The Moderation Effect of Corporate Governance Mechanisms on The Relationship Between Capital Structure and Company Performance (Empirical Study on Insurance Companies Listed on The Indonesian Stock Exchange 2019 – 2022)

Wike Wulandari, Dwiyani Sudaryanti, Dewi Diah Fakhriyyah

Abstract


The significance of Company Performance extends to enhancing shareholder value, boosting employee morale, solidifying industry standing, intensifying market competition, fulfilling stakeholder expectations, and adhering to regulatory standards. Enhanced performance not only elevates the prosperity of shareholders but also augments the company's overall value. This study aims to investigate the impact of Capital Structure on Company Performance, emphasizing the moderating effect of Corporate Governance mechanisms. A quantitative approach is adopted, and the research relies on secondary data obtained from the Indonesia Stock Exchange (IDX) for this correlational analysis. The analysis encompasses annual report data from financial entities within the insurance sub-sector from 2019 to 2022, incorporating 68 datasets. The selection of these samples was conducted through a purposive sampling technique. SmartPLS 3.0 was used as this investigation's analytical instrument, employing Partial Least Square (PLS) path analysis. The outcomes indicated a minimal effect of Capital Structure on Company Performance. Moreover, the research ascertained that the effect of Capital Structure, as quantified by the debt-asset ratio (DAR), on Company Performance, assessed through the Return on Assets (ROA), remains insignificant even when considering the moderating variable of Commissioner's Size. The effect of capital structure (DAR) on company performance (ROA) with board size as a moderating variable is insignificant. 4. Capital Structure (DAR) on Company Performance (ROA) with Audit Committee Size as Moderating Variable's effect is insignificant.

Keywords: Corporate governance, capital structure, company performance


Full Text:

PDF

References


Davies, S., Parker, C., Australia., I. of C. A. in, & CPAs., A. S. of. (1995). Accounting and auditing handbook 1995: incorporating all standards as of 1 November 1994. BOOK, Sydney: Prentice Hall.

Eisenhardt, K. M. (1989). Agency Theory: An Assessment and Review. The Academy of Management Review, 14(1), 57–74. https://doi.org/10.2307/258191

Ghozali, I. (2014). SEM metode alternatif dengan menggunakan Partial Least Squares (PLS).

Komite Nasional Kebijakan Governance (KNKG). 2006. Pedoman Umum Good Corporate Governance Indonesia. Jakarta.

Pandey, I. M. (2001). Capital Structure and the Company Characteristics: Evidence from an Emerging Market, Working Paper: 2001-10-04, Indian Institute of Management, Ahmedabad, India.

Sianturi, F.I. (2016). Pengaruh Penerapan Good Corporate Governance (Gcg)Terhadap Nilai Perusahaan (Studi Empiris pada Perusahaan Pertambangan yang Terdaftar di BEI Tahun 2010-2015).

Suciati, R. (2021). Analisis rasio solvabilitas terhadap kinerja perusahaan di sektor perdagangan indonesia. https://doi.org/10.29264/JINV.V17I2.9226

Undang-Undang Republik Indonesia Nomor 40 Tahun 2007 Tentang Undang-undang (UU) Tentang Perseroan Terbatas.


Refbacks

  • There are currently no refbacks.


e_Jurnal Ilmiah Riset Akuntansi is indexed by:

e_Jurnal Ilmiah Riset Akuntansi is licensed under a Creative Commons Attribution 4.0 International License