Financial Performance and Corporate Governance: Its Effect on Market Performance

Nur Imamah, Saparila Worokinasih, Zeni Firdayani and Jung-Hua Hung

A chapter in Macroeconomic Risk and Growth in the Southeast Asian Countries: Insight from SEA, 2023, vol. 33B, pp 25-39 from Emerald Group Publishing Limited

Abstract: This chapter investigates the effect of financial performance and corporate governance on market performance, using evidence from the companies listed on the IDX30 Index of the Indonesia Stock Exchange (IDX) from 2015 to 2018. The authors use six main independent variables and one dependent variable, controlled by using control variables in the regression analysis. Ordinary least square (OLS) regression methods are used to model the relationship between the dependent variable and the independent variables. The results show that the current ratio (CR) and Board Size (BS) have a significant negative effect on stock return (SR). In contrast, the quick ratio (QR) and debt to equity ratio (DER) have a significant positive impact on SR. Both the debt to asset ratio (DAR) and Independent Board of Commissioners (BOC) have an insignificant effect on SR. This evidence suggests that the CR, QR, DER, and BS are essential factors affecting SR.

Keywords: Financial performance; corporate governance; market performance; stock returns; emerging market; Board Size; G3; G32; G34 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:isetez:s1571-03862023000033b002

DOI: 10.1108/S1571-03862023000033B002

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