The Effect Good Corporate Governance Mechanism to Firm’s Performance (Empirical Study of Manufacturing Firms Listed on IDX)

Irma, and Widiastuti, Yeni and Hartati, Noorina and Muktiyanto, Ali (2015) The Effect Good Corporate Governance Mechanism to Firm’s Performance (Empirical Study of Manufacturing Firms Listed on IDX). Journal of Applied Business and Economic Research (IJABER), Scopus Index-Q4, 13 (7). pp. 4849-4866. ISSN 0972-7302

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Abstract

This study aimed to examine the effect of corporate governance indicators such as the board of directors, audit committee and audit quality on firm’s performance which is proxied by Tobinsq and Altman Z Score. This study used manufacturing firms listed in the Indonesia Stock Exchange as samples and Structural Equation Modelling (SEM) was used to test the influence of corporate governance indicators on the firm’s performance. From the test results found that the higher the commissioners to supervise the firm, the better the performance of the firm. As for the indicators of corporate governance, the audit committee, also has a positive effect on the performance of the firm. It means that the higher the audit committee supervising the firm, the better the performance of the firm. Meanwhile, corporate governance indicators of audit quality has a positive relationship to the performance of the firm but not significantly, meaning the quality audit of a firm doesn’t effect the firm’s performance. This is consistent with previous studies.

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