Corporate Governance Mechanism on Tunneling Incentive and Financial Distress and Their Impact on Corporate Turnaround (Study on Manufacture Companies in Indonesia Stock Exchange on 2013-2018)
International Journal of Managerial Studies and Research
Governance is a system that controls and regulates companies to create added value for those who have an interest. Parties who have an interest also have the right to obtain information and disclose reports transparently, accountability, responsibility, independence, and fairness of all information on company performance. If an error occurs in the implementation of company management, it will lead to bankruptcy (financial distress), then the party most responsible is management. The financial
... nt. The financial appearance of the company is reflected by the full financial statements for a specified period. Abstract: This study analyzes and establishes the effect of corporate governance on tunneling incentive and financial distress and their impact on the corporate turnaround on manufacturing companies listed in Indonesia Stock Exchange from 2013 to 2018. Data obtained from Statistics IDX and BEI (Indonesia Stock Exchange) with the samples consist of 32 companies. The research results indicate that direct effects boards of commissioners influence financial distress, independent commissioner influence tunneling incentive, and financial distress influence corporate turnaround. However, independent commissioners, boards of commissioners, institutional ownership, and tunneling incentive do not affect corporate turnaround. Boards of commissioners and institutional ownership variables do not affect tunneling incentive. Furthermore, independent commissioners and institutional ownership do not affect financial distress. Other results of the research indicate that indirect effects tunneling incentive and financial distress can not function as an intervening variable in the effect of corporate governance on the corporate turnaround.