Corporate Governance and Firm Performance: An Empirical Analysis

ABSTRACT : This study examines the impact of corporate governance mechanisms on firm performance among multisector companies listed on the Indonesia Stock Exchange (IDX) during the 2019–2023 period. Corporate governance is proxied by institutional ownership, managerial ownership, audit committee effectiveness, and the board of commissioners. At the same time, firm performance is measured using Return on Assets (ROA) and Return on Equity (ROE). Employing a quantitative explanatory approach with an ex post facto research design, this study utilizes secondary data derived from annual reports and financial statements. Statistical analyses include descriptive statistics, normality testing, and regression analysis. The findings reveal that institutional ownership and audit committee effectiveness have a positive and significant effect on firm performance, indicating that stronger monitoring mechanisms enhance managerial accountability, financial transparency, and operational efficiency. Conversely, managerial ownership and board size do not show a significant influence, suggesting that managerial shareholding proportions and board structures in the sampled firms may not be sufficient to effectively align managerial and shareholder interests. These results support agency theory, which emphasizes the role of governance mechanisms in mitigating agency conflicts and improving corporate outcomes. Overall, the study highlights the critical importance of robust corporate governance practices in enhancing financial performance and strengthening investor confidence in emerging markets.