Earnings Quality as a link between Corporate Governance Implementation and Firm Performance

Figures & data

Figure 1. Indonesia CG rules scores by market average (2018) and (2020)

Source: (ACGA Special Report 2020).

Figure 2. Research model

Table 1. Market category scores of good corporate governance in Asia

Number	Market	Total (%)	Key CG Reform Theme and Questions
1	Australia	71	Bank governance needs overhaul, time for a federal ICAC
2	Hong Kong	60	Going Backwards on DCS, about to go forwards on audit regulation
3	Singapore	59	Going backwards on DCS, reform direction reflects contradictory Idea
4	Malaysia	58	Can new government rid the system of corruption and cronyism?
5	Taiwan	56	Moving forward, yet piecemeal reforms hinder progress
6	Thailand	55	Moving forward, yet corruption and decline in press freedom are concerns
7	India	54	Bank governance needs overhaul, new audit regulator disappoints
8	Japan	54	Heavy focus on soft law needs to be balanced with hard law reforms
9	Korea	46	Stewardship code gaining traction, but sadly so in DCS
10	China	41	Reinforcement of Party Committees raises numerous questions
11	Philippines	37	CG reform low on the government’s priorities, direction unclear
12	Indonesia	34	CG reform low on the government’s priorities, direction unclear

Source: Ramli and Erna (2021).

Table 2. Description of research variables

	N	Minimum	Maximum	Mean	Std. Deviation
ICP	570	0.200	0.600	0.401	0.081
INSTOWNER	570	0.462	0.996	0.737	0.161
MEETINGS	570	2.000	13.000	5.658	2.665
EXPERTISE	570	0.000	3.000	1.800	0.993
ACCRUAL	570	0.000	0.210	0.053	0.042
PERFORM	570	−0.220	0.240	0.048	0.077
Valid N (listwise)	570

Table 3. Determination coefficient test (1)

Model Summary
Model	R	R Square	Adjusted R Square	Std. Error of the Estimate
1	0.401^a	0.161	0.124	0.389

^aPredictors: (Constant), ICP, INSTOWNER, MEETING, EXPERTISE.

^bDependent Variable: ACCRUAL.

Table 4. Model test

ANOVA^b
Model		Sum of Squares	df	Mean Square	F	Sig.
1	Regression	0.033	5	0.007	4.368	0.001^a
	Residual	0.173	114	0.002
	Total	0.206	119

^aPredictors: (Constant), ICP, INSTOWNER, MEETING, EXPERTISE.

^bDependent Variable: ACCRUAL.

Table 5. T-test result for Model 1

Model		Unstandardized Coefficients		Standardized Coefficients	t	Sig.
		B	Std. Error	Beta
1	(Constant)	0.044	0.025		1.760	0.081
	ICP	−0.087	0.045	−0.168	−1.911	0.059
	INSTOWNER	0.062	0.023	0.240	2.709	0.008
	MEETINGS	−0.003	0.001	−0.214	−2.231	0.028
	EXPERTISE	−0.003	0.004	−0.067	2.780	0.481

^aDependent Variable: ACCRUAL.

Table 6. Coefficient determination model summary

Model	R	R Square	Adjusted R Square	Std. Error of the Estimate
1	0.587^a	0.344	0.309	0.064

^aPredictors: (Constant, ICP, INSTOWNER, MEETING, EXPERTISE, ACCRUAL).

^bDependent Variable: DISCREV.

Table 7. Model 2 test

ANOVA^b
Model		Sum of Squares	df	Mean Square	F	Sig.
1	Regression	0.241	5	0.040	9.877	0.000^a
	Residual	0.460	113	0.004
	Total	0.701	118

^aPredictors: (Constant, ICP, INSTOWNER, MEETING, EXPERTISE, ACCRUAL).

^bDependent Variable: DISCREV.

Table 8. T-test for Model 2

Model		Unstandardized Coefficients		Standardized Coefficients	t	Sig.
		B	Std. Error	Beta
	(Constant)	0.263	0.041		6.413	0.000
	ICP	−0.166	0.076	−0.174	−2.196	0.030
	INSTOWNER	0.096	0.039	0.202	−2.493	0.014
	MEETINGS	0.001	0.003	0.025	0.291	0.771
	EXPERTISE ACCRUAL	0.002 –0.159	0.007 –0.153	0.022 –0.086	0.261 –1.039	0.795 0.301

^aDependent Variable: PERFORM.

Jamie Allen, 2020. Asian Corporate Governance Association (ACGA) special report 2020.

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Ramli, R., & Erna, S. (2021). Comparative analysis of good corporate governance implementation based on ASEAN corporate governance scorecard from the indonesian banking industry. Jurnal Keuangan Dan Perbankan, 25(1), 117–131.

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