THE EFFECT OF AUDIT COMITTE, INSTITUTIONAL OWNERSHIP, AND BOARD OF DIRECTORS ON THE FINANCIAL PERFOMANCE OF MANUFACTURING COMPANIES

Abstract

Financial performance is a key indicator used to evaluate a company’s effectiveness in managing its resources and generating value for shareholders. The implementation of Good Corporate Governance (GCG) is widely recognized as an essential mechanism for enhancing corporate financial performance through strengthened monitoring and managerial oversight. This study aims to investigate the effect of the audit committee, institutional ownership, and the board of directors on the financial performance of manufacturing companies listed on the Indonesia Stock Exchange during the 2021–2024 period. A quantitative research approach was employed using secondary data derived from annual reports. The sample comprises 72 manufacturing firms selected through purposive sampling, resulting in a total of 288 observations. Panel data regression analysis was conducted using EViews 12. The empirical results indicate that the audit committee and the board of directors have a positive and statistically significant effect on financial performance. In contrast, institutional ownership exhibits a negative but statistically insignificant effect on financial performance. These findings suggest that effective internal governance mechanisms, particularly through the audit committee and the strategic role of the board of directors, contribute to improving firm performance. However, institutional ownership has not yet demonstrated a significant influence in enhancing corporate financial outcomes