ANALYSIS THE EFFECT OF GOOD CORPORATE GOVERNANCE IMPLEMENTATION TOWARDS PROFITABILITY IN THE MANUFACTURING COMPANIES LISTED IN INDONESIA STOCK EXCHANGE FOR THE PERIOD OF 2011 - 2013

Abstract

Implementing corporate governance (GCG) in an enterprise is not an easy process. Required consistency, commitment, and a clear understanding of all stakeholders the company on how the process should be run. Implementation of the practices of good corporate governance is an important step for the company to improve and maximize the value of the Company, pushing to manage the Company in a professional, transparent and efficient by increasing the principles of openness, accountability, trustworthy, responsible and fair so as to fulfill its obligations either to the Shareholders, Board of Directors, Board of Commissioners, and stakeholders. This reasearch used purposive sampling based on manufacturing companies index for the period of 2011 – 2013. This study used multiple regression model with 5% significant level. The objective of this study is to know the effect of good corporate governance implementation towards profitability of manufacturing companies listed in Indonesia Stock Exchange for the period of 2011-2013. The result of this research showed that the top share, board of directors, and composition of board of commissioners have significant effect towards profitability. Meanwhile, audit quality, board of commissioners, and audit committee have not significant effect towards profitability. Simultaneously, audit quality, top share, board of directors, board of commissioners, composition of board of commissioners, and audit committee have significant effect towards profitability with 18.8% adjusted R2.