Abstract
This study aims to analyze the effect of good corporate governance towards idiosyncratic risk as a proxy with corporate governance variable as board size, independent director, women, firm size, firm performance, and firm age. The object of this study uses companies listed in the Indonesia Stock Exchange and Philippine Stock Exchange using agency theory. This study uses quantitative approach and multiple linear regression to analyze the data. The target populations of this study are manufacturing companies that listed in Indonesia Stock Exchange and Philippine Stock Exchange in 2014-2018 which are equal to 615 and 200 year observations. The results in Indonesia showed that board size, women, and firm age had negatif effect on idiosyncratic risk. On the other hand, firm size do not show the effect on idiosyncratic risk and firm performance had positive effect on idiosyncratic risk. However, the results in Philippine showed that board size had positive effect on idiosyncratic risk. While, women and firm size do not show the effect on idiosyncratic risk but firm performance and firm age had negatif effect on idiosyncratic risk.
Highlights
The rigorous business competition encourages the company to experience significant developments in regard to performance and risks that the company should look out for In this case, the company should pay attention to good corporate governance with the aim of maximizing shareholder's wealth by paying attention to the risks arising from the investments
Based on the gaps found in the research results above, research on the influence of good corporate governance is conducted against idiosyncratic risk in manufacturing companies listed on the Indonesia Stock Exchange and the Philippine Stock Exchange period 2014-2018
The results of the study for Indonesia are in accordance with the initial hypothesis which states that board size has a significant negative effect on idiosyncratic risk
Summary
The rigorous business competition encourages the company to experience significant developments in regard to performance and risks that the company should look out for In this case, the company should pay attention to good corporate governance with the aim of maximizing shareholder's wealth by paying attention to the risks arising from the investments. The results of the study for Indonesia are in accordance with the initial hypothesis which states that board size has a significant negative effect on idiosyncratic risk.
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