Print ISSN: 2204-1990

Online ISSN: 1323-6903

Keywords : Audit Committee


THE INFLUENCE OF CORPORATE GOVERNANCE ON FIRM PROFITABILITY: A STUDY OF THE FIRMS LISTED ON INDIA’S NSE 500

Ruby Mary Notts, Dr. Amitava Roy

Journal of Contemporary Issues in Business and Government, 2022, Volume 28, Issue 3, Pages 633-651
DOI: 10.47750/cibg.2022.28.03.049

A robust corporate governance is imperative in creating sound corporate culture of
consciousness, lucidity and openness which in turn enables a company's management achieve
its objectives in a way that maximizes profits. The given studyaims to empirically evaluate
the association of firm profitabilitywith various corporate governance mechanisms, for firms
traded on the NSE 500. The time period for our studyranges from 2013 to 2020 - using
Ordinary Least Squares as the method of estimation. We used two estimates of firm
profitability – Return on Assets (ROA) and Net Profit Margin (NPM). The analysis
established significant favourable association between ROA and independent directors’as a
proportion of the boards, total number of board meetings held, number of board committees
and audit committee presence.With respect to NPM, results showed that it was significantly
and favourably impacted by the proportion of non-executive directors on the boards, total
number of board meetings, total number of board committees prevalent in the company and
firm size. However, board size,audit committee presence and independent directors as a
proportion ofaudit committees indicated a negative impact on NPM.

The Effect of Corporate Governance on Earnings Management

PETRUS PELENG RORENG

Journal of Contemporary Issues in Business and Government, 2021, Volume 27, Issue 3, Pages 1001-1007
DOI: 10.47750/cibg.2021.27.03.134

This study aimed to examine the effect of corporate governance on earnings management. Independent variables used in this study are the proportion of independent board, audit committee, the structure of managerial ownership and institutional ownership structure. The ratio of independent commission was measured to study the percentage of the number in the independent board to entire board of commissioners in the company. Audit committee in this research do, that was calculated by adding up the audit committee in the company. The managerial ownership structure is measured by the percentage of shares owned by managers of the total shares outstanding. The institutional ownership structure is measured by the percentage of shares owned by the institutions of the total shares outstanding. Earnings management as the dependent variable proxied by discretionary accruals and is calculated by the modified Jones model.
This research was conducted using data from documentation using www.idx.co.id, Indonesian Capital Market Directory (ICMD). The method of analysis used in this study is multiple linear regressions. This study used a sample of manufacturing firms listed on the Indonesia Stock Exchange (IDX) 2013-2016.
The results showed the simultaneous variable proportion of independent board, audit committee, the structure of managerial ownership and institutional ownership structure have a significant effect on earnings management. However, only the precarious balance of independent board is a substantial effect on earnings management.