ABSTRACT

This research aims to examine the impact of corporate governance mechanisms on the financial performance of food and beverage companies in Indonesia, specifically focusing on their effect on Return on Assets (ROA). This study uses a quantitative approach, utilizing multiple linear regression analysis. The primary data is derived from corporate financial reports, while secondary data is gathered from previous studies on corporate governance practices. The results indicate that the presence of an Audit Committee and Managerial Ownership positively influences profitability, as measured by ROA. However, Independent Commissioners and Institutional Ownership show a negative impact on profitability. These findings suggest that while governance mechanisms like Audit Committees and Managerial Ownership promote profitability, stringent oversight by Independent Commissioners and Institutional Investors may restrict managerial flexibility, thus potentially limiting profitability growth. To optimize financial performance, companies should strike a balance between promoting governance mechanisms that enhance profitability and mitigating those that may impose constraints on management.

Keywords: Return on Assets, Audit Committees, Independent Board of Commissioners, Managerial Ownership, Institutional Ownership