The Effect of Corporate Governance and Firm Characteristics on Firm Performance and Risk Management as an Intervening Variable

Abstract

Abstract The purpose of this study is to examine the effect of corporate governance and firm characteristics on the existence of Risk Management Committee and the effect of the existence of the Risk Management Committee on firm performance. In addition, this study also examines the intervening role of Risk Management Committee on the relationship between corporate governance and firm characteristics and firm performance.The population in this study were non-financial companies listed in Indonesian Stock Exchange for the 2013 financial year and purposive sampling is used as sampling method. Data for this study were taken from company's annual report. The hypotheses were tested by using Partial Least Squre (PLS). The result proved that corporate governance and firm characteristics affect the existence of Risk Management Committee, and the existence of Risk Management Committee affects firm performance. The result also proved that Risk Management Committee act as an intervening variable among corporate governance and firm characteristics on firm performance.