Indonesian Institute For Corporate Governance Research Articles

Do Intellectual Capital and Corporate Governance have Value Relevance to the Market Performance? Evidence from Indonesia

We examine whether intellectual capital and corporate governance have value relevance to market performance. Intellectual capital is measured by VAIC™ (Pulic, 1998). We use annual report data from companies listed on the Indonesia Stock Exchange (IDX) and Corporate Governance Perception Index (CGPI) data from the Indonesian Institute for Corporate Governance (IICG) in the period of 2015–2019. Preliminary findings suggest that intellectual capital does not have value relevance to market performance, but corporate governance does have value relevance to market performance. This paper contributes to stakeholders in making economic decisions.

Pengaruh Corporate Governance Index terhadap Kinerja Keuangan Perusahaan

This study aims to determine the effect of the corporate governance index on the company’s financial performance. The population in this study were all companies registered in the corporate governance perception index (CGPI) rating program conducted by the independent agency the indonesian institute for corporate governance (IICG) in 2017-2021, totalling 63 companies using a purposive sampling technique. The data collection technique used is documentation. The data analysis technique used is simple linear regression analysis. The data was processed using the statistical product and service solutions (SPSS) program version 26. The result showed that the corporate governance index had a positive and significant effect on the company’s financial performance. 
 Keywords: Corporate Governance Index, Financial Performance

Corporate Governance Perception Index and Firm Performance in Indonesia

The unique business environment and inconclusive findings make it interesting to conduct investigations related to corporate governance and performance in Indonesia. The investigation is carried out on all firms on the Indonesia Stock Exchange, which The Indonesian Institute for Corporate Governance has surveyed for almost two decades (2001 to 2019). The test results find a significant relationship between corporate governance and firm performance. This study underscores the importance of stakeholders in making a collective contribution to the firm. A series of tests have been carried out to validate these findings, and the results remain robust. This finding has important contributions and implications for regulators and firms, especially in developing countries.

The Impact of Corporate Governance, Leverage, and Profitability on Intellectual Capital Disclosure with Company Size as a Moderating Variable

This research focuses to examine the impact of Corporate Governance, Leverage, and Profitability on Intellectual Capital Disclosure with Company Size as a Moderating Variable. This research method is descriptive method with a quantitative approach. The data used in this study is secondary data, namely the annual report obtained from www.IDX.co.id and the corporate governance perception index report obtained from The Indonesian Institute for Corporate Governance. The number of samples is 46 data with the technique of taking using the purposive sampling method. The findings of this study demonstrate that the Corporate Governance variable has no impact on Intellectual Capital Disclosure, Leverage and Profitability variables have a negative and significant impact on Intellectual Capital Disclosure, the company Size variable cannot moderate the relationship linking Corporate Governance and Intellectual Capital Disclosure, and the company Size variable can strengthen the relationship linking Leverage and Profitability on Intellectual Capital Disclosure. This study can be implemented by corporates to analyze the role of corporate governance, leverage, and profitability on intellectual capital disclosure with company size as a moderating variable and is expected to be a reference in policy making by corporates management to increase its intellectual capital.disclosure.

Implication of Corporate Governance and Financial Performance on Firm Value

<p>This study seeks to examine the implications of corporate governance and financial performance on firm value. The population selected are all companies that follow CGPI (Corporate Governance Preception Index) scoring held by IICG (The Indonesian Institute for Corporate Governance) in 2015-2018. Sampling of the research is purposive sampling with samples criteria are public companies participate in CGPI scoring and publish their financial statements on Indonesia Stock Exchange’s website or publish on the official website of respective companies. The total population followed CGPI score was 137 companies, 55 of those are public companies and 5 samples are outlier data. The statistical test used in this research were descriptive statistics analysis and multiple regression analysis. This research results in findings that both simultaneously and partially there are implications for corporate governance and financial performance to firm value. Therefore, the implementation of corporate governance and financial information disclosure in companies is fundamental to realizing firm value.</p>

ANALYSIS OF FACTORS AFFECTING COMPANY USING DERIVATIVES

This study aims to determine the factors that influence companies in using derivatives. In this study, the factors studied were the cost of debt, foreign sales, risk management, and corporate governance on the company's decision to use derivatives. The analytical method used in this research is logistic regression analysis using the Statistical Product and Services Solutions software. A total of 60 samples were used in this study, which were 20 companies included in the Corporate Governance Perception Index survey from 2016 to 2018. The Corporate Governance Perception Index survey is a survey conducted by the Indonesian Institute for Corporate Governance. The results of this study indicate that the cost of debt variable has a significant effect on the decision to use derivatives by the company. The corporate governance variable also has a significant effect on the decision to use derivatives by the company. The foreign sales variable in this study does not have a significant effect on the decision to use derivatives by companies. The risk management variable does not have a significant effect on the decision to use derivatives by the company. In this study, there are also control variables, namely firm size and return on assets. In this study, the firm size variable does not have a significant effect on the decision to use derivatives by the company. Meanwhile, the return on assets variable has a significant effect on the decision to use derivatives by the company.

PENGARUH CORPORATE SOCIAL RESPONSIBILTY TERHADAP PROFITABILITAS DAN VALUE CREATION DENGAN GOOD CORPORATE GOVERNANCE SEBAGAI VARIABEL MEDIASI

The aim of this study is to determine the influence of Corporate Social Responsibility (CSR) on profitability and value creation by adding Good Corporate Governance (GCG) as mediating variable. Measurement of Corporate Social Responsibility (CSR) using the Kinder Lydenburg Domini (KLD) Social Ratings Data or Clarkson's (1995) RDAP Scale which is an indicator of assessment focused on stakeholders including environmental dimensions, dimensions of product quality , community relations dimensions, dimensions of diversity, as well as the dimensions of employee relations. Measurement of Good Corporate Governance (GCG) uses the Corporate Governance Perception Index (CGPI). Profitability is proxied by Return of Assets (ROA) while value creation is proxied by Economic Value Added (EVA). The study was conducted on companies that consistently received awards as Indonesia Most Trusted Companies in 2018 and 2019 by the Indonesian Institute for Corporate Governance (IICG) and were published in SWA Magazine. Using the purposive sampling method, a sample of 25 companies with a total of 50 annual reports, financial reports and sustainability reports was obtained. The results showed that Corporate Social Responsibility (CSR) had a positive and significant effect on profitability, but did not affect the value creation and Good Corporate Governance (GCG) were not able to mediate the influence of Corporate Social Responsibility (CSR) on profitability but were able to mediate the influence of Corporate Social Responsibility ( CSR) towards value creation.

THE EFFECT OF CORPORATE GOVERNANCE AND QUALITY OF REPORTING ON FIRM VALUES

The purpose of this study is to examine the effect of corporate governance and reporting quality on firm value. This study replicates the research conducted by Siagian in 2002. The study examined the effect of the corporate governance index and the quality of financial statement disclosures on firm value. However, this study has differences in the measurements used in Siagian research. In line with the changes in SAK, Bapepam issued a financial statement disclosure checklist whose use is based on Bapepam Rule number VIII.G.7. In this study, researchers aimed to examine the corporate governance index produced through research by The Indonesian Institute for Corporate Governance (IICG) and the quality of reporting using the new checklist standard issued by Bapepam in its influence on company value. This study uses secondary data, from companies registered in the Corporate Governance Perception Index (CGPI) in 20011-2013. The analytical method used is multiple linear regression. The results of this study indicate that the corporate governance index has a significant positive effect on firm value. However, the quality of reporting measured through the disclosure score of financial statements is negatively related and not significant to the value of the company. This shows that investors do not pay much attention to the quality of financial statement disclosures as a basis for determining investment decisions.

Analisis Pengaruh NPM, ROE DAN FIRM SIZE terhadap Nilai Perusahaan dengan GCG sebagai Variabel Intervening

The research objective was to examine the effect of Return On Equity (ROE) and Net Profit Margin (NPM and Firm Size on the company value (Price Book Value) with Good Corporate Governance (GCG) as an intermediate variable (Intervening). The research population was 77 companies based on The Indonesian Institute for Corporate Governance (IICG). One of the criteria used is the most trusted company and trusted company by The Indonesian Institute for Corporate Governance (IICG) during 2010 – 2018. Five companies meet the requirements as a sample of the total population meets the criteria. The method used is path analysis with the test equipment using Smart PLS (Partial Least Square). The test results show that ROE has a significant negative effect on GCG and ROE positively and significantly affects firm value (PBV). NPM does not affect GCG, and NPM has a negative and significant effect on PBV, while Firm size has a positive and significant effect on GCG, and Firm size has no effect on PBV. GCG has a positive and significant effect on PBV. GCG cannot mediate the effect of ROE on PBV, and GCG is not able to mediate the effect of NPM on PBV, while GCG is significantly able to mediate the effect of Firm Size on PBV.

Analysis of the Effect of Loan to Deposit Ratio, Non-Performing Loans and Capital Adequacy Ratio on Return on Assets with Good Corporate Governance as Intervening Variable in Banking Companies Listed in the Corporate Governance Perception Index (CGPI) for the Period 2014 – 2018

The purpose of this study was to examine the effect of loan to deposit ratio (LDR), non-performing loans (NPL), and capital adequacy ratio (CAR) on return on assets (ROA) in banking companies listed on the Indonesian Institute for Corporate Governance (IICG) in 2014-2018. This study uses Good Corporate Governance (GCG) as an Intervening variable. The use of intervening variables GCG in this study is a recent breakthrough in increasing return on assets. The sampling technique is purposive sampling. With this sampling method, the samples used in the study were 10 of the best banking companies implementing Good Corporate Governance registered in The Indonesian Institute for Corporate Governance (IICG) in 2014-2018. This study uses secondary data obtained from SWA Magazine publications. The analysis technique used in this study is path analysis. The results of the first structural equation model that LDR and NPL have a significant negative effect on GCG and CAR has a positive significant effect. The results of the second structural equation model that NPL, CAR, GCG have an influence on ROA, but LDR does not have a significant effect. The implication of this research is that GCG as a very large variable intervening plays a role in banks in increasing ROA.

The Effect of Financial Conditions, Growth, and Debt to Equity Ratio on Company Sustainability with Corporate Governance as a Moderating Variable

The purpose of this study is to get an empirical evidence whether financial condition, growth, and debt to equity ratio have a significant effect on company sustainability. Sample consists of companies that listed on Indonesian Stock Exchange since 2014 to 2017 and participating in the CGPI survey conducted by Indonesian Institute for Corporate Governance. Using multiple regression and moderated regression, the empirical results show that financial condition and debt to equity ratio has a significant positive effect on company sustainability, meanwhile growth does not have a significant effect in company sustainability. This study also try to get an empirical evidence whether corporate governance has a moderating effect to the relationship between financial condition and company sustainability, debt to equity ratio and company sustainability, growth and company sustainability. The result show that corporate governance does not have a moderating effect to the relationship between financial condition and company sustainability, debt to equity ratio and company sustainability, growth and company sustainability. Further study can use ASEAN CG Scorecard to obtain corporate governance scores and make a comparisons between industries.

Reaksi Pasar Atas Pengumuman Corporate Governance Perception Index

CGPI is the result of research from the Indonesian Institute for Corporate Governance (IICG) in collaboration with SWA magazine. This study aims to determine the reaction of the capital market on the CGPI announcement. The research was conducted at the company surveyed by CGPI for the period 2013-2016 by accessing the Indonesia Stock Exchange, IICG, Yahoo finance and SWA magazines. The population in this study were the companies surveyed by the Corporate Governance Perception Index (CGPI) for the period 2013-2016. The number of samples taken was 61 using the purposive sampling method. The data analysis technique used is the one sample t-test. Based on the results of the analysis, it was found that during the seven days of stock trading around the announcement of the Corporate Governance Perception Index (CGPI) without involving the comfounding effect (other announcements) there was no market reaction around the CGPI announcement date.
 Keywords: Corporate Governance Perception Index (CGPI), abnormal return, market reaction

CORPORATE GOVERNANCE SEBAGAI PEMICU PENGUNGKAPAN INTELLECTUAL CAPITAL PADA PERUSAHAAN DI INDONESIA

Intangible assets proxied by Intellectual Capital play an important role as the key to success and the trigger for the creation of company�s value. The current trend is that companies have not yet focused on Intellectual�Capital disclosure. With the implementation of Corporate Governance mechanism, it is expected to support�the disclosure of IC, so as to add values to the company.This study aims to analyze corporate governance mechanism as a trigger of Intellectual Capital disclosure to companies in Indonesia. The population of this study was companies included in the ranking of CG implementation conducted by The Indonesian Institute for Corporate Governance (IICG) in 2011, 2012 and 2013. The sample was taken by purposive sampling method.This study used secondary data, i.e. company�s annual report where then the data were processed with simple linear regression. The result showed that corporate governance did not have any influence to intellectual capital disclosure.

Pengaruh Corporate Governance Perception Index dan Ukuran Perusahaan Terhadap Harga Saham Perusahaan-Perusahaan yang Terdaftar di The Indonesian Institute of Corporate Governance dan Bursa Efek Indonesia

The background in this study aims to determine whether there is a partial and simultaneous influence between the Corporate Governance Perception Index (CGPI) and company size on the company's stock price listed in the Indonesian Institute for Corporate Governance (IICG) and the Indonesia Stock Exchange (IDX) period 2014-2016. The sampling technique uses purposive sampling method with a sample of 12 companies that are routinely registered during the 2014-2016 period at IICG and BEI. The method of data collection used is through descriptive research with a quantitative approach. The results of the study show multiple regression equations where Y = -4,266 + 0,30X 1 + 0,511X 2 . Correlation coefficient value (R) is 0.773, so it can be concluded that the relationship between CGPI and company size on stock prices is strong. The results of the R square determination coefficient are 0.597. The partial test results of the influence of firm size can be concluded that the firm size variable does not have a significant effect on stock prices. The partial test results of the influence of CGPI can be concluded that the CGPI variable has a significant effect on stock prices. The results of the f test in testing this hypothesis are shown that together the independent variables have a significant influence on the dependent variable. This can be proven from the Fcount value of 24.447 greater than Ftable of 3.280. So it can be concluded that the CGPI variable and company size have a significant influence on stock prices

The Effect of Corporate Governance and Firm Performance on Stock Price: An Empirical Study on Indonesia Stock Exchange

This research aimed to determine the effect of corporate governance and firm performance on stock prices. It was shown by Corporate Governance Perception Index (CGPI), Return on Assets (ROA), Total Asset Turnover (TATO), and firm size (SIZE) in the Indonesia Stock Exchange (IDX). Data sample used in this research was company listed on IDX during 2009-2012 and participated in CGPI of that period. Financial statement data and stock prices could be obtained from the IDX website and CGPI data were from the Indonesian Institute for Corporate Governance. Hypothesis test used in this research was a multiple linear regression analysis. As a result, the application of corporate governance and ROA give positive but insignificant effect on stock prices. Meanwhile, TATO and SIZE have a positive and significant effect on stock prices. Both variables of corporate governance and firm performance influence stock prices significantly.

The Effect of Internal Control Disclosure on Financial Information Quality and Market Performance distinguished by the Corporate Governance Index

Corporate disclosure practice of internal control in Indonesia remains non-mandatory and limited in nature. This study was conducted to analyze the level of internal control disclosure in the annual reports of Indonesian public corporations and identify its consequences on the firm’s market performance and financial information quality, which was differentiated by corporate governance index. This index refers to the Corporate Governance Perception Index released by the Indonesian Institute for Corporate Governance in 2014 and 2015. Based on the conducted content analysis, it can be concluded that the disclosure of internal control by public corporations in Indonesia is still at an intermediate level. The influence of extensive internal control information disclosure on market performance is strengthened by the accounting information quality. And the influence of the relationship between extensive disclosure and firm performance is different between CGPI-indexed companies and those which are unindexed by CGPI. The findings of this research contribute to future researches related to internal control disclosure. Limitations and suggestions can be found at the end of this study.

Pengaruh Corporate Governance Perception Index Terhadap Kinerja perusahaan dalam Masa Krisis Ekonomi Global

This research examines the infl uence of corporate governance toward corporate performance, in this case market performance and fi nancial performance. The rating of corporate governance perception index (CGPI) for 2008 until 2010 by The Indonesian Institute for Corporate Governance is used to measure the corporate governance implementation and Tobin’s Q as a market performance measurement with Return on Equity (ROE) and Return on Assets (ROA) as fi nancial performance measurement. The control variables used are leverage, age, type of industry and size of fi rm. This study is causal research which companies that scored CGPI and fi nancial statement during 2008-2010 were drawn using purposive sampling method. Research data are pooling data which combines time series and cross sectional data during the observation period 2008-2010. This research employs a multiple regression to test hypothesis that corporate governance and corporate performance are positively related. From the fi rst regression equation, the result of this study shows that there is influence between corporate governance perception index and market performance (Tobin’s Q) during crisis while the control variables have no effect on market performance unless leverage levels negatively affect the market performance of the company during the global economic crisis. The second regression equation shows that there is infl uence between corporate governance perception index and fi nancial performance (ROE) during crisis while the control variables have no effect on fi nancial performance (ROE). The third regression equation shows that there has no infl uence between corporate governance perception index (CGPI) and the control variables to fi nancial performance (ROA) during the global economic crisis 2008-2010. Keywords : corporate governance, Tobin’s Q value, return on equity, return on assets, leverage, age of fi rm, size of fi rm, type of industry

Corporate governance implementation rating in Indonesia and its effects on financial performance

PurposeThe purpose of this paper is to investigate the effect of corporate governance (CG) implementation rating conducted by the Indonesian Institute for Corporate Governance (IICG) on the financial performance of the selected companies.Design/methodology/approachThis paper is a hypothesis testing study to analyze CG implementation of 88 firms listed on the Indonesian Stock Exchange. The samples are companies that participated in the Corporate Governance Perception Index (CGPI) Awards in 2008-2012. A panel data regression analysis is conducted on the data collected from IICG reports and its financial statements.FindingsThe awareness regarding good corporate governance (GCG) enforcement in Indonesian companies has already increased. The listed companies that participated in CGPI Awards during 2008-2012 always experience an increase in both quantity and quality. CG rating of go-public companies in Indonesia affects their accounting-based financial performance, such as return on assets, return on equity and earnings per share. However, CG implementation rating is not directly responded by the Indonesian stock market and has not yet been able to increase the company’s growth in the short term.Research limitations/implicationsIn this study, CGPI rating in a related year is linked to market performance in the same year. Thus, further research may link CGPI rating to market performance in the next year, as the findings of this study show that GCG implementation is not directly responded by the market.Practical implicationsGCG implementation is required by stakeholders, as it may give a long-term positive impact. Thus, the government needs to stipulate regulations to increase the commitment of the company in implementing GCG. The company can improve the internal factors of the organization that does not support the establishment of GCG based on the findings during the survey of CGPI. Finally, investors and creditors may consider the CGPI rating for their investment decisions.Originality/valueThis study contributes to the literature in two ways. First, this study uses the comprehensive CG rating in Indonesia. Previous studies on CG rating focused on internal mechanism; in this study, the rating was assessed using four stages of continuous assessment: self-assessment, document evaluation, paper assessment and company visit, which was conducted by an independent team. Second, this study uses the CG index (compliance, conformance and performance) associated with a variety of accounting-based and market-based performance variables: financial performance, market value and growth.

Pengaruh Tanggung Jawab Sosial Perusahaan terhadap Kinerja Keuangan dengan Tata Kelola Perusahaan sebagai Pemoderasi

The aim of this study is to analyze the effect of corporate social responsibility (CSR) to financial performance with good governance as a moderating variable. Data was drawn from public companies which participate in the Corporate Governance Perception Index (CGPI) held by The Indonesian Institute for Corporate Governance (IICG) for year of 2009-2011. MRA (Moderated Regression Analysis) was used to analyze the data. The results show that empirically, financial performance was influenced by CSR, and good governance is moderating variable in relationship of CSR and financial performance. Keywords: corporate social responsibility, financial performance, good governance.

Good Corporate Governance and Cost of Debt: Listed Companies on Indonesian Institute for Corporate Governance

Corporate governance concept became stronger in Indonesia after the economic crisis that occurred in 1997 because of lack of legal, unestablished accounting and auditing standards, underegulated capital market, weak supervision of the Commissioners and the neglect of minority rights. To solve these problems, companies implemented corporate governance concept so that access to low cost-debt financing will be easily obtained. Therefore, corporate governance is a factor that cannot be ignored in decision making for creditors. This study aimed to analyze the effect of Good Corporate Governance (Board of Commissioners, Audit Committee, Managerial Ownership and Institutional Ownership) on Cost of Debt in companies listed in Indonesian Institute for Corporate Governance 2010-2013. The samples used were 10 companies. This research method is using path analysis to see the direct and indirect effect between Good Corporate Governance and Cost of Debt through Corporate Governance Perception Index as intervening variable. The results of this study showed that the variables of Good Corporate Governance (Board of Commissioners, Audit Committee, Managerial Ownership and Institutional Ownership) partially and simultaneously does not have a significant effect to the Cost of Debt in companies listed in Indonesian Institute for Corporate Governance 2010-2013.