The Effects of Corporate Governance on the Performance of Manufacturing Sector Companies on the Indonesia and Philippines Stock Exchanges

Abstract

This study aims to examine the effects of corporate governance on the performance of manufacturing sector companies listed on the Indonesia and Philippines Stock Exchanges over the 2015-2019 period. This research uses a quantitative approach with a multiple linear regression method. The object used in this research was 455 observation data on Indonesia Stock Exchange and 170 observation data on the Philippines Stock Exchange. The dependent variables in this study are ROA which represents accounting-based, and Tobin’s Q, which represents market-based. Then, the independent variables in this study are board size, board meetings, institutional ownership, while the control variables are leverage and firm size. The results showed that board size has no significant effect on ROA in Indonesia and the Philippines but negatively affects Tobin’s Q in Indonesia and the Philippines. The board meeting negatively affects ROA in Indonesia and positively affects ROA in the Philippines. But board meeting also has no significant effect to Tobin’s Q in both Indonesia and Philippines. Institutional ownership has no significant effect on ROA in Indonesia and positively affects Tobin’s Q in Indonesia. But institutional ownership also has a significant negative effect on ROA and Tobin’s Q in Filipina. Whereas in the control variables, leverage negatively affects ROA and Tobin’s Q in Indonesia and the Philippines. Firm size has a significant positive effect on ROA in Indonesia and the Philippines and has a significant negative effect on Tobin’s Q in Indonesia. Firm size also has no significant effect on Tobin’s Q in the Philippines.