THE INFLUENCE OF CORPORATE

GOVERNANCE ON THE
PERFORMANCE OF
MANUFACTURING COMPANY
WITH EVA APPROACH

CREATED BY :
RINA DIANITA
115020307121027

Department of Accounting
Faculty of Economics and Business
University of Brawijaya
Malang
Background
Good Corporate Governance
mechanism : Structure, system or process
that govern the management of the
company to generate long-term economic
value that is sustainable for shareholders
and other stakeholder.
Transparency
Accountability
Responsibility
Independency
Fairness
Background
EVA (Economic Value Added) is a method of measuring the
financial performance to calculate the actual economic
benefits from a company. Singgih (2005) stated that EVA is
a method that takes into account the cost of capital as a
replacement for the companys risk is believed to be an

appropriate method for measuring the company value.

Purpose of the Study:
1. To analyze the influence of size of Independent Board of
Commissioners toward the EVA.
2. To analyze the influence of Institutional Ownership toward
the EVA.
3. To analyze the influence of Managerial Ownership toward
the EVA.
4. To analyze the influence of Audit Committee toward the
EVA.
Research Framework
Theory Base :
Agency Theory

The Size of the Independent

Board of Commissioners

Institutional Ownership
Company Performance
(EVA)
Managerial Ownership

The Size of the Audit

Committee
 Hypothesis
H1: The proportion of Independent Board of
Commissioner has a positive effect on Company
Performance (EVA)

H2: The proportion of Institutional Ownership has a

positive effect on Company Performance (EVA)

H3: The proportion of Managerial Ownership has a

positive effect on Company Performance (EVA)

H4: The Audit Committee has a positive effect on

Company Performance (EVA)
Research Methodology
Secondary data
Annual financial statement

Population
Manufacturing companies in industry and chemical sector
listed in Indonesian Stock Exchange 2012-2013

Samples
Purposive Sampling
No. Sample Criteria
1. Company are listed on BEI 2012-
2013 period and publishing its
financial statement until December
31.
2. Company does not earn a profit in
20 companies
succession during the observation
period.
3. Company does not have data on
managerial ownership in succession
during the observation period.
 Research Methodology
Data collection method:
Documentation and pooling
Data analysis method:

1. Normality test
2. Multicollinearity test
3. Heteroscedasticity test
4. Autocorrelation test
Independent Variable Dependent Variable
1. Independent Board of
Comissioners (X1)
2. Institutional
Company
Ownership(X2)
performance (Y)
3. Managerial Ownership
(EVA)
(X3)
4. Audit Committee (X4)
Research Methodology
Hypothesis Testing
1. Simultaneous regression test (F test)
- If the calculated value is > a, where a =5%, then H0: accepted and
HA: rejected.
- If the calculated value is < a, where a=5%, then H0: rejected and
HA: accepted
2. Determination Coefficient (R2 test)
- Determination coefficient value is between zero and one
3. The significance of individual parameter test (t-test)
- If the p-value is smaller than 0.05, then H0 is rejected, this means
that the regression coefficient is not significant
- If the probability < 0.05 then corporate governance significant
effect on the company's performance
- If probability > 0.05 then corporate governance significant effect on
the financial performance
Results
variable B T count Significanc Explanatio
e n
Constant -
9026,50
3
Independent 443,943 0,810 0,426 Not
commissione Significant
r
Institutional 4,464 0,054 0,957 Not
ownership Significant

Managerial 154,139 2,145 0,043 Significant

ownership
Audit -210,355 -1,362 0,187 Not
committee Significant
Discussions
b1 = the coefficient of regression variables are independent
Commissioners (X 1) score is 443.943. This score has a
positive sign which shows that the variable and the
company's performance (Y) has a unidirectional relationship.
b2 = regression coefficient institutional ownership variable
(X2) score is 4.464 with positive sign. This result indicates
that the variable and company's performance (Y) has a
unidirectional relationship.
b3 = regression coefficient managerial ownership variable
(X3) score is 154.139 and has a positive sign. It shows that
the variable and company's performance (Y) has a
unidirectional relationship.
b4 = regression coefficient audit committee variable (X4)
score is -210.355 and has a negative sign indicating that
this variable and company's performance (Y) have an
inverse relationship.
Conclusions
The size of independent Commissioners in the
industry and chemical sectors of manufacturing
company has no effect on company performance
(EVA).
Institutional Ownership in the industry and
chemical sectors of manufacturing company has
no effect on company performance (EVA).
Managerial ownership in the industry and
chemical sectors of manufacturing company has
significant effect on company performance (EVA).
The size of audit committees in the industry and
chemical sectors of manufacturing company has
significant effect on company performance (EVA).