The effect of financial and non-financial performance on investors’ reactions: The role of corporate governance mechanisms as moderating

Abstract

The purpose of this study is to examine the effect of financial and non-financial performance on investor reactions and the role of corporate governance mechanisms as moderating. The analysis technique used is the moderated regression analysis (MRA). The research population is manufacturing sector companies listed on the Indonesia Stock Exchange (IDX). Based on the purposive sampling method, 78 companies were selected as the samples (390 firm-year observations). The results of this study provide empirical evidence that the existence of financial and non-financial performance in a company can increase investor reactions. Institutional ownership plays a role in the relationship between financial performance and investor reactions. Meanwhile, independent commissioners, boards of directors, and audit committees have no role in the relationship between financial performance and investor reactions. And independent commissioners and institutional ownership can moderate the influence of non-financial performance on investor reactions. Meanwhile, the board of directors and audit committee cannot moderate the influence of non-financial performance on investor reactions.

Keywords: {'name': 'Financial and non-financial performance, investor reactions, corporate governance '}

Authors & affiliations

Intadaviqotul Minakh
Affiliation not supplied

Erwin Saraswati
Affiliation not supplied

Abdul Ghofar
Affiliation not supplied

Deposited references

Supplied references, not a list of publications citing this article.

Agrawal, P., Bansal, P., & Kathpal, S. (2020). Effect of financial performance on corporate social responsibility and stock price: A study of BSE listed companies. International Journal on Emerging Technologies. 11(1): 286-291.

DOI: 10.1016/j.jjie.2008.05.001

Amba, S. M. (2014). Corporate Governance And Firms’ Financial Performance. Journal Of Academic and Business Ethics, 8, 1–11.

Anderson, J. C. & Franlde, A. W. (1980). Voluntary Social Reporting: An Iso-Beta Portfolio Analysis. The Accounting Review. 467-479. https://www.jstor.org/stable/246408

DOI: 10.24815/jdab.v7i1.15402

DOI: 10.1016/j.jclepro.2014.08.047

DOI: 10.1111/auar.12170

Ayuni, A. D. (2016). Pengaruh Kinerja Keuangan dan Kebijakan Dividen terhadap Reaksi Investor pada Perusahaan Otomotif. Jurnal Ilmu Riset dan Riset Akuntansi, 5(7).

Ayoib, C.-A., & Peter, O. N. (2015). Directors Culture and Environmental Disclosure Practice of Companies in Malaysia. International Journal of Business and Technopreneurship, 5(1).

DOI: 10.1016/j.accfor.2017.02.003

DOI: 10.2139/ssrn.967638

Chang, K., & Zhang, L. (2015). The Effects of Corporate Ownership Structure on Environmental Information Disclosure — Empirical Evidence from Unbalanced Penal Data in Heavy-pollution Industries in China. E-ISSN: 2224-2856, 10, 405–414.

DOI: 10.1108/01140581311318968

DOI: 10.5465/30040676

DOI: 10.1177/0149206310388419

Dwiridotjahjono, J. (2009). Penerapan Good Corporate Governance :Manfaat Dan Tantangan Serta KesempatanBagi Perusahaan Publik Di Indonesia. Jurnal Administrasi Bisnis, 5(2).

DOI: 10.1108/ARJ-12-2015-0153

DOI: 10.2139/ssrn.1032851

DOI: 10.1016/j.aos.2009.04.006

DOI: 10.1108/03074351011050334

DOI: 10.37531/sejaman.v3i2.597

DOI: 10.1007/s10551-013-1929-2

DOI: 10.22495/cocv17i2art9

DOI: 10.1108/IJCCSM-07-2017-0144

DOI: 10.1108/JFRC-04-2014-0019

Lang, M., & Lundholm, R. (1996). Cross-Sectional Determinants of Analyst

Ratings of Corporate Disclosures. Journal of Accounting Research, 31(2): 246-

DOI: 10.2307/2491273

DOI: 10.1016/j.bar.2014.01.002

Lisic, L., Neal, T., & Zhang, Y. (2011). Audit committee financial expertise and restatements: The moderating effect of CEO power. School of Management, George Mason University, Fairfax.

DOI: 10.3390/su10051644

DOI: 10.5465/amr.2008.31193458

Nainggolan, N. E., & Rohman, A., (2015). Pengaruh Struktur Corporate Governance terhadap Pengungkapan Lingkungan. Diponegoro Journal of Accounting, 4(2): 2337-3806.

DOI: 10.15408/etk.v18i1.10987

DOI: 10.26740/jaj.v4n1.p51-70

Ongore, Vincent O. Peter O K’obonyo dan Martin Ogutu. (2015). Board Composition and Financial Performance: Emprical Analysis of Companies Listed at The Nairobi Securities Exchange. International Jurnal of Economics and Financial Issue. 5(1). 23-43.

DOI: 10.1016/0361-3682(90)90035-S

Preda, P., and T. Watts. 2004. Contemporary Accounting Innovations in Australia: Manufacturing versus service organizations. Journal of Management Accounting Research 2, Vol 2 (2).

Rajabi, R., Mahdavikhou, M., & Khotanlou, M. (2014). Board of Directors' Characteristics and the Stock Return Evidence from Tehran Stock Exchange (TSE). European Journal of Economics, Finance and Administrative Sciences, (66): 78-92.

Ramírez, C. Z., González-González, J. M., & SabaterMarcos, A. (2016). Carbon Reporting: Analysis of the Spanish Market Response. Spanish Journal

of Finance and Accounting. 45(2): 231–265.

DOI: 10.1108/09513571111184751

DOI: 10.1108/14720701211214052

DOI: 10.1016/S2212-5671(16)30025-9

DOI: 10.21511/bbs.11(3).2016.03

DOI: 10.5296/ijafr.v6i2.9757

DOI: 10.2139/ssrn.2743251

DOI: 10.54367/jrak.v5i2.535

Shane, P. B. & Spicer. 13. H. (1983). Market Response to Environmental Information Produced Outside the Firm, The Accounting Review. 521-538. https://www.jstor.org/stable/246532

Simon, J. G., Powers, C. W. & Gunnemann. J. P. (1972). The Ethical Investor Universities and Corporate Responsibility. New Haven, CT: Yale University Press.

DOI: 10.2307/1882010

Supatmi. (2007). Corporate Governance dan Kinerja Keuangan. Jurnal Bisnis dan Ekonomi, 14.

DOI: 10.1007/s10551-014-2404-4

DOI: 10.1007/s10997-014-9307-8

DOI: 10.35808/ersj/210

DOI: 10.21632/irjbs.8.3.155-166

Widiatmoko, J., & Indarti, K. (2018). The determinans of earning response coefficient: an empirical study for the real estate and property companies listed on Indonesia Stock Exchange. Accounting Analysis Journal, 7(2): 135-143.

DOI: 10.12928/fokus.v3i1.1332