The Effect of Corporate Governance Mechanisms and Banking Performance in Indonesia

Abstract

The company's main goal is to grow and develop well. To be able to grow, company management must be able to improve company performance which is usually measured by profitability. There are several factors that influence profitability, including corporate governance mechanisms. This research aims to examine the influence of corporate governance mechanisms on banking performance. In this research, corporate governance mechanisms are measured by institutional ownership, managerial ownership, independent board of commissioners, size of the board of directors and size of the audit committee, while banking performance is measured by Return On Assets (ROA). The population in this research is the banking industry listed on the Indonesia Stock Exchange, totaling 46 banks and all of them were taken as samples. The observation period is 4 years (2019 – 2022) with quarterly data. To test the hypothesis, use multiple regression analysis with a significance requirement of 0.05. The data was processed using the SPSS version 25 program. The results of this study show that institutional ownership and the board of directors have no effect on financial performance, while managerial ownership has a significant effect but with a negative coefficient. Meanwhile, independent commissioners and audit committee size have a positive effect on performance.