The Effect of Corporate Governance on Performance Modified by the Company Size

Abstract

This study aims to determine the effect of corporate governance on corporate financial performance which is moderated by company size. The population used is companies listed on the Indonesian stock exchange. The sample in this study amounted to 53 companies. The sampling technique uses MRA (moderated regression analysis). The results of this study indicate that (1) board of commissioner variables, audit committee variables, board of directors variables, company size variables affect company performance, (2) board of commissioners with company size as a moderating variable has no influence on company performance, (3) audit committee with company size as a moderating variable influences company performance, (4) variable of directors with company size as a moderating variable has no influence on company performance. For companies, the company should apply good corporate governance, so that company performance can be improved, and consider the size of the company assessed to see how much the company develops form of performance, the audit committee is assessed to see how much the company can be controlled and monitored its financial reporting so that no fraud and directors are assessed to see how much the company can run effectively. The board of commissioners is to function more optimally, not only as a fulfillment of regulations, because good corporate governance can be realized if the control function can run well. for future research it might be with the same theme, but by adding other variables that can strengthen the impact on company value.

Good Corporate Governance and Financial Performance: Moderating Effects of Company Size

“…The results of this research conducted by Widyastuti (2017), Yadnyapawita & Dewi (2020), Anjani & Yadnya (2017, Purnomo et al (2021, Novitasari et al (2020), andRimardhani et al (2018) which states that the board of directors does not affect company performance. Contrary to the results of this study Syamsudin et al (2020), Ramadhanti (2020), Oktaviani (2018), andOktaviana &Worokinasih (2020) prove that the size of the board of directors has a positive effect on the company financial performance.…”

“…Research by Widyastuti (2017), the independent board of directors and commissioners have no significant effect on financial performance, while the audit committee has a significant impact on financial performance. In another study by Syamsudin et al (2020) the size of the board of directors and audit committee on financial performance proved to have a significant effect. Meanwhile, Sarafina & Saifi (2017), independent commissioners' size and audit committee significantly affect financial performance.…”

“…Good management can improve the company's financial performance. Research by Syamsudin et al (2020), Ramadhanti (2020), and Oktaviana & Worokinasih (2020) concluded that the size of the board of directors has a significant effect on financial performance.…”

“…The supervision carried out by the audit committee is expected to minimize fraudulent actions by management carried out in their interests so that the company's financial performance can improve. Research by Syamsudin et al (2020) and Widyastuti (2017) states the audit committee significantly influences financial performance. Research by Sarafina & Saifi (2017) suggests that partially the audit committee has a significant effect on financial performance.…”

“…Several studies have examined the effect of GCG with proxies from the board of directors, independent commissioners, and audit committees on the company's financial performance. The research was conducted by Widyastuti (2017), Syamsudin et al (2020) , Sarafina & Saifi (2017), Ramadhanti (2020), andNovitasari et al (2020). Research by Widyastuti (2017), the independent board of directors and commissioners have no significant effect on financial performance, while the audit committee has a significant impact on financial performance.…”