The Effect of Corporate Governance on Firm Performance: Empirical Evidence from Indonesia

Objective – The main purpose of this research is to examine the effect of corporate governance on firm performance. The corporate governance characteristics was represented by the board structure (board of commissioner, board of director and independent commissioner) and ownership structure (institutional ownership, managerial ownership and public ownership), while the proxy of firm performance is return on equity. Methodology/Technique – This research used data from Indonesian Stock Exchange (IDX) period 2004-2014 with purposive sampling method and panel data regression analysis as data analysis method. Findings – The empirical result indicate that board of director, independent commissioner, institutional ownership and public ownership in a company has significant effect on firm performance, otherwise the board of commissioner and managerial ownership has no significant effect on firm performance. Overall, all of the independent variables (board and ownership structure) have significant effect on firm performance. Novelty – The use of long research period during 2000 to 2014 allows to see the consistency of the application of corporate governance in Indonesia since 2001. Confirmed that Corporate Governance (Board and Ownership Structure) have significant effect on firm performance in Indonesia. Type of Paper: Empirical