Effect Of Good Corporate Governance On Company Profitability RE &amp; Property Sector In Indonesia

Ahmad Azmy, Dea Restiya Anggreini, Mohammad Hamim

doi:10.24912/ja.v23i1.457

Abstract

This study aims to examine the effect of Good Corporate Governance (GCG) on company profitability. The dependent variable are Return On Assets (ROA) and Return On Equity (ROE). The independent variable are Good Corporate Governance (GCG) represented by the Board of Commissioners, the Board of Directors, and the Audit Committee. This study uses secondary data from audited financial statements of Real Estate and Property companies in 2013-2017. The analytical tool used in this study uses panel data regression. Based on the results of the study it is known that the Board of Directors and Audit Committee variables have a significant positive effect on ROA and ROE. The Board of Commissioners variable has no influence and negative relationship to ROA and ROE.

Highlights

The term corporate governance began to emerge in Indonesia in 1998 when Indonesia experienced a prolonged economic crisis that was assessed because it did not manage the company responsibly, resulting in many being depressed because they could not survive (Marsella, 2013)
Panel data regression research model to test the compatibility of common effects, fixed effects, and random effects. (Ajja et al, 2011) explained that testing the suitability of the model does use some of the effects that exist in panel data regression using the Chow Test and Hausman Test
This shows that the common effect is more suitable than the fixed effect on both dependent variables Return on Assets (ROA) and Return on Equity (ROE)

Summary

Introduction

The term corporate governance began to emerge in Indonesia in 1998 when Indonesia experienced a prolonged economic crisis that was assessed because it did not manage the company responsibly, resulting in many being depressed because they could not survive (Marsella, 2013). The following are data regarding the growth of ROA and ROE from several Real Estate and Property companies in Indonesia, such as PT. Metropolitan Land, Tbk (MTLA): The current conditions related to profitability in the real estate and property business sector that are proxied with Return on Assets (ROA) and Return on Equirt (ROE) are as follows: Jurnal Akuntansi/Volume XXIII, No 01, January 2019: 18-33. ROE measurement is one of the most important ones used in the Real Estate and Property business because investors will usually look at financial performance and assess the level of profitability of the company before investing. Bank Lippo, Tbk is an example of the implementation of good governance in the company Both of these cases have similarities, namely fraud committed by the internal company that seeks profit for itself which causes losses to the company. In this study profit will be measured by profitability ratios proxied by Return On Assets (ROA) and Return On Equity (ROE)

Objectives

Methods

Results

Discussion

Conclusion