Two college, university, public company and government also apply

Topic: BusinessLeadership
Sample donated:
Last updated: October 19, 2019

Two decades ago,Global Economic Crisis was happened around the world which affected inSoutheast Asian. Some countries in Southeast Asian such as Indonesia, Malaysia,Philippines, and Thailand got serious impact.

Many of companies in Indonesiaare out of business due to economic crisis. One of the causes many companies bankruptsis poor of implementation good corporate governance. Effendi (2009) state thatin article one of the degree of the minister of BUMN No. 117/ M-MBU / 2002,corporate governance is the structure and process which is used by organs ofBUMN to increase the success of business and corporate accountability based onlaws and ethical values.

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After global economic crisis in 1997-1998, companieshave been apply good corporate governance in theirs companies. In thisday, not only private company adopted good corporate governance butinstitutions like college, university, public company and government also applygood corporate governance. There are five correlations among implementationfive principles of good corporate governance which are accountability,transparency, independence, responsibility and fairness to the institution performance.

The firstprinciple of good corporate governance is accountability. Accountability is theclarity of functions, responsible management, and operations, so that themanagement company can work with effectiveness and economist, Emirzon, 2006. This principle has positiveinfluence to the institution performance. This is known from result of research which has beta value ofunstandardized test 0.84 or 84 percent. It shows that principle ofaccountability has good influence to the Politeknik Negeri Batam performance.

Transparency,the second principle of good corporate governance based on Emirzon (2006), is transparentof the process of decision making and disclosure of information that isrelevant to the company. With transparency, governance of institution can beapplied with very well. This principle has greatly good influence to theinstitution performance. This is proved by result of beta value ofunstandardized test which is score 0.73.

8 or 73.8 percent. This score giveindication that principle of transparency has positive effect to PoliteknikNegeri Batam performance.The thirdprinciple of good corporate governance is independence which is one conditionwhere the company is managed professionally without conflict of interest andinfluence from anyone or other party that does not match with the law and theprinciples of healthy corporate, Emirzon (2006). In this day, independence isfully needed to apply in the governance institution. In this is research, betavalue of unstandardized test of independence is 0.

729 or 72.9 percent whichindicate that it has a good adequate effect to the Politeknik Negeri Batamperformance.The fourthprinciple of good corporate governance is responsibility.

According to Emirzon(2006), the principle of responsibility is a management company’s conformitywith laws and regulations in force and the principles of healthy corporate.This principle is much essential to apply in governance of institution becauseperformance of institution is plentiful affected by this principle. Theprinciple of responsibility has score 0.956 or 95.6 percent of beta value ofunstandardized test which is the highest score of principle of good corporategovernance. It is confirmation that this principle has highly great influenceto the Politeknik Negeri Batam performance.

The last principleof good corporate governance is fairness principle which is explain about objectivityand equality in fulfilling the rights of stakeholders arising as a result ofthe agreement and the legislation in force. The principle of fairness is verywell to apply in governance an institution such as university, public company,and government because it will make similarity among stakeholders. In thisresearch, fairness, which has score of beta value of unstandardized test 0.799or 79.

9 percent, is the most important thing in good corporate governance andthe score of beta value shows us that fairness is significantly affected to thePoliteknik Negeri Batam performance.Finally,this research, which has aim to know effect of implementation of principles ofgood corporate governance to the institution performance, displays the result.Each of principles of good corporate governance has significant effect to theinstitution performance. The principle of responsibility becomes the mostprinciple which has influence to the Politeknik Negeri Batam performance.

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