CORPORATE GOVERNANCE , DEBT POLICY AND PROFITABILITY RELATIONSHIP
Keywords:
: Insider Ownership, Institutional Investors, Independent Commissioners, Board Commissioner,
Abstract
This study examines the relationship of Corporate Governance with Debt Policy, and Profitability, especially in corporate that conduct IPOs on the Indonesia Stock Exchange for the 2018-2019 period. Corporate Governance uses proxies of the Board of Commissioners, Independent Commissioners, Institutional Investors, and Insider Ownership which is predicted to affect Debt Policy and Profitability Using a purposive sampling technique, obtained 108 samples, the analyst uses multiple regression with the IBM SPSS 23 program. The findings show that Insider Ownership and the Board of Commissioners have a positive effect on profitability, Institutional Investors and Independent Commissioners are not proven to affect profitability. Corporate governance variables that are proven to influence Debt Policy are Insider Ownership, Institutional Investors, and Independent Commissioners.
References
References
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[37] Dasilas A, Papasyriopoulos N. Corporate governance, credit ratings and the capital structure of Greek SME and large listed firms. Small Bus Econ 2015; 45: 215–244.
[38] A.A Zaid M, Wang M, T.F. Abuhijleh S, et al. Corporate governance practices and capital structure decisions: the moderating effect of gender diversity. Corp Gov 2020; 20: 939–964.
[39] Bear S, Rahman N, Post C. The Impact of Board Diversity and Gender Composition on Corporate Social Responsibility and Firm Reputation. J Bus Ethics 2010; 97: 207–221.
[40] Jensen MC. Journal of Social and Personal. J Soc Pers Relatsh 1986; 15: 755–773.
[41] Stiglitz JE. Incentives and risk sharing in sharecropping. Rev Econ Stud 1974; 41: 219–255.
[1] Eldaly MK, Abdel-Kader M. How to regain public trust in audit firms? The case of the Financial Reporting Council. Account Res J 2018; 31: 343–359.
[2] Hassan R, Marimuthu M. Volume 36 , Issue 3 Corporate Governance , Board Diversity , and Firm Value : Examining Large. 2016; 36: 1737–1750.
[3] Adel C, Hussain MM, Mohamed EKA, et al. Is corporate governance relevant to the quality of corporate social responsibility disclosure in large European companies? Int J Account Inf Manag 2019; 27: 301–332.
[4] Bhat KU, Chen Y, Jebran K, et al. Board diversity and corporate risk: evidence from China. Corp Gov 2019; 20: 280–293.
[5] Ofoeda I. Corporate governance and non-bank financial institutions profitability. Int J Law Manag 2017; 59: 854–875.
[6] Veno A. Pengaruh Corporate Governance Terhadap Kinerja Perusahaan Manufaktur. BENEFIT J Manaj dan Bisnis 2015; 19: 95–112.
[7] Jensen MC, Meckling WH. Theory of the firm: Managerial behavior, agency costs and ownership structure. J financ econ 1976; 3: 305–360.
[8] Haque F, Arun T, Kirkpatrick C. The political economy of corporate governance in developing economies: The case of Bangladesh. Res Int Bus Financ 2011; 25: 169–182.
[9] Mande V, Park YK, Son M. Equity or debt financing: Does good corporate governance matter? Corp Gov An Int Rev 2012; 20: 195–211.
[10] Dam L, Scholtens B. Does Ownership Type Matter for Corporate Social Responsibility? Corp Gov An Int Rev 2012; 20: 233–252.
[11] KASABOĞLU OT, ÇİNKO M. a Study of the Relationship Between Institutional Ownership and Capital Structure: Evidence From Turkey. Marmara J Econ 2017; 1: 155–170.
[12] Pirzada K, Mustapha MZ Bin, Wickramasinghe D. Firm Performance, Institutional Ownership and Capital Structure: A Case of Malaysia. Procedia - Soc Behav Sci 2015; 211: 170–176.
[13] Ling DC, Wang C, Zhou T. Institutional common ownership and firm value: Evidence from real estate investment trusts. Real Estate Econ 2021; 49: 187–223.
[14] Subarnas D, Gunawan Y. Effect of Good Corporate Governance on Profitability. J Audit Financ Forensic Account 2019; 7: 90–96.
[15] Tjandra E. Pengaruh good corporate governance terhadap leverage dan profitabilitas pada perusahaan property dan real estate di Indonesia. J GEMA Aktual 2015; 4: 74–85.
[16] Pham HST, Nguyen DT. The effects of corporate governance mechanisms on the financial leverage–profitability relation: Evidence from Vietnam. Manag Res Rev 2020; 43: 387–409.
[17] Suryanto A. Analisis Pengaruh Penerapan Good Corporate Governance Terhadap Kinerja Keuangan. J Bina Manaj 2019; 8: 1–33.
[18] Vo DH, Nguyen VT-Y. Managerial Ownership, Leverage and Dividend Policies: Empirical Evidence from Vietnam’s Listed Firms. Int J Econ Financ; 6. Epub ahead of print 2014. DOI: 10.5539/ijef.v6n5p274.
[19] Boateng A, Cai H, Borgia D, et al. The influence of internal corporate governance mechanisms on capital structure decisions of Chinese listed firms. Rev Account Financ 2017; 16: 444–461.
[20] Atanasova C, Gatev E, Shapiro D. The corporate governance and financing of small-cap firms in Canada. Manag Financ 2016; 42: 244–269.
[21] STIJN CLAESSENS AND JOSEPH P. Corporate governance in Asia. Int Rev Financ 32, 2002 pp 71±103 Corp 2002; 1–335.
[22] BRIGHAM EF. Brigham, Eugene F._ Houston, Joel F. - Fundamentals of financial management-Cengage Learning (2013).pdf.
[23] Saini N, Singhania M. Corporate governance, globalization and firm performance in emerging economies: Evidence from India. Int J Product Perform Manag 2018; 67: 1310–1333.
[24] Abor J, Bokpin GA. Investment opportunities, corporate finance, and dividend payout policy: Evidence from emerging markets. Stud Econ Financ 2010; 27: 180–194.
[25] Javaid A, Nazir MS, Fatima K. Impact of corporate governance on capital structure: mediating role of cost of capital. J Econ Adm Sci. Epub ahead of print 2021. DOI: 10.1108/jeas-09-2020-0157.
[26] Rahman SMK. Effect of Financial Leverage on Firm’s Market Value Creation in Bangladesh. Int J Corp Financ Account 2018; 4: 41–58.
[27] Kim B, Burns ML, Prescott JE. The strategic role of the board: The impact of board structure on top management team strategic action capability. Corp Gov An Int Rev 2009; 17: 728–743.
[28] Ali N, Nasir NM, Satti SL. The Effect of Corporate Governance on Capital Structure Decisions – A Case of Saudi Arabian Banking Sector. Acta Univ Danubius 2014; 10: 51–60.
[29] Arifin J. Corporate Governance and Intellectual Capital on Financial Performance of Bank Sector Companies: Indonesia Stock Exchange 2008-2012. J Adm Sci Policy Stud 2016; 4: 195–206.
[30] Joher H, Ali M, Nazrul M. The Impact Of Ownership Structure On Corporate Debt Policy: Two Stage Least Square Simultaneous Model Approach For Post Crisis Period: Evidence From Kuala Lumpur Stock Exchange. Int Bus Econ Res J 2011; 5: 51–64.
[31] Persson R. Simultaneous determination of Debt, Dividend, and Inside Ownership policies: Evidence from Sweden.
[32] Chou T. Insider Ownership And Firm Performance : J Appl Bus Res 2015; 31: 861–871.
[33] Masry M. The Impact of Institutional Ownership on the Performance of Companies Listed In the Egyptian Stock Market. J Econ Financ 2016; 7: 5–15.
[34] Wardhana LI, Tandelilin E. Institutional Ownership and Agency Conflict Controlling Mechanism. J Indones Econ Bus 2011; 26: 389–406.
[35] Din SU, Arshad Khan M, Khan MJ, et al. Ownership structure and corporate financial performance in an emerging market: a dynamic panel data analysis. Int J Emerg Mark. Epub ahead of print 2021. DOI: 10.1108/IJOEM-03-2019-0220.
[36] Kang MY, Ausloos M. An inverse problem study: Credit risk ratings as a determinant of corporate governance and capital structure in emerging markets: Evidence from Chinese listed companies. Economies; 5. Epub ahead of print 2017. DOI: 10.3390/economies5040047.
[37] Dasilas A, Papasyriopoulos N. Corporate governance, credit ratings and the capital structure of Greek SME and large listed firms. Small Bus Econ 2015; 45: 215–244.
[38] A.A Zaid M, Wang M, T.F. Abuhijleh S, et al. Corporate governance practices and capital structure decisions: the moderating effect of gender diversity. Corp Gov 2020; 20: 939–964.
[39] Bear S, Rahman N, Post C. The Impact of Board Diversity and Gender Composition on Corporate Social Responsibility and Firm Reputation. J Bus Ethics 2010; 97: 207–221.
[40] Jensen MC. Journal of Social and Personal. J Soc Pers Relatsh 1986; 15: 755–773.
[41] Stiglitz JE. Incentives and risk sharing in sharecropping. Rev Econ Stud 1974; 41: 219–255.
Published
2020-06-26
How to Cite
Subagyo, H. (2020). CORPORATE GOVERNANCE , DEBT POLICY AND PROFITABILITY RELATIONSHIP. Kompak :Jurnal Ilmiah Komputerisasi Akuntansi , 13(1), 170 - 177. https://doi.org/10.51903/kompak.v13i1.711
Section
Articles
