Analyzing the Impact of Corporate Governance on Financial Performance of Banking Companies

Abstract

The financial performance of most of the companies in Indonesia are affected by the COVID-19 pandemic, especially the banking sector. Thus, this study is intended to analyze the impact of corporate governance on financial performance in banking companies by considering the pandemic factor. This study uses quantitative method with a descriptive causal design. The sample used in this study are forty-six banking companies which are listed on the Indonesian Stock Exchange during the period of 2019-2022. Moreover, corporate governance is measured using the number of board of commissioners, board of directors, and percentage of institutional ownership. On the other hand, financial performance is measured by using Return on Equity. A regression analysis was conducted to obtain the statistical results of the data. As a result, institutional ownership positively impacts the financial performance of banking companies. The higher the bank is owned by the institution, the higher the financial performance. On the other hand, the board of commissioners and board of directs have no impact on the financial performance of banking companies. Furthermore, several implications can be drawn from this study.