[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/grg/01biss/v5y2012i1p1-17.html
   My bibliography  Save this article

The Influence Of Corporate Governance Practices On The Company’S Financial Performance

Author

Listed:
  • Nuryaman

    (University of Widyatama, Bandung, Indonesia)

Abstract
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

Suggested Citation

  • Nuryaman, 2012. "The Influence Of Corporate Governance Practices On The Company’S Financial Performance," Journal of Global Business and Economics, Global Research Agency, vol. 5(1), pages 1-17, July.
    • Handle: RePEc:grg:01biss:v:5:y:2012:i:1:p:1-17
    as

    Download full text from publisher

    File URL: http://www.globalresearch.com.my/journal/business_v05n01/001_Article_009_JOGBE_PG001-017.pdf
    Download Restriction: no
    File URL: http://www.globalresearch.com.my/journal/business_v05n01/business_v05n01.htm
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. 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(4), pages 693-719, December.
    3. Chang, Jui Chin & Sun, Huey-Lian, 2009. "Corrigendum to "Crossed-listed Foreign Firms' Earnings Informativeness, Earnings Management and Disclosures of Corporate Governance Information under SOX" [International Journal of Accountin," The International Journal of Accounting, Elsevier, vol. 44(2), pages 217-217, June.
    4. Daines, Robert, 2001. "Does Delaware law improve firm value?," Journal of Financial Economics, Elsevier, vol. 62(3), pages 525-558, December.
    5. Steen Thomsen & Torben Pedersen, 2000. "Ownership structure and economic performance in the largest european companies," Strategic Management Journal, Wiley Blackwell, vol. 21(6), pages 689-705, June.
    6. 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.
    7. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
    8. Firth, Michael & Fung, Peter M.Y. & Rui, Oliver M., 2007. "Ownership, two-tier board structure, and the informativeness of earnings - Evidence from China," Journal of Accounting and Public Policy, Elsevier, vol. 26(4), pages 463-496.
    9. Chang, Jui Chin & Sun, Heuy Lian, 2009. "Crossed-listed foreign firms' earnings informativeness, earnings management and disclosures of corporate governance information under SOX," The International Journal of Accounting, Elsevier, vol. 44(1), pages 1-32, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nooraisah Katmon & Omar Al Farooque, 2017. "Exploring the Impact of Internal Corporate Governance on the Relation Between Disclosure Quality and Earnings Management in the UK Listed Companies," Journal of Business Ethics, Springer, vol. 142(2), pages 345-367, May.
    2. Aman, Hiroyuki & Nguyen, Pascal, 2013. "Does good governance matter to debtholders? Evidence from the credit ratings of Japanese firms," Research in International Business and Finance, Elsevier, vol. 29(C), pages 14-34.
    3. Cormier, Denis & Houle, Sylvain & Ledoux, Marie-Josée, 2013. "The incidence of earnings management on information asymmetry in an uncertain environment: Some Canadian evidence," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 22(1), pages 26-38.
    4. Kuo, Jing-Ming & Ning, Lutao & Song, Xiaoqi, 2014. "The Real and Accrual-based Earnings Management Behaviors: Evidence from the Split Share Structure Reform in China," The International Journal of Accounting, Elsevier, vol. 49(1), pages 101-136.
    5. Sattar Khan & Yasir Kamal & Azhar Khan & Arif Hussain & Muhammad Rafiq & Maryam Bibi & Syed Fahad Ali Shah & Zahir Shah & Muhammad Khan, 2020. "The Impact of Ownership Types on the Value of Discretionary Accruals: What is the Role of Audit Committee? Evidence from Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 10(4), pages 141-150.
    6. Redhwan Ahmed al-Dhamari & Ku Nor Izah Ku Ismail, 2013. "Governance Structure, Ownership Structure and Earnings Predictability: Malaysian Evidence," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 9(1), pages 1-23.
    7. Nesrine Klai & Abdelwahed Omri, 2013. "Corporate Board Characteristics and the Informativeness of Accounting Earnings: Evidence from Tunisia," International Journal of Financial Economics, Research Academy of Social Sciences, vol. 1(4), pages 133-142.
    8. Alves, Paulo & Couto, Eduardo Barbosa & Francisco, Paulo Morais, 2015. "Board of directors’ composition and capital structure," Research in International Business and Finance, Elsevier, vol. 35(C), pages 1-32.
    9. Eman F. Attia & Wafa Khémiri & Messaoud Mehafdi, 2023. "Does ownership structure reduce earnings manipulation practice of Egyptian listed firms? Evidence from a dynamic panel threshold model," Future Business Journal, Springer, vol. 9(1), pages 1-18, December.
    10. Zhijun Lin & Ming Liu & Carlos Noronha, 2016. "The Impact of Corporate Governance on Informative Earnings Management in the Chinese Market," Abacus, Accounting Foundation, University of Sydney, vol. 52(3), pages 568-609, September.
    11. Alves, Paulo & Couto, Eduardo & Francisco, Paulo, 2014. "Board of directors’ composition and financing choices," MPRA Paper 52973, University Library of Munich, Germany, revised 2014.
    12. Jackson, Gregory, 2010. "Understanding corporate governance in the United States: An historical and theoretical reassessment," Arbeitspapiere 223, Hans-Böckler-Stiftung, Düsseldorf.
    13. Lu, Yun & Ntim, Collins G. & Zhang, Qingjing & Li, Pingli, 2022. "Board of directors’ attributes and corporate outcomes: A systematic literature review and future research agenda," International Review of Financial Analysis, Elsevier, vol. 84(C).
    14. Chia-Ying Chan & Iftekhar Hasan & Chih-Yung Lin, 2021. "Agency cost of CEO perquisites in bank loan contracts," Review of Quantitative Finance and Accounting, Springer, vol. 56(4), pages 1221-1258, May.
    15. Stephen J. Smulowitz & Didier Cossin & Alfredo De Massis & Hongze (Abraham) Lu, 2023. "Wrongdoing in Publicly Listed Family- and Nonfamily-Owned Firms: A Behavioral Perspective," Entrepreneurship Theory and Practice, , vol. 47(4), pages 1233-1264, July.
    16. Nader Mansouri, 2014. "The Determinants Of Management Provisions After The Introduction Of Ias / Ifrs Standards In France [Les Determinants De La Gestion Des Provisions (Prc) Apres L’Introduction Des Normes Ias/Ifrs En F," Post-Print hal-01899131, HAL.
    17. Oehmichen, Jana, 2018. "East meets west—Corporate governance in Asian emerging markets: A literature review and research agenda," International Business Review, Elsevier, vol. 27(2), pages 465-480.
    18. Shan Xue & Yi Tang & Yuehua Xu & Chu-Ding Ling & Xiao-Yun Xie & Shenjiang Mo, 2024. "How boards’ factional faultlines affect corporate financial fraud," Asia Pacific Journal of Management, Springer, vol. 41(1), pages 351-376, March.
    19. Otten, J.A. & Heugens, P.P.M.A.R., 2007. "Extending the Managerial Power Theory of Executive Pay: A Cross National Test," ERIM Report Series Research in Management ERS-2007-090-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    20. Qaiser Rafique Yasser & Abdullah Al Mamun & Marcus Rodrigs, 2017. "Director Training and Financial Disclosure: Asian Insights," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 11(2), June.

    More about this item

    Keywords

    corporate governance practices; financial performance;

    JEL classification:

    • M0 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. 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.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: editor (email available below). General contact details of provider: http://www.globalresearch.com.my/journal.htm .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.