of innovation between corporate governance and organizational performance: Moderating role of innovative culture in Pakistan textile sector. Cogent Business and Management, 6(1), 1–23. https://doi.org/10.1080/23311975.2019.1631018
Ntim, C. G. (2015). Board diversity and organizational valuation: unravelling the effects of ethnicity and gender. Journal of Management and Governance, 19(1), 167–195. https://doi.org/10.1007/s10997-013-9283-4
O’Connell, V., & Cramer, N. (2010). The relationship between firm performance and board characteristics in Ireland. European Management Journal, 28(5), 387–399. https://doi.org/10.1016/j.emj.2009.11.002
Octosiva, F., Theresia, M., & Hidayat, A. A. (2015). PENGARUH INDEPENDENSI, KOMPETENSI, DAN PARTISIPASI DEWAN KOMISARIS TERHADAP KINERJA KEUANGAN PERUSAHAAN. 210–231.
Pfeffer, J. (2019). Size and composition of corporate boards of directors: The organization and its environment. Corporate Governance: Values, Ethics and Leadership, 17(2), 53–64. https://doi.org/10.2307/2393956
Purnama, D. (2017). PENGARUH PROFITABILITAS, LEVERAGE, UKURAN PERUSAHAAN, KEPEMILIKAN INSTITUSIONAL DAN KEPEMILIKAN MANAJERIAL TERHADAP MANAJEMEN LABA. 3, 1–14.
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Riyadh, H. A., Sukoharsono, E. G., & Alfaiza, S. A. (2019). The impact of corporate social responsibility disclosure and board characteristics on corporate performance. Cogent Business and Management, 6(1), 1–18. https://doi.org/10.1080/23311975.2019.1647917
Riza Bernandhi, A. M. (2021). Pengaruh Kepemilikan Institusional, Kepemilikan Manajerial, Leverage Dan Ukuran Perusahaan Terhadap Nilai Perusahaan. Jurnal Paradigma Akuntansi, 3(3), 966. https://doi.org/10.24912/jpa.v3i3.14878
Shanti, Y. K. (2020). PENGARUH KOMITE AUDIT TERHADAP KINERJA KEUANGAN PERUSAHAAN DENGAN DEWAN KOMISARIS SEBAGAI VARIABEL INTERVENING. Jurnal Ilmiah Ekonomi Kita, 9(12), 147–158. https://journal.feb.unipa.ac.id/index.php/acemo
Sriyana, J. (2014). METODE REGRESI DATA PANEL (1st ed.). Ekonesia.
Susmanto, A., Daryanto, & Sasongko, H. (2021). PENGARUH KARAKTERISTIK DEWAN KOMISARIS TERHADAP KINERJA KEUANGAN. 7(2), 498–511.
Turnip, T. (2019). PENJELASAN BANK BRI, Karyawannya Korupsi Dana Nasabah Rp 1 Miliar karena Main Judi Online. Kompas.Com. ttps://medan.tribunnews.com/2019/05/18/penjelasan-bank-bri-karyawannya-korupsi-dana-nasabah-rp-1-miliar-karena-main-judi-online
Wardhani, Y. A., & Suwarno, A. E. (2019). KINERJA KEUANGAN PERUSAHAAN ( Studi Empiris Pada Perusahaan Manufaktur Yang Terdaftar di Bursa Efek Indonesia Tahun 2017-2019 ).
Widarjono, A. (2018). Ekonometrika. UUP STIM YKPN.
Widasari, T., & Isgiyarta, J. (2017). PENGARUH KEAHLIAN KOMITE AUDIT DAN JUMLAH RAPAT KOMITE AUDIT TERHADAP MANAJEMEN LABA DENGAN AUDIT EKSTERNAL SEBAGAI VARIABEL MODERASI. 6, 1–13.
Wijaya, R., & Al’ Adawiyah, R. (2021). Pengaruh Hubungan Rapat Dewan Komisaris, Kepemilikan Institusional dan Ukuran Perusahaan terhadap Kinerja Keuangan. Seminar Nasional, 1, 1–17.
Afrifa, G. A., & Tauringana, V. (2015). Corporate governance and performance of UK listed small and medium enterprises. Corporate Governance (Bingley), 15(5), 719–733. https://doi.org/10.1108/CG-03-2015-0029
Ahmed Haji, A. (2014). The relationship between corporate governance attributes and firm performance before and after the revised code: Some Malaysian evidence. International Journal of Commerce and Management, 24(2), 134–151. https://doi.org/10.1108/IJCoMA-02-2012-0009
Allen, J. (2021). Future promise. 81. https://www.acga-asia.org/cgwatch.php
Amelinda, T. N., & Rachmawati, L. (2021). PENGARUH PENERAPAN GOOD CORPORATE GOVERNANCE TERHADAP KINERJA KEUANGAN BANK UMUM SYARIAH DI INDONESIA. 4, 33–44.
Arora, A., & Sharma, C. (2016). Corporate governance and firm performance in developing countries: evidence from India. Emerald Insight, 16(2), 420–436. https://doi.org/10.1108/CG-01-2016-0018
Assenga, M. P., Aly, D., & Hussainey, K. (2018). The impact of board characteristics on the financial performance of Tanzanian firms. Emerald Insight, 18(6), 1089–1106. https://doi.org/10.1108/CG-09-2016-0174
Berthelot, S., Francoeur, C., & Labelle, R. (2012). Corporate governance mechanisms, accounting results and stock valuation in Canada. International Journal of Managerial Finance, 8(4), 332–343. https://doi.org/10.1108/17439131211261251
Chen, Z., Cheung, Y. L., Stouraitis, A., & Wong, A. W. S. (2005). Ownership concentration, firm performance, and dividend policy in Hong Kong. Pacific Basin Finance Journal, 13(4), 431–449. https://doi.org/10.1016/j.pacfin.2004.12.001
Clarabella, B., & Tarigan, J. (2015). KINERJA KEUANGAN MELALUI STRUKTUR MODAL SEBAGAI VARIABEL INTERVENING PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DALAM BURSA EFEK INDONESIA ( BEI ). 625–634.
Davis, J. H., Schoorman, F. D., & Donaldson, L. (2018). Toward a stewardship theory of management. Business Ethics and Strategy, Volumes I and II, 22(1), 473–500. https://doi.org/10.4324/9781315261102-29
Fama, E. (2012). Agency problems and the theory of the firm. University of Chicago, 88(21), 270–282. https://doi.org/10.1017/CBO9780511817410.022
Ghazali, N. A. M. (2010). Ownership structure, corporate governance and corporate performance in Malaysia. International Journal of Commerce and Management, 20(2), 109–119. https://doi.org/10.1108/10569211011057245
Guest, P. M. (2009). The impact of board size on firm performance: Evidence from the UK. European Journal of Finance, 15(4), 385–404. https://doi.org/10.1080/13518470802466121
Gunawan, J., & Wijaya, H. (2019). Pengaruh Kepemilikan Institusional, Komite Audit Dan Ukuran Perusahaan Terhadap Kinerja Perusahaan. JMB : Jurnal Manajemen Dan Bisnis, 5(1), 1718–1727. https://doi.org/10.31000/jmb.v5i1.1990
Hastuti, R. K. (2020). Gagal Bayar 5 Asuransi Ini Bikin Nasabah Teriak. Cnbcindonesia. https://www.cnbcindonesia.com/market/20200816100319-17-180132/kacau-gagal-bayar-5-asuransi-ini-bikin-nasabah-teriak
Ichsani, S., Putri, A. R. P. T., Aprianto, F., Hermawan, H., & Hanavi, R. (2021). Pengaruh Mekanisme Good Corporate Governance terhadap Rasio Profitabilitas Perusahaan. 12(4), 860–868.
Ichsani, S., Ratu, A., Taswa, P., Aprianto, F., & Hermawan, H. (2021). Effect of Good Corporate Governance Mechanism on Company Profitability Ratios. 12(8), 1793–1805.
Jackling, B., & Johl, S. (2009). Board structure and firm performance: Evidence from India’s top companies. Corporate Governance: An International Review, 17(4), 492–509. https://doi.org/10.1111/j.1467-8683.2009.00760.x
Jiang, C., Feng, G., & Zhang, J. (2012). Corporate governance and bank performance in China. Journal of Chinese Economic and Business Studies, 10(2), 131–146. https://doi.org/10.1080/14765284.2012.673779
Karina, R., & Sufiana, S. (2020). Pengaruh Efektivitas Komite Audit, Kualitas Audit Dan Efektivitas Dewan Direksi Terhadap Manajemen Laba. Journal of Applied Managerial Accounting, 4(1), 42–59. https://doi.org/10.30871/jama.v4i1.1925
Kiel, G. C., & Nicholson, G. J. (2003). Board composition and corporate performance: How the Australian experience informs contrasting theories of corporate governance. Corporate Governance: An International Review, 11(3), 189–205. https://doi.org/10.1111/1467-8683.00318
Kiptoo, I. K., Kariuki, S. N., & Ocharo, K. N. (2021). Corporate governance and financial performance of insurance firms in Kenya. Cogent Business and Management, 8(1), 1–18. https://doi.org/10.1080/23311975.2021.1938350
Kumar, N., & Singh, J. P. (2013). Effect of board size and promoter ownership on firm value : some empirical findings from India. Corporate Governance, 13(1), 88–98. https://doi.org/10.1108/14720701311302431
Kyereboah-Coleman, A., Biekpe, N., Africa, S., & of Finance, P. (2006). the Relationship Between Board Size, Board Composition, Ceo Duality and Firm Performance: Experience From Ghana. Corporate Ownership & Control, 4(2), 114–122.
Mak, Y. T., & Kusnadi, Y. (2005). Size really matters: Further evidence on the negative relationship between board size and firm value. Pacific Basin Finance Journal, 13(3), 301–318. https://doi.org/10.1016/j.pacfin.2004.09.002
Malik, M. S., & Makhdoom, D. D. (2016). Does corporate governance beget firm performance in Fortune Global 500 companies? Corporate Governance (Bingley), 16(4), 747–764. https://doi.org/10.1108/CG-12-2015-0156
Nawaz Khan, S., Hussain, R. I., Ur-Rehman, S., Maqbool, M. Q., Engku Ali, E. I., & Numan, M. (2019). The mediating role of innovation between corporate governance and organizational performance: Moderating role of innovative culture in Pakistan textile sector. Cogent Business and Management, 6(1), 1–23. https://doi.org/10.1080/23311975.2019.1631018
Ntim, C. G. (2015). Board diversity and organizational valuation: unravelling the effects of ethnicity and gender. Journal of Management and Governance, 19(1), 167–195. https://doi.org/10.1007/s10997-013-9283-4
O’Connell, V., & Cramer, N. (2010). The relationship between firm performance and board characteristics in Ireland. European Management Journal, 28(5), 387–399. https://doi.org/10.1016/j.emj.2009.11.002
Octosiva, F., Theresia, M., & Hidayat, A. A. (2015). PENGARUH INDEPENDENSI, KOMPETENSI, DAN PARTISIPASI DEWAN KOMISARIS TERHADAP KINERJA KEUANGAN PERUSAHAAN. 210–231.
Pfeffer, J. (2019). Size and composition of corporate boards of directors: The organization and its environment. Corporate Governance: Values, Ethics and Leadership, 17(2), 53–64. https://doi.org/10.2307/2393956
Purnama, D. (2017). PENGARUH PROFITABILITAS, LEVERAGE, UKURAN PERUSAHAAN, KEPEMILIKAN INSTITUSIONAL DAN KEPEMILIKAN MANAJERIAL TERHADAP MANAJEMEN LABA. 3, 1–14.
Purnamasari, P. A. (2019). PENGARUH KARAKTERISTIK DEWAN KOMISARIS TERHADAP KINERJA KEUANGAN PERUSAHAAN YANG TERDAFTAR DI BURSA EFEK INDONESIA (BEI) PERIODE 2015-2017 manajemen.
Rahardjo, A. P., & Wuryani, E. (2021). Pengaruh Good Corporate Governance, Kepemilikan Institusional, dan Ukuran Perusahaan Terhadap Kinerja Keuangan Perusahaan (Studi Pada Perusahaan Perbankan Yang Terdaftar Di Bursa Efek Indonesia (BEI) Tahun 2016-2018). 10(1).
Riyadh, H. A., Sukoharsono, E. G., & Alfaiza, S. A. (2019). The impact of corporate social responsibility disclosure and board characteristics on corporate performance. Cogent Business and Management, 6(1), 1–18. https://doi.org/10.1080/23311975.2019.1647917
Riza Bernandhi, A. M. (2021). Pengaruh Kepemilikan Institusional, Kepemilikan Manajerial, Leverage Dan Ukuran Perusahaan Terhadap Nilai Perusahaan. Jurnal Paradigma Akuntansi, 3(3), 966. https://doi.org/10.24912/jpa.v3i3.14878
Shanti, Y. K. (2020). PENGARUH KOMITE AUDIT TERHADAP KINERJA KEUANGAN PERUSAHAAN DENGAN DEWAN KOMISARIS SEBAGAI VARIABEL INTERVENING. Jurnal Ilmiah Ekonomi Kita, 9(12), 147–158. https://journal.feb.unipa.ac.id/index.php/acemo
Sriyana, J. (2014). METODE REGRESI DATA PANEL (1st ed.). Ekonesia.
Susmanto, A., Daryanto, & Sasongko, H. (2021). PENGARUH KARAKTERISTIK DEWAN KOMISARIS TERHADAP KINERJA KEUANGAN. 7(2), 498–511.
Turnip, T. (2019). PENJELASAN BANK BRI, Karyawannya Korupsi Dana Nasabah Rp 1 Miliar karena Main Judi Online. Kompas.Com. ttps://medan.tribunnews.com/2019/05/18/penjelasan-bank-bri-karyawannya-korupsi-dana-nasabah-rp-1-miliar-karena-main-judi-online
Wardhani, Y. A., & Suwarno, A. E. (2019). KINERJA KEUANGAN PERUSAHAAN ( Studi Empiris Pada Perusahaan Manufaktur Yang Terdaftar di Bursa Efek Indonesia Tahun 2017-2019 ).
Widarjono, A. (2018). Ekonometrika. UUP STIM YKPN.
Widasari, T., & Isgiyarta, J. (2017). PENGARUH KEAHLIAN KOMITE AUDIT DAN JUMLAH RAPAT KOMITE AUDIT TERHADAP MANAJEMEN LABA DENGAN AUDIT EKSTERNAL SEBAGAI VARIABEL MODERASI. 6, 1–13.
Wijaya, R., & Al’ Adawiyah, R. (2021). Pengaruh Hubungan Rapat Dewan Komisaris, Kepemilikan Institusional dan Ukuran Perusahaan terhadap Kinerja Keuangan. Seminar Nasional, 1, 1–17.