The influence of corporate governance on firm value: a case study in Indonesian manufacturing industries

Abstract

This study aims to determine the effect of corporate governance on financial performance and financial performance on dividend policy, then examining the effect of financial performance and dividend policy on firm value. The research approach is quantitative with panel data type. The sample are companies listed in the manufacturing industries on the Indonesia Stock Exchange. This study found that independent commissioners' existence does not affect financial performance. The size of the board of commissioners, audit committee members, and the number of board meetings do not affect financial performance. The study also found that financial performance and free cash flow affect the company's dividend policy. Finally, the results show that financial performance affects firm value while dividend policy does not affect it. These results have theoretical implications for supporting agency theory. The independent commissioners will reduce conflict and thus improve the financial performance.

The Influence of Good Corporate Governance through the Gender Diversity on Firm Performance

“…Independent commissioners for Indonesia and the Philippines reveal the same results, which are insignificant. These results support the findings of [2].…”

“…The number of board members of commissioners has a negative impact on ROA because the smaller the board of commissioners is when making decisions, the better; as a result, supervision becomes effective and leads to better performance and gender [1]. At the same time, another result shows the size of the board of commissioners does not affect ROA [2][3][4][5].…”

Does Corporate Governance Affect Market Performance as Well as Fundamental Performance? Evidence from Indonesian Manufacturing Sectors

“…The size of the board of commissioners has no influence on the firm's performance on Tobin's Q from a market performance or investor perspective. Murhadi [6] said that in the corporate system in Indonesia, the board of commissioners performs the function of supervisor and adviser to the board of directors. The size of board of commissioners positively and significantly affects the company performance based on ROE as a fundamental performance from an internal firm perspective.…”

“…Shareholders often demand a company have a good corporate governance mechanism to avoid contradicting goals among executives and shareholders [5]. Ria Murhadi [6] said that good corporate governance could assure returns to investors by minimizing the related investment risks and contributing to company performance. The size of the board of commissioners is the number of commissioners in the company, which includes inside and outside directors [7].…”

Corporate Governance of Firm Performance in the Non-Financial Sector for the 2017–2021 Period

“…The interests of shareholders can be protected by sound corporate governance. It is anticipated that businesses with sound governance will be able to reduce investment risk and improve financial performance [1]. Companies that emphasize sound corporate governance can increase value for shareholders by lowering their cost of capital or producing more cash flow [2][3][4][5].…”