The Influence Of Corporate Governance Practices On The Company’S Financial Performance
The aim of this study is to examine the effect of corporate governance practices on company's financial performance. Corporate governance practices are measured by score of corporate governance perception index (CGPI) issued by the Indonesian Institute of Corporate Governance (IICG). Financial performances in this study include operational performance and the performance of company stock. Operational performance is measured by current ratio (CR), debt to asset (DAR), return on asstes (ROA), net profit margin (NPM), return on equty (ROE). Stock performance is measured by price to book value (PBV). Statistical model used is the regression model. Study sample size was forty-three firms (43 firms), which are all included in the application of corporate governance ranking by IICG in 2007-2009, and are listed on the Indonesia Stock Exchange. The data is taken from the CGPI report and financial statements for the year 2007-2009. The results of this study indicate that the practice of corporate governance has a positive effect on company's operational performance by proxy CR, ROA, ROE and also a positive influence on stock performance by proxy PBV
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Klock, Mark S. & Mansi, Sattar A. & Maxwell, William F., 2005. "Does Corporate Governance Matter to Bondholders?," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(04), pages 693-719, December.
- Siregar, Sylvia Veronica & Utama, Sidharta, 2008. "Type of earnings management and the effect of ownership structure, firm size, and corporate-governance practices: Evidence from Indonesia," The International Journal of Accounting, Elsevier, vol. 43(1), pages 1-27, March.
- Dimitropoulos, Panagiotis E. & Asteriou, Dimitrios, 2010. "The effect of board composition on the informativeness and quality of annual earnings: Empirical evidence from Greece," Research in International Business and Finance, Elsevier, vol. 24(2), pages 190-205, June.
When requesting a correction, please mention this item's handle: RePEc:grg:01biss:v:5:y:2012:i:1:p:1-17. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (editor)
If references are entirely missing, you can add them using this form.