Implement effective GCG policies

Oct 13, 2025 by talynt.org 36 views

The Effect of Good Corporate Governance, Company Size, and Ownership Structure on Financial Performance in Food and Beverage Companies on the Indonesia Stock Exchange

Introduction

Good corporate governance (GCG) is a crucial aspect of a company's success, particularly in the food and beverage industry. The Indonesia Stock Exchange (IDX) is home to numerous food and beverage companies, and understanding the factors that influence their financial performance is essential for investors, regulators, and company management. This study aims to explore the effect of GCG, company size, and managerial ownership structure on the financial performance of food and beverage companies listed on the IDX during the 2010 to 2016 period.

The Importance of Good Corporate Governance

Good corporate governance is a set of principles and practices that ensure a company is managed in a transparent, accountable, and responsible manner. It involves the implementation of policies and procedures that promote fairness, accountability, and transparency in the company's operations. In the context of this study, GCG refers to the presence of independent commissioners, audit committees, and other governance mechanisms that promote accountability and transparency.

Company Size and Financial Performance

Company size is another critical factor that influences financial performance. Larger companies may have better access to resources, technology, and talent, which can lead to improved financial performance. In contrast, smaller companies may struggle to compete with larger rivals and may experience financial difficulties. This study aims to investigate the relationship between company size and financial performance in the food and beverage industry.

Ownership Structure and Financial Performance

Ownership structure is another important factor that influences financial performance. Managerial ownership, in particular, can have a significant impact on a company's financial performance. Managers who have a greater interest in the company are more likely to prioritize financial performance and make decisions that benefit the company. This study aims to investigate the relationship between managerial ownership and financial performance in the food and beverage industry.

Research Methods

This study employed a quantitative approach, using data from 17 food and beverage companies listed on the IDX. The data was collected from the official website of the IDX and consisted of financial statements and governance data for the period 2010 to 2016. The study used descriptive statistical analysis and multiple regression analysis to investigate the relationships between GCG, company size, managerial ownership, and financial performance.

Research Results

The results of this study show that partially, independent commissioner variables, audit committees, company size, and managerial ownership have no significant influence on the company's financial performance. However, when tested simultaneously, these variables show a significant effect on financial performance. This suggests that the interaction between these variables can have a stronger impact on financial performance.

Additional Analysis

The simultaneous influence of the independent commissioner, audit committee, company size, and managerial ownership shows that the interaction between these variables can have a stronger impact on financial performance. For example, independent commissioners and audit committees have an important role in increasing transparency and accountability, which in turn can increase investor confidence and company performance. The size of the company also plays an important role, as larger companies may have better access to resources and technology, as well as the ability to deal with more intense competition. Likewise, managerial ownership can have a significant impact on financial performance, as managers who have a greater interest in the company are more likely to prioritize financial performance and make decisions that benefit the company.

Conclusion

Overall, this research highlights the importance of considering the interaction between various elements of good corporate governance and ownership structure in influencing the company's financial performance. These results provide insight for stakeholders, including company management, investors, and regulators, to pay more attention to the implementation of GCG policies and effective ownership structures in order to improve the company's financial performance in the future. This research also opens opportunities for further research to understand other factors that might affect financial performance in the same sector.

Recommendations

Based on the findings of this study, the following recommendations are made:

Implement effective GCG policies: Companies should implement effective GCG policies that promote transparency, accountability, and responsibility.
Increase managerial ownership: Companies should encourage managerial ownership to promote a sense of ownership and responsibility among managers.
Monitor company size: Companies should monitor their size and adjust their strategies accordingly to ensure they remain competitive.
Invest in technology and resources: Companies should invest in technology and resources to improve their financial performance.
Conduct regular audits: Companies should conduct regular audits to ensure compliance with GCG policies and regulations.

Limitations

This study has several limitations, including:

Sample size: The sample size of this study is relatively small, which may limit the generalizability of the findings.
Data availability: The data used in this study is limited to the period 2010 to 2016, which may not reflect the current market conditions.
Measurement error: The measurement of GCG, company size, and managerial ownership may be subject to measurement error, which may affect the accuracy of the findings.

Future Research Directions

This study opens opportunities for further research in the following areas:

Investigating the impact of GCG on financial performance: Future studies should investigate the impact of GCG on financial performance in other industries and contexts.
Examining the relationship between company size and financial performance: Future studies should examine the relationship between company size and financial performance in other industries and contexts.
Investigating the impact of managerial ownership on financial performance: Future studies should investigate the impact of managerial ownership on financial performance in other industries and contexts.

Conclusion

In conclusion, this study highlights the importance of considering the interaction between various elements of good corporate governance and ownership structure in influencing the company's financial performance. The findings of this study provide insight for stakeholders, including company management, investors, and regulators, to pay more attention to the implementation of GCG policies and effective ownership structures in order to improve the company's financial performance in the future.
Frequently Asked Questions (FAQs) about the Effect of Good Corporate Governance, Company Size, and Ownership Structure on Financial Performance in Food and Beverage Companies on the Indonesia Stock Exchange

Q: What is good corporate governance (GCG)?

A: Good corporate governance (GCG) refers to the set of principles and practices that ensure a company is managed in a transparent, accountable, and responsible manner. It involves the implementation of policies and procedures that promote fairness, accountability, and transparency in the company's operations.

Q: Why is GCG important for food and beverage companies?

A: GCG is important for food and beverage companies because it helps to promote transparency, accountability, and responsibility in the company's operations. This can lead to improved financial performance, increased investor confidence, and better relationships with stakeholders.

Q: What is the relationship between company size and financial performance?

A: The relationship between company size and financial performance is complex. Larger companies may have better access to resources, technology, and talent, which can lead to improved financial performance. However, smaller companies may struggle to compete with larger rivals and may experience financial difficulties.

Q: How does managerial ownership affect financial performance?

A: Managerial ownership can have a significant impact on financial performance. Managers who have a greater interest in the company are more likely to prioritize financial performance and make decisions that benefit the company.

Q: What are the implications of this study for food and beverage companies?

A: The findings of this study suggest that food and beverage companies should pay more attention to the implementation of GCG policies and effective ownership structures in order to improve their financial performance. This may involve increasing managerial ownership, investing in technology and resources, and monitoring company size.

Q: What are the limitations of this study?

A: This study has several limitations, including a relatively small sample size, limited data availability, and potential measurement error.

Q: What are the future research directions for this study?

A: Future research directions for this study include investigating the impact of GCG on financial performance in other industries and contexts, examining the relationship between company size and financial performance in other industries and contexts, and investigating the impact of managerial ownership on financial performance in other industries and contexts.

Q: What are the practical implications of this study for regulators and policymakers?

A: The findings of this study suggest that regulators and policymakers should pay more attention to the implementation of GCG policies and effective ownership structures in order to improve the financial performance of food and beverage companies. This may involve developing and enforcing regulations that promote GCG and effective ownership structures.

Q: What are the implications of this study for investors and stakeholders?

A: The findings of this study suggest that investors and stakeholders should pay more attention to the implementation of GCG policies and effective ownership structures in order to improve the financial performance of food and beverage companies. This may involve conducting due diligence on companies and evaluating their GCG and ownership structures.

Q: What are the implications of this study for company management?

A: The findings of this study suggest that company management should pay more attention to the implementation of GCG policies and effective ownership structures in order to improve the financial performance of the company. This may involve increasing managerial ownership, investing in technology and resources, and monitoring company size.

Q: What are the implications of this study for the Indonesia Stock Exchange?

A: The findings of this study suggest that the Indonesia Stock Exchange should pay more attention to the implementation of GCG policies and effective ownership structures in order to improve the financial performance of food and beverage companies listed on the exchange. This may involve developing and enforcing regulations that promote GCG and effective ownership structures.