The Influence of Corporate Governance Mechanism on Performance of Manufacturing Listed Companies in Indonesia Stock Exchange

Interest differences between pricipals and agents could lead into agency conflicts. Procedure control mechanisms are needed to prevent clashes, as well as harbour and concord these interests between the stakeholders through corporate governance. Corporate governance refers to systems, processes, structures, and sets of regulations that control the stakeholders to achieve efficient and fruitful corporate performances. The aim of this research is to determine the effects of of CG mechanisms on company performances. CG mechanisms were proxied by management and institutional ownership, audit committee, independent commissioners, and debt to equity; whereas company performances were measured by CFROA (financial performances) and Tobin’s Q (market performances). Samples were obtained from manufacture companies listed in Indonesian Stock Exchange from 2013 to 2017. Sampling technique used was purposive sampling. 44 companies were sampled with summed observations of 220. This research used panel data analysis method. The result showed management and institutional ownership, audit committee, independent commissioners, and debt to equity simultaneously and significantly affected corporate performances (CFROA and Tobin’s Q). Management and institutional ownership, as well as independent commissioners increased CFROA. On the other hand, audit committee and debt to equity positively affected Tobin’s Q (market performances).