Good Corporate Governance Research Articles

The effect of good corporate governance policies on welfare employee

The purpose of this study is to examine the influence of Good Corporate Governance based on Social Welfare Theory. The reason researchers choose Good Corporate Governance which is measured using Fairness, Disclosure/Transparency, Accountability and Responsibility Formulations is because this Formulation is very easy to apply at a practical level, and can more accurately measure the level of welfare received by Crew in the field, compared to other GCG formulations. This type of research is quantitative, with the main data source in the form of questionnaires, which will be analyzed using SEM PLS. Practically the application of GCG principles can help improve the welfare of the crew. The results showed that, Fairness, Transparency, Acoountability and Responsibility have a positive effect on the welfare of the crew. The recommendation in this study is, preferably between the Ministry of Transportation and the Ministry of Transportation, must carry out their functions and duties in accordance with the articles of association and laws and regulations, not dominate each other and throw responsibility on each other. This needs to be done, so that the goals and desires of the Crew in realizing their welfare get support and are well realized through the preparation of appropriate regulations.

Impacts of investment relations service quality on corporate information transparency and intangible value: the moderating role of competitive intensity

PurposeThis study aims at proposing and testing a model delineating how and when the quality of a special B2B professional service, investment relations (IR), would drive corporate intangible value.Design/methodology/approachThis study employs a proprietary dataset on voting records of an annual investment relations (IR) awards event and the corresponding company-level archival data for analysis. Regression analysis is used to test hypotheses.FindingsIR service quality not only directly enhances corporate intangible value, but also indirectly boosts it via information transparency. While competitive intensity does not moderate the relationship between IR service quality and corporate intangible value, its moderating effect on the relationship between information transparency and this value is negative.Research limitations/implicationsThe findings advance academic understanding of the mechanism and boundary conditions underlying the complex and dynamic relationships among IR service quality, information transparency, corporate intangible value and competitive intensity. Future research endeavors to verify the present findings in other service and/or geographic settings would help establish their external validity.Practical implicationsThe findings advise companies to expand the traditional role of IR by taking it as a powerful communication and relationship marketing tool to improve their visibility and attract investors.Social implicationsThe findings suggest that superior IR service would strengthen the company’s social bonding with institutional investors and effectively signal to them its commitment to good corporate governance practices.Originality/valueMatching a proprietary dataset on IR voting records with the corresponding company-level archival data over a five-year period to investigate the performance implications of IR service quality within the Hong Kong context rectifies methodological limitation and geographic confinement of prior IR research.

Does Financial Performance Mediate the Relationship between Corporate Governance and Corporate Value? Evidence from Indonesian Banking Companies

The banking sector has the potential to progress and grow sustainably. This is reflected in the increase in the value of distributed funds and the value of commercial bank assets. However, this increase was not in line with the increase in company value. Therefore, companies must be able to optimize their resources to increase corporate value. This study aims to analyze and explain the factors that can affect corporate value. The variables used in this research are corporate governance as an independent variable, financial performance as a mediating variable, and corporate value as a dependent variable. The type of research used is explanatory research with a quantitative approach. The samples for this research were Bank Rakyat Indonesia (BBRI), Bank Mandiri (BMRI), Bank Negara Indonesia (BBNI), and Bank Tabungan Negara (BBTN). The data analysis was done using descriptive statistical analysis and partial least squares (PLS) analysis which is processed using SmartPLS software. The results of this research indicate that corporate governance has a negative and insignificant effect on corporate value. Furthermore, corporate governance variables also had a negative and insignificant effect on financial performance. Apart from that the results also show that the financial performance variable is not able to mediate the relationship between corporate governance and corporate value significantly. The practical implication of this research was to encourage banking management in Indonesia to implement good corporate governance as it can boost financial performance.
 Keywords: banking, corporate governance, corporate value, financial performance

Corporate governance mishap in a startup: a case of GoMechanic

Learning outcomes The case study is designed to help students understand how the “growth at all costs” attitude can lead to compromised corporate governance in a start-up leading to disastrous implications for all the stakeholders. This case study aims to make students understand the components of the fraud triangle, the impact of financial fraud on various stakeholders, the role of venture capitalist (VC) investors and the importance of good corporate governance in start-ups. The case study presents an excellent opportunity for students to discuss the consequences of ignoring good governance in the pursuit of growth in a start-up. After analyzing the case study, the students shall be able to explain the concept of the fraud triangle and to be able to identify the motivation, opportunity and rationalization of financial irregularities in a start-up; analyze the impact of financial irregularities on various stakeholders; comprehend the business model of VCs and evaluate its influence on VC-funded start-ups; and appraise the importance of good corporate governance in start-ups. Case overview/synopsis The case study revolves around the confession of financial irregularities made by one of the cofounders of GoMechanic, a start-up headquartered in Gurugram, India. On January 18, 2023, Amit Bhasin confessed to financial irregularities in the company’s financial statements, leading to laying off 70% of the workforce of the company. GoMechanic had earlier raised close to US$62m [1] from maverick global investors including Sequoia Capital, Tiger Global, Orios Venture Partners and Chiratae Ventures, and was negotiating to raise Series D financing from the Japanese multinational SoftBank with aspirations to be a unicorn (start-up with a valuation of over $1bn). The confession led to a debate about the consequences of the “growth at all cost” culture being followed by start-ups as well as VCs. GoMechanic was not an isolated instance of a lack of governance in the start-ups. The confession had consequences not only for the GoMechanic but for the entire start-up ecosystem of India, which was the third largest in the world. Bhasin stated that the founders take full responsibility for the situation, and they were working on a plan which was most viable under the circumstances. However, it was not going to be easy to regain the confidence of the investors. Complexity academic level The case study is best suited for senior undergraduate- and graduate-level business school students and in executive education programs in courses such as corporate governance and ethics, private equity and entrepreneurial finance. Supplementary material Teaching notes are available for educators only. Subject code CSS 1: Accounting and finance

Corporate governance and Indonesian state-owned companies’ performance: Agency and institutional perspectives

The purpose of this study is to investigate the relationship between corporate governance practices and Indonesia’s SOEs' performance. State-owned enterprises (SOEs) are often criticized for underperformance and political manipulation, raising doubts about the efficiency of implemented corporate governance mechanisms. Additionally, this research examines the moderating role of board diversity on the relationship between good corporate governance (GCG) and performance. This study adopted a quantitative method to analyze secondary data from SOE’s financial statements from 2012 to 2019. The key independent variable is the GCG score, while return on assets is the dependent variable. The regression model incorporates managerial diversion variables and control variables. Surprisingly, the results found that corporate governance practices adversely affect the performance of Indonesian SOEs, particularly when board members have political affiliations. Institutional theory explains the negative relationship between the implementation of GCG and the performance of state-owned companies from coercive and mimetic perspectives. The phenomenon often happens in a developing country when a new system is adopted without fully understanding its mission. Additionally, the significant role of the Board of Commissioners' political connection as a moderating variable supports the conjecture of the managerial diversion perspective. This research contributes empirical insights for SOE stakeholders about corporate governance implementation and the performance of Indonesia's SOEs from the perspective of an emerging economy. The paper contributes novel views to agency and institutional theory for developing countries.

EFFECTIVENESS OF RGEC- BANK SOUNDNESS LEVEL AND INFLATION RATE IN PREDICTING POTENTIAL BANKRUPTCY OF BANKS: EVIDENCE FROM INDONESIA

This study examines the effectiveness of RGEC-based bank soundness and inflation rate in predicting the potential for bankruptcy. The samples in this study are the banking sector companies listed on the Indonesia Stock Exchange (IDX) from 2016 to 2020. Using several proxies of the RGEC-based bank soundness and inflation rate, the results of this study indicate that the loan-to-deposit ratio (LDR), self-assessment of good corporate governance, and capital adequacy ratio (CAR) affect the potential of bankruptcy negatively and significantly. Furthermore, non-performing loans (NPL), return on assets (ROA), and inflation rate do not affect the potential for bankruptcy. The result shows that only two indicators, among four of RGEC-based bank soundness, effectively predict the potential bankruptcy. These results suggest that if banking management wants to predict and anticipate bankruptcy based on the bank’s soundness, it can be considered to see and maintain the LDR and self-assessment of GCG and CAR.

Determinan yang Mempengaruhi Audit Delay dengan Ukuran Perusahaan Sebagai Moderasi

The time span between the issuance date of the audit report and the closing date of the financial year is called the audit delay. This study aims to examine the effect of profitability, solvency, liquidity, and good corporate governance proxied by the board of commissioners and audit committee on audit delay with firm size as a moderating variable. This research was conducted at trading service and investment companies listed on the Indonesia Stock Exchange in 2015-2019. The number of samples selected by purposive sampling method is 268 samples from 56 companies for five years. The type of data used is secondary data in the form of financial statements of trading services and investment companies. The data analysis technique used is Moderated Regression Analysis. The results of the study show that profitability, solvency, board of commissioners and audit committee have an effect on audit delay, while liquidity has no effect on audit delay. Firm size moderates the effect of solvency and liquidity on audit delay. But company size cannot moderate the board of commissioners on audit delay.

PENGARUH METODE RGEC TERHADAP NILAI PERUSAHAAN PADA BANK KONVENSIONAL YANG TERDAFTAR DI BEI

The purpose of this study is to determine how the influence of RGEC indirectly or not on company value. This research was conducted on conventional banking companies listed on the Indonesia Stock Exchange (IDX) in the period 2017 – 2021. This research uses quantitative methods by obtaining 38 conventional banking companies using this data analysis technique using smartPLS. From the results of the study shows that risk profile has a significant negative influence on company value, GCG (Good Corporate Governance) has a significant positive influence on company value, Earning has a significant positive influence on company value, and Capital has a significant positive influence on company value. The company’s own value uses PBV (Price Book Value).

Capturing Islamic bank performance in Indonesia during the COVID-19 crisis: RGEC and SCNP approaches

While adhering to the unique principle of Islamic value, Islamic banks are subject to any occurring crisis, just like other banks in common. After the end of the COVID-19 crisis, it is important to determine whether Islamic banking can demonstrate its resilience based on the unique values it upholds. Therefore, the primary objective of this study is to capture how Islamic banks performed during the unprecedented challenge posed by COVID-19. By utilizing the data generated from financial reports, this study employs the RGEC (Risk Profile, Good Corporate Governance, Earnings, and Capital) method that was introduced by Indonesia Central Bank and SCnP (Sharia Conformity and Profitability) measurement. The findings show that by utilizing RGEC, the study classifies Islamic banks into tiers of health, distinguishing 7 as very healthy, 5 as healthy, and 2 as fairly healthy. Meanwhile, SCnP sheds light on the balance between Sharia conformity and profitability, highlighting 2 Islamic banks with commendable equilibrium, 5 displaying a tilt towards high profitability and low conformity, 4 with a tendency towards Shariah conformity with low profitability, and 3 struggling with challenges in both aspects. The study concludes the overall financial resilience of the majority of Islamic banks in Indonesia during the pandemic while noting that some banks faced challenges in achieving a harmonious balance between profitability and Sharia conformity.

Corporate governance and financial fraud occurrence – case study on Romanian companies

PurposeThe aim of this study is to approach the way in which corporate governance influences the occurrence of financial fraud, as expressed by the M-Beneish score. In order to get further into the topic, we have first computed a corporate governance score based on the comply-explain statement and then selected a few elements that are part of the corporate governance reporting: equilibrium of board members (EQUIL), independence of board members (INDEP), selection of the board members (NOM), remuneration policy (REM), audit committee (AUDIT) and the proportion of female directors on boards (GenF). They were tested, one by one, using the financial fraud score to see the way in which they interact.Design/methodology/approachThe study is conducted on a sample of 65 companies listed on the Bucharest Stock Exchange (BSE) for the 2016–2022 period. The data were processed using three-stage general least square [general least squares (GLS), with iteration, igls and option] with a common first-order panel-specific autocorrelation correction, so as to explain how a poor adoption of the corporate governance score and its elements has a negative implication for the M-Beneish score, controlling for the auditor opinion, type of auditing company and if the company is privately owned.FindingsThe results support most of our research hypothesis, revealing that a poor adoption of the corporate governance score and its components – AUDIT, EQUIL, INDEP and GenF – negatively influences the M-Beneish score, i.e. a low corporate governance score will lead to an increase in financial fraud. This is an encouraging aspect, for an improved adoption of the corporate governance principles reduces the occurrence of financial fraud.Research limitations/implicationsThis is a study that concerns the relationship between corporate governance and financial fraud for the case study for Romania.Practical implicationsThe study highlights the importance of adopting the corporate governance code applied to the Romanian business environment. By measuring the presence of financial fraud appearance through the M-Beneish score, we have managed to outline the negative relationship between the two components. Thus, it is an important aspect of which companies should take account, so they will have long-term benefits and ensure the continuity of the business.Social implicationsThe policy implications of this project are for policymakers, so that they will understand how a good corporate governance mechanism will enhance high-performing businesses. Different aspects regarding corporate governance were validated and are in the process of being validated. Managers can extract and try to understand and apply the good characteristics of corporate governance for the well-being of their companies. At a broader level, the macroeconomic environment will increase its own well-being while encouraging market players to enhance qualitative corporate governance reporting. There is no doubt that corporate governance has a positive impact on businesses.Originality/valueThe study highlights the importance of adopting the corporate governance code as applied to the Romanian business environment. By measuring the occurrence of financial fraud using the M-Beneish score, we have managed to outline the negative relationship between the two components. Therefore, this is an important aspect that companies should take into account in order to have long-term benefits and ensure the continuity of their business.

The impact of Carbon Emissions Disclosure, Good Corporate Governance, and Media Disclosure on Investor Reaction

This research aims to determine the influence of Carbon emission Disclosure, Good Corporate Governance, and Media Exposure on investor reactions. The population used is energy companies listed on the Indonesian Sharia Stock Index for 2021-2022. The number of samples in the study was 70, using the purposive sampling method. Meanwhile, the research data used is secondary data in the form of annual reports obtained from the IDX and issuer websites. The analytical method used is multiple linear regression analysis. The research results show that disclosure of carbon emissions significantly negatively affects investor reactions. This is because there is still very little socialization from the company regarding operational activities in the environment towards the community as shareholders. Meanwhile, Good Corporate Governance and Media exposure significantly affect investor reactions.

Corporate governance in Basic Material and Energy Sector Companies, green strategy, and carbon emissions disclosure

This study aims to find empirical evidence of the influence of corporate governance and green strategy on carbon emission disclosure. This study uses a quantitative approach using panel data regression with a sample size of 105 energy and basic material sector companies listed on the Indonesia Stock Exchange for the 2018-2022 period. The technical analysis used in this research is software EViews 12. The results of the t test that was carried out to test the first hypothesis showed a t-statistic value of 2.132. and significance 0.0354 < 0.05. This value indicates that the quality of carbon emissions is significantly determined by good corporate governance. Tests carried out on the second hypothesis produced a t-statistic of 1.496 with a significance of 0.000 <0.05, which indicates that companies that adopt a green strategy will tend to carry out activities that reduce carbon emission levels. Meanwhile, the results of testing the third hypothesis show a t-statistic value of 3.023 and a significance of 0.0032. The value of testing this third hypothesis explains that large companies tend to carry out higher carbon emission reduction activities, in line with the increasing attention and expectations of stakeholders for these companies.

Qualitative analysis of the effectiveness of audit committees and internal audit functions in the public sector: the case of public establishments in Morocco

This article examines corporate governance and the performance of the audit committee, as well as the functions of internal audit in the public sector of an emerging economy such as Morocco. Both of these functions are crucial for corporate governance, ensuring optimal service delivery by local authorities, particularly public institutions. The study, based on stakeholder theory, qualitatively analyzes corporate governance and the effectiveness of audit committees and internal audit units in the Moroccan public sector. The results suggest good corporate governance with the presence of audit committees and internal audit functions in the public sector. However, the inefficiency of audit committees and internal audit units is highlighted, attributed to the lack of guidance, non-implementation of recommendations, and insufficient resources in the Moroccan public sector. To enhance performance, it is recommended that leaders take into account the findings of audit committees and internal audit units, endorsing and incorporating their conclusions into action plans implemented by management. Audit committees should strengthen their oversight of internal audit functions to ensure their effectiveness. The presence of effective audit committees and internal audit units in the public sector reflects competent and efficient utilization of resources for the benefit of all stakeholders.

DETERMINANTS OF ISLAMIC BANKING FINANCIAL PERFORMANCE: ANALYZING THE ROLE OF CSR, ZAKAT, AND GCG IN INDONESIA AND MALAYSIA

Although the Islamic banking sector is expanding rapidly, it still needs to improve its financial performance in order to compete with conventional banking. This study attempts to investigate how corporate social responsibility (CSR), zakat, and good corporate governance (GCG) affect the financial performance of Islamic banking in Indonesia and Malaysia from 2015 to 2021. Using the quantitative method of panel data regression, the study discovered that, simultaneously, CSR, zakat, and GCG have a significant impact on the financial performance of Islamic banking in both countries. Partially, only GCG has a noticeable influence while the other two do not. The results of this study encourage Islamic banks to consistently develop CSR, zakat, and GCG in every aspect of their operations and lead the industry.

PENGARUH FINANCIAL DISTRESS, GOOD CORPORATE GOVERNANCE, AUDIT REPORT LAG DAN OPINI AUDIT TERHADAP KETEPATAN WAKTU PUBLIKASI LAPORAN KEUANGAN

The purpose of this study is to determine the effect of financial distress, good corporate governance, audit report lag, and audit opinion on the timeliness of financial statement publication in banking companies listed on the Indonesia Stock Exchange. Research conducted based on quantitative methods. The determination of this research sample used the purposive sampling method so that research samples were obtained from as many as 5 state-owned banking companies listed on the Indonesia Stock Exchange. This research data uses the financial statements of banking companies for the 2018-2022 period. The data analysis method used is multiple linear regression. The results proved that financial distress had a significant effect on the timeliness of financial statement publication, good corporate governance had a significant effect on the timeliness of financial statement publication, audit report lag had a significant effect on the timeliness of financial statement publication and audit opinion had a significant effect on the timeliness of financial statement publication. The results together / combined obtained financial distress, good corporate governance, audit report lag, and audit opinion have a significant effect on the timeliness of financial statement publication in banking companies listed on the Indonesia Stock Exchange with a calculated F value (4,875) or an effect of 62.5%. This result proves that the timeliness of financial statement publication is supported by low financial distress value, high good corporate governance, fast audit report lag, and unqualified audit opinion.

Changes in Banking Industry Stock Prices: The Role of Risk, Good Governance, Earnings, and Capital

This research, with direct implications for banking professionals and investors, aims to empirically test and analyze the RGEC components, which consist of risk profile, good corporate governance, earnings and capital, and their influence on banking stock prices listed on the Indonesian Stock Exchange (BEI). The sample for this research was determined using a purposive sampling technique, resulting in a total sample of 21 companies over 3 periods, namely 2016-2018. The data analysis technique used is Partial Least Square (PLS). The research results, which have immediate relevance for investment strategies, show that earnings proxied using ROA positively affect stock prices, while risk profile, good corporate governance, and capital do not. This indicates that earnings are still a strong signal for investor investment decisions. Therefore, the company must succeed in maintaining and increasing its earnings to become an investment choice for investors. However, even though good corporate governance and capital do not influence stock prices, it doesn’t mean that banking companies should ignore their governance and capital. These two factors are essential in maintaining good performance.

The Effect of Good Corporate Governance and Liquidity Mechanisms on Financial Performance (Empirical Study on Property and Real Estate Sub-Sector Companies Listed on the Indonesia Stock Exchange for the 2019-2022 Period)

This study examines the effect of Good Corporate Governance and liquidity mechanisms on financial performance in property and real estate sub-sector companies listed on the Indonesia Stock Exchange. Good corporate governance in this study is proxied with independent commissioners, audit committees, and institutional ownership. Liquidity is proxied by the current ratio. Financial performance is proxied by returns on assets (ROA). The purpose of this study is to analyze the influence of independent commissioners, audit committees, institutional ownership and current ratios on financial performance. The formulation of the problem in this study is whether independent commissioners, audit committees, institutional ownership and current ratios affect financial performance. The methods used in this study are descriptive methods and explanatory causal methods with a quantitative approach. The results of this study show that independent commissioners and institutional ownership have no effect on financial performance. While the audit committee and current ratio have a negative and significant effect on financial performance.

Pengaruh Tingkat Kesehatan Bank Terhadap Firm Value Dengan CSR Expenditure Sebagai Variabel Moderasi

This research investigates the influence of various financial variables on Bank Health Level on Company Value (PBV) with CSR Expenditure as a moderating variable in the context of the banking industry in Indonesia. The research method used in this research is descriptive and verification research, while the sampling technique used is non-probability sampling with a purposive sampling method, the sample for this research is 26 companies. This research identifies Non-Performing Loans (NPL) and Return on Assets (ROA) as factors that influence Price to Book Value (PBV). Then CSR Expenditure can moderate the Non-Performing Loan (NPL), Loan Deposit Ratio (LDR), and Good Corporate Government (GCG) variables on price-to-book value (PBV). Simultaneously, the results of the F test show that collectively these variables have a significant effect on Price to Book Value (PBV), and CSR Expenditure is an important factor that contributes positively to Price to Book Value (PBV), which can be concluded that CSR policy is very capable strengthening company performance in increasing stakeholder perception and trust which is reflected in increasing company value.

Corporate Governance, Financial Leverage, External Audit Quality, and Financial Reporting Quality in Ghanaian Companies

Good corporate governance influences the capital structure adopted by a firm. Higher financial leverage increases a firm’s risk. This might result in a window-dressing of financial statements to maintain the value of the firm. The study examined the interaction between corporate governance, financial leverage, external audit quality, and their combined influence on the quality of financial reporting inside enterprises in Ghana. The extensive inquiry was conducted using a dataset consisting of 650 observations and encompassing the timeframe from 2009 to 2021 using SPSS Process version 4.2. The findings of this study revealed a significant inverse correlation between the size of the board and the level of compliance with International Financial Reporting Standards with a correlation coefficient of -0.056. With a correlation coefficient of 0.003, the analysis revealed that there is no linear association between Board Gender Diversity (BGD) and International Financial Reporting Standards. With regards to Independent Audit Committee with a correlation coefficient of around 0.068, the findings of the study indicated a statistically significant positive relationship between the presence of an Independent Audit Committee and the level of compliance with International Financial Reporting Standards. The study showed a negative correlation of -0.024 between Financial Leverage and International Financial Reporting Standards Compliance. The observed data suggests a notable and favourable correlation between Audit Fee and International Financial Reporting Standards Compliance with a significant positive correlation of around 0.157. The model employed in the study exhibited multiple R (R) of about 0.191, indicating a modest positive association between the predictor variables and International Financial Reporting Standards Compliance. The coefficient of determination (R Square) was 0.037, indicating that 3.7% of the variation in International Financial Reporting Standards Compliance can be attributed to the predictor variables in the model used for the study. Furthermore, the study revealed an unstandardized coefficient of -0.003 and a standardized coefficient of -0.078 for Board Size, 0.023 and 0.016 for Board Gender Diversity, 0.028 and 0.109 for the Independent Audit Committee, -2.152E-05 and -0.031 for Financial Leverage and 2.809E-08 and 0.156 for Audit Fee. The study again revealed a significant indirect effect through Financial Leverage (FL) on Board Size and International Financial Reporting Standards Compliance with bootstrapped results of 0.0001. On the contrary, the study revealed that Financial Leverage does not mediate Board Gender Diversity and International Financial Reporting Standards Compliance, Independent Audit Committee, and International Financial Reporting Standards Compliance with, an indirect effect of -0.0021 and -0.0009 respectively. With mediation through Audit Fee, the study showed significant indirect effects for all three independent variables. Board Size at 0.0000, Board Gender Diversity at -0.0016, and Independent Audit Committee at -0.0027. The findings from the direct effects study indicate that Board Size and Audit Fee have a notable influence on IFRS Compliance, hence affecting the quality of financial reporting. However, no concrete evidence was found to establish a link between Board Gender Diversity and Independent Audit Committee and IFRS Compliance. For the mediation effects, it was discovered that Financial Leverage played a role as a mediator in elucidating the connection between Board Size and IFRS Compliance. Furthermore, the Audit Fee variable served as an intermediary in clarifying the associations between Board Size, Board Gender Diversity, Independent Audit Committee, and IFRS Compliance. It is recommended for companies to give utmost importance to the principles of openness, accountability, and consistent monitoring of financial leverage. Moreover, the study recommends the allocation of resources towards high-caliber external audits as it plays a pivotal role in bolstering the precision and dependability of financial reporting.

The Effect of Non Performing Loan, Agency Cost, Good Corporate Governance, and Credit Policy to Bank Profitability

The study attempts to investigate the effect of Agency Cost (AGCOST), Good Corporate Governance (GCG), Capital Adequacy Ratio (CAR), Loan Deposit Ratio (LDR), Non Performing Loan (NPL), interest rate (BI7DAY) and foreign exchange rate (KURS) to bank profitability measured by Return on Assets (ROA). The sample consists of 29 banks listed in Otoritas Jasa Keuangan (OJK) during 2012 – 2021. Sampling method was census. Data analysis method was panel data regression method. The novelty of the research is using the ratio of board of director’s and commissioner’s remuneration to total salary as the proxy of AGCOST. GCG was proxied by percentage of institutional ownership. Result shows that NPL, AGCOST and GCG have a significant negative effect to ROA; CAR and BI7DAY have a significant positive effect to ROA; LDR and KURS have a insignificant effect to ROA. Conclusion of the study: escalating the board’s remuneration and institutional ownership will decrease ROA.