Governance, Risk Management Index, and Performance: A Comparative Study of Indonesian Islamic Compliant and Non-Compliant Firms

Abstract

The aim of this study is to test whether the performance of Islamic compliant companies is better than noncompliant companies. This research also examines whether Board Size, Board independence and Enterprise Risk Management (ERM) influence the Performance of those companies. The sample in this study is non-financial companies listed on the Indonesia Stock Exchange period 2011-2015, with a total of 95 Islamic compliant and 858 non-Islamic compliant companies. This study found that Islamic compliant performance is higher than non-Islamic compliant companies. Further, the findings of this study show that board size has no relation to the performance of those companies. While board independence has a negative relation to the performance of the companies. This study also found ERM positively affects the performance of both Islamic compliant and non-Islamic compliant companies.