Manajemen S-1, Vol. 1 (2013) No. 1

Board Governance Characteristics And Firm Performance

Widia Mariska

Abstract

This paper deals with the relationship between board governance characteristics and firm performance of manufacturing industry in Indonesia. Board governance in Indonesia follows Continental European’s two-tier board structure with slight modification under the Indonesian Company law. A sample of 64 listed manufacturing firms in the ISX between 2009-2011 was selected for the purpose of the study. The result indicates that board size have a positive impact on firm’s performance while board independence has negative impact on Return on Sales but has no relation to Return on Assets, whereas board-meeting frequency and female representation on board have no relations to firm performance. The result implies that the relationship between board governance characteristics and firm performance under the two-tier regime in Indonesia, do not follow similar pattern as the country which adopted single-tier board structure. It might be argued that board governance mechanism works differently across country influenced by the country’s governance orientation.

cite this paper     download