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Essay On Corporate Governance Mechanism

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THE MEDIATING EFFECT OF FINANCIAL REPORTING QUALITY ON THE RELATION BETWEEN CORPORATE GOVERNANCE MECHANISM AND THE STOCK PRICE OF CONSUMER GOODS INDUSTRY LISTED IN INDONESIA STOCK EXCHANGE

Abstract: The aim of this research is to investigate how Financial Reporting Quality affects the relationship between Corporate Governance Mechanism and stock price of consumer goods industry listed in Indonesia Stock Exchange. The proxy of Corporate Governance Mechanism are: Institutional Ownership, Managerial Ownerhip, Proportion of the Board of Directors. In this study, 30 firms investigated during 2010-2013. Path Analysis is used to analysis the direct and indirect relationship among the variables. The result shows that there is no direct and indirect …show more content…

High and low stock price of a company is affected by many factors such as company performance, risk, dividends, interest rates, supply, demand, inflation, government policies and economics conditions. Stock price reflects the value of company in the public opinion. If a company's stock price high, the company's value in the the public is also good and vice versa. So, the stock price is important for the company.
II. LITERATURE REVIEW
Corporate Governance
Corporate governance is a concept based on agency theory, and is expected to serve as a tool to give confidence to investors that they would receive a return. Corporate governance is concerned with how the investors believe that the managers will benefit them , confident that the manager will not steal / manipulated or invested into projects that do not give benefit associated with the fund / capital that has been invested by the investor , and deals with how the investors control managers (Shleifer dan Vishny, 1997)
Corporate Governance Mechanisms monitoring role
Some aspects related to the mechanism corporate govemance is managerial ownership, institutional ownership, the role of the board of commissioners (number

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