Do Governance Mechanisms Matter? Evidence from Food and Beverage Sector in Indonesia
DOI:
https://doi.org/10.55980/ebasr.v4i1.197Keywords:
Corporate Governance, Financial Performance, Agency Theory, Institutional Ownership, Food and Beverage IndustryAbstract
This study investigates the impact of corporate governance mechanisms on financial performance, with a focus on publicly listed food and beverage manufacturing companies in Indonesia during the period 2017–2023. Grounded in Agency Theory, this research examines the influence of four key governance mechanisms: Independent Board of Commissioners (IBC), Audit Committee (AC), Managerial Ownership (MO), and Institutional Ownership (IO) on firm profitability as measured by Return on Assets (ROA). The study used multiple linear regression analysis. The results reveal that IBC, AC, and MO have statistically significant positive effects on ROA, confirming their roles as effective internal governance mechanisms in mitigating agency conflicts and promoting accountability. However, IO does not exhibit a significant relationship with financial performance, indicating that ownership by institutional investors alone may be insufficient to enhance firm value, particularly in emerging market contexts with weak regulatory environments and passive investment behavior. These findings underscore the necessity of context-sensitive governance reforms and suggest that ownership structures must be complemented by active monitoring and stakeholder alignment. Furthermore, the study highlights the limitations of single-theory approaches and advocates for a pluralistic governance framework that integrates multiple perspectives, including stewardship and stakeholder theories. By providing industry-specific insights and empirical evidence from an underexplored emerging economy sector, this study contributes to the evolving discourse on corporate governance effectiveness and offers practical implications for regulators, investors, and corporate leaders.
References
Ahmad, G. N., Prasetyo, M. R. P., Buchdadi, A. D., Suherman, Widyastuti, U., & Kurniawati, H. (2022). The Effect of CEO Characteristics on Firm Performance of Food and Beverage Companies in Indonesia, Malaysia and Singapore. Quality - Access to Success, 23(186), 111–122. https://doi.org/10.47750/QAS/23.186.15
Ahmad, N., Mobarek, A., & Raid, M. (2023). Impact of global financial crisis on firm performance in UK: Moderating role of ESG, corporate governance and firm size. Cogent Business and Management, 10(1). https://doi.org/10.1080/23311975.2023.2167548
Al-Faryan, M. A. S. (2024). Agency theory, corporate governance and corruption: an integrative literature review approach. Cogent Social Sciences, 10(1). https://doi.org/10.1080/23311886.2024.2337893
Al Mamun, A., Rafique Yasser, Q., & Ashikur Rahman, M. (2013). A Discussion of the Suitability of Only One vs More than One Theory for Depicting Corporate Governance. Modern Economy, 04(01), 37–48. https://doi.org/10.4236/me.2013.41005
Alshdaifat, S. M., Alharasis, E. E., Hidayah, N., Aziz, A., Bataineh, I., & Amosh, H. Al. (2025). Governance in crisis : do different types of ownership influence firm performance in GCC countries amid Covid-19 ? Governance in crisis : do different types of ownership influence firm. Cogent Business & Management, 12(1). https://doi.org/10.1080/23311975.2025.2463576
Altin, M. (2024). Audit committee characteristics and firm performance: a cross-country meta-analysis. Management Decision, 62(5), 1687–1719. https://doi.org/10.1108/MD-04-2023-0511
Alves, S. (2023). CEO duality, earnings quality and board independence. Journal of Financial Reporting and Accounting, 21(2), 217–231. https://doi.org/10.1108/JFRA-07-2020-0191
Ararat, M., Claessens, S., & Yurtoglu, B. B. (2021). Corporate governance in emerging markets: A selective review and an agenda for future research. Emerging Markets Review, 48(November 2020), 100767. https://doi.org/10.1016/j.ememar.2020.100767
Bezares, N., Fretes, G., & Martinez, E. M. (2021). The Role of Food and Beverage Companies in Transforming Food Systems: Building Resilience at Multiple Scales. Current Developments in Nutrition, 5(9), nzab110. https://doi.org/10.1093/cdn/nzab110
Bhatt, P. R., & Bhatt, R. R. (2017). Corporate governance and firm performance in Malaysia. Corporate Governance: The International Journal of Business in Society, 17(5), 896–912. https://doi.org/10.1108/CG-03-2016-0054
Biase, P. di, & Onorato, G. (2021). Board characteristics and financial performance in the insurance industry: An international empirical survey. Corporate Ownership and Control, 18(3), 8–18. https://doi.org/10.22495/cocv18i3art1
Bivona, E., & Cruz, M. (2021). Can business model innovation help SMEs in the food and beverage industry to respond to crises? Findings from a Swiss brewery during COVID-19. British Food Journal, 123(11), 3638–3660. https://doi.org/10.1108/BFJ-07-2020-0643
Chen, X. Y. (2024). A literature review of corporate governance. Edelweiss Applied Science and Technology, 8(6), 8945–8949. https://doi.org/10.55214/25768484.v8i6.3916
Derouez, F., Alharbi, F., Mathlouthi, N., Ifa, A., Ahmed, N., & Alrawad, M. (2025). How Does the Stock Market Development React to Energy Consumption? Evidence from the ARDL Panel Approach. ECONOMICS, 13(1), 247–265. https://doi.org/10.2478/eoik-2025-0006
Elsayed, N., & Elbardan, H. (2018). Investigating the associations between executive compensation and firm performance: Agency theory or tournament theory. Journal of Applied Accounting Research, 19(2), 245–270. https://doi.org/10.1108/JAAR-03-2015-0027
Fuzi, M. H. M., Suffian, M. T. M., Kabir, M. R., & Omar, N. B. (2024). The Effect of Corporate Governance Mechanisms on Corporate Performance in Malaysia During COVID-19 Pandemic. Management and Accounting Review, 23(3). https://doi.org/10.24191/MAR.V23i03-01
Ha, H. H. (2022). Audit committee characteristics and corporate governance disclosure: evidence from Vietnam listed companies. Cogent Business and Management, 9(1). https://doi.org/10.1080/23311975.2022.2119827
Ha, N. M., & Hiep, P. (2019). The effect of institutional ownership on listed companies’ performance in Vietnam. International Journal of Economics and Business Research, 17(3), 317. https://doi.org/10.1504/IJEBR.2019.098878
Hammond, P., Opoku, M. O., & Kwakwa, P. A. (2022). Relationship among corporate reporting, corporate governance, going concern and investor confidence: Evidence from listed banks in sub Saharan Africa. Cogent Business and Management, 9(1). https://doi.org/10.1080/23311975.2022.2152157
Jebran, K., & Chen, S. (2023). Can we learn lessons from the past? COVID-19 crisis and corporate governance responses. International Journal of Finance & Economics, 28(1), 421–429. https://doi.org/10.1002/ijfe.2428
Jha, R. K., & Tiwari, R. K. (2025). Institutional Ownership and Corporate Risk-taking: Indian Evidence. Global Business Review. https://doi.org/10.1177/09721509241310035
Kabeyi, M. J. B. (2019). Corporate Governance in Manufacturing and Management with Analysis of Governance Failures at Enron and Volkswagen Corporations. American Journal of Operations Management and Information Systems, 4(4), 109. https://doi.org/10.11648/j.ajomis.20190404.11
Kirk, M. (2025). Abnormal Institutional Ownership and Expected Returns. Journal of Accounting, Auditing & Finance. https://doi.org/10.1177/0148558X251319189
Klettner, A. (2021). Stewardship Codes and the Role of Institutional Investors in Corporate Governance: An International Comparison and Typology. British Journal of Management, 32(4), 988–1006. https://doi.org/10.1111/1467-8551.12466
Kyere, M., & Ausloos, M. (2021). Corporate governance and firms financial performance in the United Kingdom. International Journal of Finance and Economics, 26(2), 1871–1885. https://doi.org/10.1002/ijfe.1883
Nirino, N., Miglietta, N., & Salvi, A. (2019). The impact of corporate social responsibility on firms’ financial performance, evidence from the food and beverage industry. British Food Journal, 122(1), 1–13. https://doi.org/10.1108/BFJ-07-2019-0503
Ramalingegowda, S., Utke, S., & Yu, Y. (2021). Common Institutional Ownership and Earnings Management*. Contemporary Accounting Research, 38(1), 208–241. https://doi.org/10.1111/1911-3846.12628
Sambo, E. M., Sufiati, S., & Pura, R. (2023). Determinants of Company Value: Study on Pharmaceutical Companies on the Indonesia Stock Exchange. Economics, Business, Accounting & Society Review, 2(3), 193–202. https://doi.org/10.55980/ebasr.v2i3.94
Shan, Y. G. (2019). Managerial ownership, board independence and firm performance. Accounting Research Journal, 32(2), 203–220. https://doi.org/10.1108/ARJ-09-2017-0149
Shan, Y. G., Troshani, I., Wang, J., & Zhang, L. (2024). Managerial ownership and financial distress: evidence from the Chinese stock market. International Journal of Managerial Finance, 20(1), 192–221. https://doi.org/10.1108/IJMF-06-2022-0270
Shubita, M. F. (2023). The effect of human capital and structural capital on leverage: Evidence from Jordan. Problems and Perspectives in Management, 21(3), 1–10. https://doi.org/10.21511/ppm.21(3).2023.01
Squires, B., & Elnahla, N. (2020). The roles played by boards of directors: an integration of the agency and stakeholder theories. Transnational Corporations Review, 12(2), 126–139. https://doi.org/10.1080/19186444.2020.1757340
Supramono, S., Damayanti, T. W., & Adhitya, D. (2025). Dynamic capabilities and financial behavior to accelerate MSME performance recovery and its impacts on business sustainability. Journal of Innovation and Entrepreneurship, 14(1). https://doi.org/10.1186/s13731-024-00456-7
Suwito, S., & Siskawati, E. (2022). Sharia business resilience during the covid-19 pandemic : A case study of Indonesian sharia banking business. Economics, Business, Accounting & Society Review, 1(2), Press. https://doi.org/10.55980/ebasr.v1i2.22
Utama, A. N. B., & Efrina, L. (2023). Effect of Short-Term Debt on Sales Growth in Food and Beverage Companies. International Journal of Academic Research in Accounting, Finance and Management Sciences, 13(2). https://doi.org/10.6007/IJARAFMS/v13-i2/17815
YahiaMarzouk, Y., & Jin, J. (2022). Does relational capital matter to food and beverage SMEs’ resilience? The mediating role of environmental scanning. Frontiers in Psychology, 13(October), 1–16. https://doi.org/10.3389/fpsyg.2022.1033837
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Enny Hardi, Rifqi Novriyandana, Hisni Miliya, Amiruddin Junus, Darmawati Darmawati
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
