4346++[English+Translation]+Template+Ekonomi

Jurnal Ekonomi
Volume 13, Number 01, 2024, DOI 10.54209/ekonomi.v13i01

ESSN 2721-9879 (Online)
https://ejournal.seaninstitute.or.id/index.php/Ekonomi
The Effect of Corporate Governance, Company Growth and Debt Policy

on Financial Performance in Technology Sector Companies
Listed on the Indonesian Stock Exchange
For the Period 2017-2021
Amzi J.M.Y1, Heri Ispriyahadi2, Kholil3

1,2,3
Master of Management, Sahid University Jakarta
Article Info ABSTRACT

Keywords: Good Corporate Governance constitutes a framework that positively
Corporate Govermance influences a company's financial performance. This research aims to
Company Growth ascertain and analyze the impact of Corporate Governance, company
Debt Policy growth, and debt policy on technology sector companies listed on the
Financial Performance Indonesia Stock Exchange from 2017 to 2021. The research utilizes
secondary data extracted from annual reports accessible on the IDX website
via www.idx.co.id covering a five-year period (2017-2021). Statistical
analysis is conducted employing SPSS Version 25.0. Hypothesis testing is
carried out using the F test and T test. Partial results indicate that the
independent board of commissioners (DKI) and company growth (PP)
significantly affect financial performance (ROA) among companies listed on
the IDX during 2017-2021. Conversely, institutional ownership (KI),
managerial ownership (KM), and debt policy (DER) demonstrate no
significant impact on financial performance (ROA) within the same
companies and period. Thus, it is advisable for companies to sustain and
enhance their financial performance to achieve profitable outcomes,
involving all stakeholders in the process.
This is an open access article Corresponding Author:
under theCC BY-NClicense Amzi J.M.Y
Master of Management, Sahid University Jakarta
[email protected]
INTRODUCTION
The Covid-19 pandemic made its initial entry into Indonesia on March 2, 2020, following
the examination of 339 individuals (Ministry of Health of the Republic of Indonesia, 2020).
This global pandemic has precipitated an economic downturn in countries worldwide.
Governmental policies aimed at curbing the spread of the coronavirus, such as cross-border
lockdowns, have led to the cessation of various business activities. Despite these
challenges, companies are still required to devise financial plans to mitigate the long-term
repercussions stemming from the Covid-19 outbreak, thereby enhancing the company's
financial performance. Financial performance evaluation serves as a tool to demonstrate
the effectiveness and efficiency of a company's accomplishments (Rahmani, 2020).
Indryanti (2018) asserts that company performance refers to the capability of the company
to execute all operational activities. Evaluating company performance is crucial as it
The Effect of Corporate Governance, Company Growth and Debt Policy on Financial
Performance in Technology Sector Companies Listed on the Indonesian Stock
Exchange For the Period 2017-2021–Amzi J.M.Y et.al
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influences the perception of the company's leadership regarding the effectiveness of future
management. A favorable financial performance of a business is typically evidenced by its
profitability, prompting stakeholders such as creditors, suppliers, and investors to assess
the company's ability to generate profits from sales and investments. Increased business
profitability signifies the success of the business in maximizing profits (Yuriah, Kartini, and
Isnaeni 2022).
Firm value can be assessed through ROA, which stands for return on assets. The
utilization of the ROA metric is common due to its ability to indicate the company's
effectiveness in generating profits (Hamid et al., 2022). The profitability factor is
determined by the company's asset side which can be seen from the company's growth, the
debt side, and also the internal management side, namely Good Corporate Governance in
the company (Hamid et al., 2022). The phenomenon that arises in technology companies is
a decrease in financial performance or ROA in GoTo and Grab companies which has the
potential to cause employee layoffs. It is estimated that the loss of both during the covid-
19 pandemic until 2022 is 344 T.
Hence, Good Corporate Governance stands as one of the systems that positively
influence a company's financial performance. The implementation of Good Corporate
Governance offers considerable protection for investors, shareholders, and creditors,
fostering their confidence in the company. Corporate profitability, a key metric for assessing
financial performance, is subject to fluctuations influenced by various internal and external
factors affecting the company's operations (Mohamad Agus Salim Monoarfa et al., 2020).
In Indonesia, various instances of poor corporate governance have been observed
among large companies, such as PT Lippo Tbk and PT Kimia Farma Tbk, which involve
financial statement manipulation or fraudulent activities. The inadequacy of governance
practices within these companies indicates shortcomings in the size of the board of
directors, company scale, board of commissioners, and audit committee performance.
Investors can discern this situation by examining the company's performance report, which
includes indicators such as profitability (Sari and Setyowati, 2017). Indriati (2018)
conducted research revealing that Corporate Governance (GCG), as assessed through the
presence of Independent Commissioners, Audit Committees, and Managerial Ownership,
significantly influences the company's financial performance. Similarly, Sari et al. (2017)
discovered that Corporate Governance (GCG), as evaluated by the presence of Independent
Commissioners, Audit Committees, and Managerial Ownership, influences the financial
performance of companies. Sari and Setyowati (2017) assert that debt policy represents
one of the most critical funding decisions for companies. Utilizing debt for corporate
funding offers several advantages, including the tax deductibility of loan interest from
profits and the avoidance of profit sharing with lenders (Oktariyani & Hasanah, 2019). It has
been observed that during the pandemic, the debt levels of manufacturing companies
surged by 53.2%, with various allocations, including the allocation for share buybacks and
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dividend distributions funded through debt, aiming to attract investment once again (CNBC,
2020).
Sari and Setyowati (2017) found that debt policy affects financial performance. In
addition, Hamid et al (2022) also found that debt policy as measured by DAR and DER has
an influence on sales decisions. Meanwhile, Firmansyah et al (2020) found contradictory
results, namely debt policy has no effect on financial performance. The next aspect that
has an impact on financial performance is company growth, this company growth has an
impact on the company's ability to maintain its position in the industry and in general
economic development. In general, company growth can be measured using the Growth
Opportunity proxy which is expressed as sales or asset growth which provides an overview
of future profits (Rode, 2020). Asset growth is an important consideration for managers in
the company's business by paying attention to asset growth to invest in after-tax income
and expect better performance in overall company growth. In addition to the three internal
aspects of the company, namely GCG, debt policy, and also company growth (Yuriah and
Kartini 2022).
The research was undertaken in the technology sector with the objective of
examining whether the company's favorable financial performance is influenced by factors
such as good governance practices, rapid company growth, and the company's debt policy.
Based on the description above, the researchers are interested in re-examining corporate
governance, company growth, debt policy and financial performance in companies with the
title "The Effect of Corporate Governance, Company Growth and Debt Policy on Financial
Performance in Technology Sector Companies Listed on the Indonesia Stock Exchange for
the 2017-2021 Period".
As per Destiana & Muslih (2019), financial statements serve as a clear depiction of a
company's financial health. These reports, generated from the company's routine
operational activities, furnish valuable financial information beneficial for both internal and
external entities associated with the company. Financial reports for a company only
function as a "testing tool" of the work of the bookkeeping function, but henceforth along
with the times, the function of financial reports as a basis for being able to determine or
assess the financial position of the company. By using the results of the analysis, interested
parties can make a decision.
Corporate governance elucidates the allocation of rights and responsibilities among
various stakeholders within a business, encompassing the Board of Commissioners,
Directors, Managers, Shareholders, and other relevant parties. Meanwhile, good corporate
governance (GCG) represents a widely accepted best practice, constituting the internal
control system of a company primarily aimed at risk management (Yuriah, Juniarti, and
Sepriani 2023).
Financial performance measurement serves as a means to present information
regarding the effectiveness and efficiency of a company's accomplishments (Rahmani,
2020). The effectiveness and efficiency of a company can be gauged through its
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profitability. Profitability itself can be measured by ROA because this ratio is able to show
the company's success in generating profits (Hamid et al., 2022). The profitability factor is
determined by the company's asset side which can be seen from the company's growth, the
debt side, and also the internal management side, namely Good Corporate governance in
the company (Hamid et al., 2022).
Good Corporate Governance can be seen from institutional ownership, managerial
ownership, and also the independent board of commissioners. While the company's growth
side is measured by asset growth or asset growth which provides an overview of future
profits (Rode, 2020), and the debt side is measured by DER (Debt Equity Ratio) which is
used to measure how much the company's assets are financed by total debt. The higher
this ratio means the greater the amount of loan capital used for investment in assets to
generate profits for the company (Putra, 2018).
Good Corporate Governance

Institutional Ownership (X1)
Managerial Ownership (X2)
Independent Board of
Commissioners (X3)
Company Growth (X4) Financial

Performance (Y)
Debt Policy (X5)
Figure 1. Thinking Framework
The research hypotheses are 1) There is an influence on institutional ownership

variables on financial performance, 2) There is an influence of managerial ownership on
financial performance, 3) There is an influence of the company's board of commissioners on
financial performance, 4) there is an influence of company growth on financial performance,
5) there is an influence of debt policy on financial performance 6) There is an influence of
institutional ownership, managerial ownership, independent board of commissioners,
company growth, debt policy on financial performance,
METHOD
This research employs quantitative methods, which are utilized to analyze problems
manifested through quantitative data. Quantitative analysis involves quantifying research
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data to generate the necessary information for analysis. The data used are annual reports
listed on the Indonesia Stock Exchange (IDX) by accessing the official IDX website, namely
www.idx.co.id for the period or observation year 2017-2021. This research was conducted
on Technology Sector companies listed on the IDX using secondary data, namely
quantitative data contained in audited annual reports. This research uses time series data
with data for a period of 5 years, namely 2017-2021.
RESULT AND DISCUSSION

Research data analysis
Descriptive variables are intended to analyse data based on secondary data obtained,
which is presented in table 1:
Table 1. Descriptive Statistics
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
KI (X1) 40 ,00 94,25 48,0025 25,40892
KM (X2) 40 ,00 70,00 18,4120 23,72392
DKI (X3) 40 ,00 67,00 35,1750 9,52968
PP (X4) 40 -57,87 3965,69 134,3253 630,95556
DER (X5) 40 ,00 31300,00 1865,9830 5547,99682
ROA (Y) 40 -22,27 21,00 2,6898 7,62021
Valid N (listwise) 40
Source: SPSS 25, 2022
From the table above, it is evident that the institutional ownership (KI) construct
exhibits an average value of 48.0025, with a standard deviation of 25.40892. The smaller
standard deviation relative to the mean value suggests that the KI variable demonstrates
low variability, ranging from a minimum value of 0 to a maximum value of 94.25.
Conversely, the managerial ownership (KM) construct possesses an average value of
18.4120, with a standard deviation of 23.72392. The higher standard deviation compared
to the mean value indicates that the KM variable displays high variability, ranging from 0 to
70. Additionally, the independent board of commissioners (DKI) construct has an average
value of 35.1750. The variable standard deviation is 9.52968. The standard deviation value
which is smaller than the mean value explains that the DKI variable has low variability,
with a maximum value of 67, and a minimum value of 0. The company growth construct
(PP) has an average value of 134.3253. The variable standard deviation is 630.95556. The
standard deviation value which is greater than the mean value explains that the PP variable
has high variability, with a maximum value of 3965.69 and a minimum value of -57.87%.
The debt policy construct (DER) exhibits an average value of 1865.9830, with a variable
standard deviation of 5547.99682. The higher standard deviation compared to the mean
value indicates that the DER variable demonstrates high variability, ranging from 0 to
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31300. Similarly, the company performance construct (ROA) has an average value of
2.6898, with a variable standard deviation of 7.62021. The greater standard deviation
relative to the mean value suggests that the ROA variable displays higher variability,
ranging from -22.27 to 21.
Classical Assumption Analysis
Normality Test
The normality test is conducted to determine whether the distribution between
variables is normal or not. In this research, normality testing was performed using the
Kolmogorov-Smirnov test, as shown in Table 2 below:
Table 2. Normality Test Calculation
One-Sample Kolmogorov-Smirnov Test
Unstandardised Residual
N 30
Normal Parameters a,b
Mean ,0000000
Std. Deviation 4,48648173
Most Extreme Differences Absolute ,097
Positive ,097
Negative -,066
Test Statistic ,097
Asymp. Sig. (2-tailed) ,200c,d
a. Test distribution is Normal.
b. Calculated from data.
c. Lilliefors Significance Correction.
d. This is a lower bound of the true significance.
Source: Data processed with SPSS Version 25.0, 2022
As stated in the previous chapter, the basis for decision making in the normality test
is:
 If the significant value > 0.05 then the data is normally distributed.
 If the significant value <0.05 then the data is not normally distributed.
The table above shows that the significance value of the institutional ownership
variable, managerial ownership, independent board of commissioners, company growth,
debt policy and financial performance is 0.200 Because the significance value of the three
variables is> 0.05, the data is normally distributed.
Heteroscedasticity Test
The heteroscedasticity test is conducted to ascertain whether there is unequal
variance in the residuals of one observation to another within the regression model. To
determine the presence of heteroscedasticity in the regression model of this research,
informal methods are employed. These informal methods for testing heteroscedasticity
include the graphical method and the Scatterplot method.
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Figure 2. Scatter graph

Based on the shape of Figure 2 above, it is apparent that the distribution of residuals
is irregular and lacks a discernible pattern. This is evident from the scattered dots or plots.
The conclusion drawn from this observation is that there is no heteroscedasticity.
Multiple Linear Regression Analysis
Table 3. Multiple Linear Regression Equation Results
Coefficientsa
Model Unstandardised Standardised t Sig.
Coefficients Coefficients
B Std. Error Beta
1 (Constant) -6,291 6,013 -1,046 ,306
KI (X )1 -,025 ,049 -,116 -,500 ,621
sqrtKMX2 -,212 ,504 -,105 -,420 ,678
DKI (X )3 ,358 ,112 ,648 3,196 ,004
sqrtPPX4 ,184 ,096 ,381 1,914 ,068
sqrtDERX5 -,033 ,029 -,215 -1,129 ,270
a. Dependent Variable: ROA (Y)
The multiple linear regression equation above shows that the independent variable
institutional ownership (X1 ) with a regression coefficient of -0.025, the managerial
ownership variable (X2 ) with a regression coefficient of -0.212, the independent board of
commissioners variable (X3 ) with a regression coefficient of 0.358, the company growth
variable (X4 ) with a regression coefficient of 0.184, and the debt policy variable (X5 ) with a
regression coefficient of -0.033, then the independent board of commissioners variable (X3 )
has a greater influence on the dependent variable financial performance (Y).
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Test Coefficient of Determination (R )2

Table 4. Results of the Coefficient of Determination
Model Summaryb
Model R R Adjusted R Std. Error of the Durbin-
Square Square Estimate Watson
1 ,608a
,369 ,238 4,93173 1,325
a. Predictors: (Constant), sqrtDERX5, sqrtPPX4, KI (X1), DKI (X3), sqrtKMX2
b. Dependent Variable: ROA (Y)
Based on the calculation of the coefficient of determination (R Square) of 0.369 or

36.9%. This value indicates that the contribution of institutional ownership variables (X1 ),
managerial ownership (X2 ), independent board of commissioners (X3 ), company growth
(X4 ), debt policy (X5 ) to employee performance (Y) is 36.90%. While the remaining 63.10%
is influenced by other factors not discussed in the research.
Hypothesis Testing
Partial Hypothesis Test (T Test)
The hypothesis in this research was tested using the t test. It is known that in the
two-way test, the significance level (α) 0.05, the number of samples (n) 40, and the degree
of freedom n-6 =34, obtained ttable of 2.032. As explained in the previous chapter regarding
the formulation of the hypothesis, that:
a) Ho is accepted and Ha is rejected, if t count < ttable with significant (Sig.) > 0.05.
b) Ho is rejected and Ha is accepted, if t count> ttable with significant (Sig.) <0.05.
Table 5. T Test (Partial) X with Y
Coefficientsa
Model Unstandardised Standardised t Sig.
Coefficients Coefficients
B Std. Error Beta
1 (Constant) -6,291 6,013 -1,046 ,306
KI (X )1 -,025 ,049 -,116 -,500 ,621
sqrtKMX2 -,212 ,504 -,105 -,420 ,678
DKI (X )3 ,358 ,112 ,648 3,196 ,004
sqrtPPX4 ,184 ,096 ,381 1,914 ,068
sqrtDERX5 -,033 ,029 -,215 -1,129 ,270
Hypothesis 1: institutional ownership (KI) affects financial performance (ROA)

Based on Table 5, the regression coefficient value of the Institutional Ownership
variable is -0.025. The t-value is -0.500, with a significance level of 0.621, which is greater
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than 0.05. Since the calculated t-value is less than the critical t-value (-0.500 < 2.032), the
null hypothesis (Ho) is accepted and the alternative hypothesis (Ha) is rejected. Therefore,
it can be concluded that Institutional Ownership partially has no significant effect on
Financial Performance.
Hypothesis 2: managerial ownership (KM) affects financial performance (ROA)
Based on Table 5, the regression coefficient value of the Managerial Ownership
variable is -0.212. The calculated t-value is -0.420, with a significance level of 0.678, which
is greater than 0.05. Since the calculated t-value is less than the critical t-value (-0.420 <
2.032), the null hypothesis (Ho) is accepted, and the alternative hypothesis (Ha) is rejected.
Therefore, it can be concluded that Managerial Ownership partially has no significant effect
on Financial Performance.
Hypothesis 3: independent board of commissioners (DKI) affects financial performance
(ROA)
Based on Table 5, the regression coefficient value of the Independent Board of
Commissioners variable is 0.358. The t-value is 3.196, with a significance level of 0.004,
which is less than 0.05. Since the calculated t-value is greater than the critical t-value
(3.196 > 2.032), the null hypothesis (Ho) is rejected, and the alternative hypothesis (Ha) is
accepted. Therefore, it can be concluded that the Independent Board of Commissioners
partially affects Financial Performance.
Hypothesis 4: company growth (PP) affects financial performance (ROA)
Based on Table 5, the regression coefficient value of the Company Growth variable is
0.184. The t-value is 1.914, with a significance level of 0.068, which is greater than 0.05.
Since the calculated t-value is less than the critical t-value (1.914 < 2.032), the null
hypothesis (Ho) is accepted, and the alternative hypothesis (Ha) is rejected. Therefore, it
can be concluded that Company Growth partially has no significant effect on Financial
Performance.
Hypothesis 5: debt policy (DER) affects financial performance (ROA)
Based on Table 5, the regression coefficient value of the Debt Policy variable is -
0.033. The t-value is -1.129, with a significance level of 0.270, which is greater than 0.05.
Since the calculated t-value is less than the critical t-value (-1.129 < 2.032), the null
hypothesis (Ho) is accepted, and the alternative hypothesis (Ha) is rejected. Therefore, it
can be concluded that Debt Policy partially has no significant effect on Financial
Performance.
Simultaneous Hypothesis Test (F Test)
To determine the significance of institutional ownership, managerial ownership,
independent board of commissioners, company growth, and debt policy on financial
performance, the following F-test results are examined:
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Table 6. F Test Results

ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression 341,728 5 68,346 2,810 ,039b
Residuals 583,727 24 24,322
Total 925,455 29
b. Predictors: (Constant), sqrtDERX5, sqrtPPX4, KI (X1), DKI (X3), sqrtKMX2
Based on the data above, it is known that the calculated F value is 2.810 with a significant
value of 0.039. Known at a significant level of 0.05, the degree of freedom of the
denominator (df1 ) = k = 5, and the degree of freedom of the numerator (df 3 ) = n-k-1 = 34,
obtained F table of 2.494. Based on the hypothesis formulation in the previous chapter, that:
a. Ho is accepted and Ha is rejected, if F count < F table with significant (Sig.) > 0.05.
b. Ho is rejected and Ha is accepted, if F count > Ftable with significant (Sig.) < 0.05.
CONLUSION
This research aims to analyze the financial performance of companies listed on the IDX
from 2017 to 2021 through corporate governance variables, company growth, and debt
policy. The research methodology employed is a descriptive quantitative method utilizing
the SPSS Version 25.0 analysis tool. Based on the results of the research and the literature
reviewed, it can be concluded that institutional ownership has no significant effect on
financial performance. This is evidenced by the calculated t-value being less than the
critical t-value (-0.500 < 2.032), and the p-value of 0.621 being greater than 0.05, failing to
meet the decision-making criteria at the 5% significance level. So there is no influence on
the institutional ownership variable on the company's financial performance. Then
managerial ownership has no significant effect on financial performance, as evidenced by
the t value < t table -0.420 < 2.032) and p value 0.678 > 0.05, meeting the decision-
making requirements at the 5% significance level. So there is no effect of managerial
ownership on the company's financial performance. Also, the independent board of
commissioners has no effect on financial performance, as evidenced by the t value < t table
3.196> 2.032) and p value 0.004> 0.05, meeting the decision-making requirements at the
5% significance level. Then the independent board of commissioners has an effect on
financial performance. Company growth has no effect on financial performance, as
evidenced by the t value < t table 1.914> 2.032 and p value 0.068> 0.05 does not meet the
decision making requirements at the 5% significance level. So there is no effect of company
growth on the company's financial performance. Debt policy has no effect on financial
performance, as evidenced by the t value < t table -1.129> 2.032 and p value 0.270> 0.05
does not meet the decision-making requirements at the 5% significance level. So there is
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no effect of debt policy on the company's financial performance. Institutional ownership,

managerial ownership, independent board of commissioners, company growth, debt policy
affect financial performance, as evidenced by the value of Fcount 2.810> Ftable 2.494 and p
value 0.039 <0.05 meets the decision-making requirements at the 5% significance level. So
there is an effect of institutional ownership, managerial ownership, independent board of
commissioners, company growth, debt policy on the company's financial performance.
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Jurnal Ekonomi

Volume 13, Number 01, 2024, DOI 10.54209/ekonomi.v13i01

The Effect of Corporate Governance, Company Growth and Debt Policy

Amzi J.M.Y1, Heri Ispriyahadi2, Kholil3

Article Info ABSTRACT

Good Corporate Governance

Company Growth (X4) Financial

Debt Policy (X5)

Figure 1. Thinking Framework

The research hypotheses are 1) There is an influence on institutional ownership

RESULT AND DISCUSSION

Figure 2. Scatter graph

Test Coefficient of Determination (R )2

Based on the calculation of the coefficient of determination (R Square) of 0.369 or

Hypothesis 1: institutional ownership (KI) affects financial performance (ROA)

Table 6. F Test Results

no effect of debt policy on the company's financial performance. Institutional ownership,

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