The Effect of Corporate Governance on the Performance of a Company. Some Empirical Findings from Indonesia
The Effect of Corporate Governance on the Performance of a Company. Some Empirical Findings from Indonesia

Summary/Abstract: Purpose: This study is aimed at analyzing the influence of the size of the board of directors, auditcommittee, institutional ownership and managerial ownership on the fnancial performance ofmanufacturing companies listed on the Indonesia Stock Exchange. Methodology: The study analyses 156 Indonesia frms listed on the Indonesia Stock Exchange usinglinear regression analysis. Findings: The results indicated that the size of the board of directors has a positive effect on fnancial performance, while the size of the audit committee, institutional ownership and managerialownership has no effect on the fnancial performance. While on the simultaneously testing, itshowed that the size of the board of directors, audit committee size, institutional ownership andmanagerial ownership influence the fnancial performance. Research limitations/implications: The research has been limited to the manufacturing sector ofIndonesian companies and the internal mechanism of corporate governance. The study suggests considering an external mechanism of corporate governance as predictor variables. Originality: The study adds to the literature of corporate government and frm performance inemerging countries. The study implies that corporate governance mechanism for audit committee,managerial ownership and institutional ownership do not enhance company performance. Theaverage size of an audit committee just to fulfll the regulation. Corporate governance mechanismthat improve fnancial performance is size board director. Improvement in board performance asboard size increase has positive impact that enhance fnancial performance of company.

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