The Effect of Good Corporate Governance on the Financial Performance of Mining Companies

Abstract

The objective of the study is to identify the effect of board of directors’ size, board of commissioners' size, audit committee and board of independent commissioner’s proportion towards the financial performance of mining companies that listed in the Indonesian Stock Exchange from 2013 to 2017. The background of the study is the essence of the successful implementation of Good Corporate Governance through the internal mechanism such as board of directors, board of commissioners and audit committee. The researcher used Return on Investment (ROI) as measurement of company’s financial performances. Method used in this study is empirical study. The researcher used secondary data that had been gathered from the Indonesian Stock Exchange (ISE). The data used in this study are 28 mining companies listed in ISE with their financial information from 2013 to 2017. To analyses those data, the researcher used statistics tool SPSS and used multiple linier regression analysis. The result of the analysis shows that the board of directors’ size has positive effect towards the financial performance of the sampled company. On the other hand, the result of the analysis also shows that board of commissioners' size, audit committee size and board of independent commissioners’ proportion has no effect towards the financial performance of the sampled companies.