Chapter V CONCLUSIONS AND RECOMMENDATIONS
B. The Results of Previous Research
38 between the sizes of the board of the company performance. Contrast with Hardikasari (2011), Jensen (1993), Lipton and L'orsch (1992) and Yermack (1996) said that the company has a large of board of director size cannot do the coordination, communication, and decision-making better than the company that has a smaller board of director.
39 Table 2.1
The Relevant Previous Research
Continued to next page No. Researcher
(Year) Title Variable
Result (Summary) Similarity Difference
1. Yonnedi and Yulia (2011)
Impact of Corporate Governance Mechanisms on Firm
Performance;
Evidence from Indonesia’s State – Owned Enterprises (SOEs)
Variable:
Board Size, Board of Independent and
profitability measured by ROA,
Variable: Role and
Responsibility board of directors, Sample: SOEs
Based on this study shed lights on the importance on corporate governance mechanisms in SOEs to improve its profitability.
More optimal corporate governance mechanisms.
system are needed that could
encourage the company to have efficient
governance in order to increase the firm’s performance.
2. Wijayanti and
Mutmainah (2012)
Analysis of the implementation of good corporate governance (GCG) effect of Application of Corporate Performance Governance on financial Performance banking on companies Listed in
Indonesia.Stock excange
(IDX) YEAR 2009-2011
Variable:
Board Size, profitability Measured by ROA, Independent of Executive
Variable:
Family members in the boards, independent non- executive director, Numbers of the board meetings in relation to corporate performance Sample: Banking
The results showed the size of the board of directors, the activity (meetings)
commissioners, the proportion of commissioners independent, and the number of audit committee and no significant negative effect
the financial performance of banks. The results of this study also shows the positive effect of
institutional ownership, but not significant to the financial
performance of the banking and sizes Companies positive and significant impact on financial performance banking company.
Overall the results show
that the lack of influence of corporate
40 Table 2.1 ( Continued )
Continued to next page No. Researcher
(Year) Title Variable
Result (Summary) Similarity Difference
3. Setyorini (2013)
The Effect of Good
Corporate Governance Management To Profit On SOE
Company That Has Go Public In Indonesia Stock Exchange (IDX)
Variable:
Profitability, Independent Commission ers, Sample:
Manufacturi ng
Companies listing in indonesia
Variable:
the existence of audit committees.
management of earnings.
Sample:
Company SOE.
Based on the results concluded that the
proportion of commissioners independent, board size and existence of audit committee does not have a significant effect on earnings management in state-owned companies which went public on the stock exchanges of Indonesia.
4. Febriyanto (2013)
Analysis of the implementation of good
corporate governance of the company
Variable:
board of directors, board of
commissioners, managerial ownership and institutional ownership, profitability
Variable:
shareholders’
grievance committee, protection of minority stockholders’rig hts weaker, shareholders;
and report on CG, family concentrated stock ownership.
The results find that managerial and institutional ownership are related and there are significant interrelationships.
The managerial ownership is negatively related to institutional ownership.
However, this research failed to find the
interrelationship among board structure and corporate ownership
41 Table 2.1 ( Continued )
Sources Various of research journal No. Researcher
(Year) Title Variable
Result (Summary) Similarity Difference
5. Haryani et al (2011)
The effect on the
performance of mechanism of corporate governance:
Transparency
Variables:
Board size including executive, independent executive, corporate performanc e.
Variables:
Transparansi, corporate performance as measured by Tobin's Q.
relationship between mechanisms of corporate governance and organizational performnace, this study examine the influence of corporate governance mechanisms on firm performance with
transparency as an intervening variable. This research was conducted with a purposive
sampling method of secondary data from annual reports of companies listed in Indonesia Stock Exchange in 2007 and
analyzed with multiple regression.
Corporate governance mechanisms are analyzed on firm performance (Tobin's Q) and the transparency of corporate governance, performance
\extended with path analysis.
42 C. Theoretical Frameworks
Theoretical framework is networked of associations that organized. As logically elaborate between variables which relevant with situations and problems identified through processes such as interviews, observations, and literature survey, (Sekaran, 2009:127). The conceptual framework will connect the independent variables with the dependent variable. So, when there are other variables that accompany the role of the variable to be explained.
In this study, which is the independent variable is Board of Commissioners size, independent Board of Commissioners composition, institutional ownership, managerial ownership, Board of Directors size and the dependent variable is the Profitability measure by Return on assets. ( The table 2.2 in the next page )
43 Table 2.2 Theoretical Framework
The effect of good corporate governance on Profitability empirical study on manufacture companies listed in Indonesia Stock Exchange period 2012-2015
Good corporate governance is a key element in improving the profitability which includes a series of relationships between management, the board and stakeholders
Classic Assumptions and Hypothesis Test
Test result and analysis
Conclusion, Implication, Suggestion
Independent Variable Dependent Variable
Board of Commissioners (BOC) size (X1)
Independent Board of Commissioners(INBOC) (X2)
Institutional Ownership (X3)
Managerial Ownership (X4)
Board of Directors (BOD) size (X5)
Profitability (Return on assets )
44 D. Hypothesis
H1: There is effect of Board of Commissioners size on profitability.
H2: There is effect of Board of Directors size on profitability.
H3: There is effect of Independent Board of Commissioners composition on profitability.
H4: There is effect of institutional ownership on profitability.
H5: There is effect of managerial ownership on profitability.
45
CHAPTER III
RESEARCH METHODOLOGY A. Scope of Research
This research involved variables comprising five independent variables (Independent), one dependent variable (dependent)and this research is empirical study of hypothesis testing with using causalities research method to determine the effect between the independent variables (variables that effect) and the dependent variable (the variable that is effected). The independent variable in this research are Board of Commissioners size, independent Board of Commissioners composition, institutional ownership, managerial ownership and Board of Directors size. The dependent variable in this research is profitability as measured by Return on assets (ROA).by aimed to examine the effect of good corporate governance on profitability in manufacture companies that listed in Indonesia Stock Exchange for period 2012-2015.
This research is a quantitative research. It take place in Indonesian Stock Exchange (IDX) with manufacture company as the research object. The type of data used in this research is secondary data. The data of Board of Commissioners size, independent Board of Commissioners composition, institutional ownership, managerial ownership and Board of Directors size, and profitability are taken from the financial report of manufacture company listed in Indonesian Stock Exchange period 2012-2015.
46