Philippine E-Journals

The Effect of Good Corporate Governance and Information Transparancy on Corporate Financial Performance in Banking Industries in Indonesia

Supriyati Supriyati | Bambang Tjahjadi | Heru Tjaraka

Discipline: Business Management

 

Abstract:

Banking industries have grown rapidly as indicated by the increasing number of banking industries listed in Indonesia Stock Exchange (ISE). Bank Indonesia, the central bank, demands that all banks conduct a good governance as it can increase the disclosure of financial and non-financial information. This study aims to test empirically the impact of corporate governance and CSR on financial performance. The data collected from the banks’ annual financial statements listed in Indonesia Stock Exchange (ISE) in 2008-2015 and GCG report of the banks. It shows that GCG has a significant effect on corporate value, profitability, the audit report lag, and the information asymmetry except on the tax avoidance. In addition, this study also shows that CSR could not affect all the dependent variables except the company’s value. And, CSR could not either moderate the effect of corporate governance on the dependent variables. Banking industries tend to produce a good performance shown on the achievement of maximum profit so the banks have to select accounting policies. GCG is good for companies’ value, profitability, the audit report lag, and the information asymmetry. However, CSR only has an impact on the company value but could not moderate the effect of GCG on other variables.