The relationship between corporate governance and firm performance: An empirical analysis of Indonesian companies

Husnah (), Aryati, Ramlawati and Mochammad Fahlevi ()
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Husnah: Department of Management, Faculty of Economics and Business, Tadulako University, Indonesia
Aryati: Faculty of Economics and Business, Muslim Indonesia University, Indonesia
Ramlawati: Faculty of Economics and Business, Muslim Indonesia University, Indonesia

Journal of Economics and Business Letters, 2023, vol. 3, issue 3, 49-52

Abstract: This study investigates the relationship between corporate governance practices, as measured by the Corporate Governance Perception Index (CGPI) scores, and firm performance (ROA, ROE, EPS) of publicly-listed Indonesian firms. Using a panel dataset of 112 firms over five years (560 observations), fixed and random effects models are applied. Results show a positive and statistically significant association between higher CGPI scores and improved performance metrics, even after controlling for firm size and industry type. This underscores the strategic role of corporate governance in enhancing financial performance, attracting investors, and fostering long-term growth in Indonesia’s competitive and globalized economy.

Keywords: Corporate governance; Firm performance; Corporate Governance Perception Index (CGPI); Indonesia; ROA; ROE; EPS (search for similar items in EconPapers)
JEL-codes: G30 G34 M48 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:prv:jeblpv:224

DOI: 10.55942/jebl.v3i3.224

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