Influence of Financial Performance, Value of Company, Corporate Governance Mechanism For Executive Compensation

Abstract

This study explains the effect of corporate performance, corporate values and corporate governance mechanisms on executive compensation. The sample is 16 firms listed in the manufacturing company for the period of 2010-2016 (112 research data). Results of F test show that the regression model used to determine the ROA variable (X1), Tobin’s Q (X2), Institutional ownership (X3) on Executive Compensation (Y) is jointly influential, so the proposed hypothesis is proved true. Result of F test 20,275 with p value (sig.) Equal to 0.000 which is much smaller 5% (0.05). The regression model in this study indicates that the independent variables are able to explain the Executive compensation by 36%. Based on t test result, it is found that ROA (X1) variable has no effect on execitive compensation, Tobin's Q (X2), Institutional Ownership (X3), which significantly influence Executive Compensation (Y). Keyword—Return on Asset (ROA); corporate values (Tobin’s Q); Mechanism of Corporate Governance (Institutional Ownership); Executive Compensation