THE RELATION OF CORPORATE GOVERNANCE TO FIRM PERFORMANCE AND MANAGEMENT COMPENSATION AS MEDIATING VARIABLE
Abstract: The objective
of this research
is to investigate
influence of corporate
governance to management
compensation and subsequent firm performance. This study uses data from manufacture
companies that listed in Jakarta Stock Exchange for the financial reporting in
2003 – 2005 periods. The sample consists of 198 observations over a three-year
period for 66 publicly traded firms. The mechanism of corporate governance is
to be proxy by managerial ownership and
number of commissioner proportion
board. Management compensation
is measured using sum of
remuneration that reported in audited financial reporting. Firm performance is
to be proxy by return on assets (ROA) and return on equity (ROE) after
compensation is awarded. The result was showed that managerial ownership and
number of commissioner proportion
board giving significant
positive impact to
management compensation. Even though, managerial ownership as one of
mechanism of corporate governance has negative coefficient to management
compensation. This study was find that corporate governance and management
compensation was not impact to subsequent firm performance. This result was indicated
that compensation did not designed optimally and corporate governance did not work
effectively.
Author: eNdANg surAsetyo
NiNgsih, WidA FAdhliA dAN rAhmAWAty
Journal Code: jpakuntansidd120327
