Abstract:
The Indonesian Institute for Corporate Governance (IICG) always conducts
research about the proper application of corporate governance every year, especially in public
companies in Indonesia’s Stock Exchange. Basically, Good Corporate Governance is the
procedure of company management in running their goals that result in optimal profitability
or profit for the investors. In theory, the application of good corporate governance will
increase the profitability of a company. But in reality, it is necessary to conduct research on
the issue. Some problem identifications that arise are the questions about the implementation
of good corporate governance, the level of profitability (return on assets) and how much the
implementation of Good Corporate Governance affects the profitability (return on assets). This
study involved 9 companies which participated in The Indonesian Institute for Corporate
Governance (IICG) research. For this study, the authors used quantitative research method to
test the hypothesis that has been set. The variables correlation is causal or causal associative.
The statistical test measurement used to determine the effects is simple regression. The
statistical tool to measure the effect of the used measurement scale is ratio and interval. Based
on the research conducted by the author, the result that is obtained is the implementation of
CGPI that is measured through CGPI increased and decreased, although in general it
increased. Meanwhile profitability that is measured through average ROA increased. Based
on the result of hypothesis testing, the implementation level of Good Corporate Governance
has a positive effect on the sampled company’s profitability (return on assets). The effect is
19.8%.
