CORPORATE GOVERNANCE, TRANSPARANCY AND STOCK RETURN SYNCHRONICITY

Werner Ria Murhadi,Liliana Inggrit Wijaya

doi:10.24123/jeb.v2i1.3919

Werner Ria Murhadi, Liliana Inggrit Wijaya

Open Access

https://doi.org/10.24123/jeb.v2i1.3919

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Abstract

This study aims to analyze the effect of corporate governance on transparency as measured by stock return synchronicity. The variables used are board size (commissioner), big4 audit, institutional ownership, market to book, the volatility of firm fundamentals, leverage, and firm size. This study uses a quantitative approach with multiple linear analysis models. This study uses a sample of non-financial business entities listed on the Indonesia Stock Exchange (BEI). The number of samples used in this study was 198 observations. The results showed that the variable board size (commissioner), institutional ownership, and leverage had a positive effect on transparency, and the implied volatility of the firm hurt transparency. Other variables such as big4 audit, market to book ratio, and firm size do not affect transparency.

Highlights

Corporate governance plays an essential role in the company and will impact the company's finances
The change in income varies due to competition between companies (Li et al, 2003). This high level of competition causes companies to be less willing to be open to the company's information
A large board size causes the company's transparency to decrease due to the large size of the board of commissioners, which makes it difficult for the board of commissioners to coordinate and resolve problems that occur in the company

Summary

Introduction

Corporate governance plays an essential role in the company and will impact the company's finances. Corporate governance can be used as a strength within the company to compete in the current situation. Companies that have good governance will be more transparent compared to companies that do not have proper management. The transparency of the company will be measure using stock return synchronicity. Khandaker (2011) explains that Stock return synchronicity shows the stock market's tendency to move in the same direction for some time to come. The concepts of beta and synchronicity become difficult to separate. This concept is because both ideas show the same relationship between a Journal of Entrepreneurship & Business, Vol., No 1 1

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