Increase awareness about GCG

Oct 13, 2025 by magicalceylontours.com 114 views

Effect of Quality Implementation of Good Corporate Governance on Real Estate and Property Company Profit Management Practices Listed on the Indonesia Stock Exchange

Introduction

The implementation of Good Corporate Governance (GCG) is a crucial aspect of a company's success, particularly in the real estate and property sector. As companies listed on the Indonesia Stock Exchange (IDX) strive to maintain transparency and accountability in their management practices, the quality of GCG implementation becomes a vital indicator of their health. This study aims to investigate the effect of GCG implementation on profit management practices in real estate and property companies listed on the IDX, with a focus on the period from 2007 to 2008.

Background

Good Corporate Governance (GCG) is a set of principles and practices that promote transparency, accountability, and fairness in a company's management. In the real estate and property sector, where investment and asset management decisions are critical, GCG implementation is expected to minimize the practice of unethical earnings management. The quality of GCG implementation is often measured by factors such as managerial ownership, the Board of Commissioners, and the Audit Committee. These factors are expected to increase transparency and accountability in management, ultimately leading to better earnings management practices.

Research Methodology

This study uses a quantitative approach with a linear regression method to analyze the data from the annual reports of 17 companies listed on the IDX. The variables studied include managerial ownership, the Board of Commissioners, and the Audit Committee as independent variables, while earnings management functions as the dependent variable. The data was collected from the official website of the IDX, www.idx.co.id.

Research Results

The results of this study show that the quality of GCG implementation, represented by managerial ownership, the Board of Commissioners, and the Audit Committee, did not have a significant effect both partially and simultaneously on the company's earnings management. This finding suggests that although there is an effort to implement GCG, it is not strong enough to influence decisions related to earnings management in real estate and property companies.

Additional Analysis and Explanation

This finding raises questions about the effectiveness of GCG implementation in Indonesia, particularly in the real estate and property sectors. Several factors may contribute to this outcome, including a lack of understanding or commitment of management to the principles of GCG. Additionally, pressure to meet market expectations can encourage companies to practice more aggressive earnings management despite implementing GCG.

It is also essential to consider that GCG is a sustainable process. Although currently, it has not shown a significant effect, companies that continue to improve the quality of GCG are expected to obtain long-term benefits, including investor confidence and a better reputation in the market.

Conclusion

In conclusion, this study indicates that good GCG implementation is not always directly proportional to the practice of ethical earnings management. Therefore, there is a need for greater efforts to increase awareness about the importance of GCG among company managers and tighter supervision from regulators to ensure that earnings management practices do not harm stakeholders. In the long run, this can create a more transparent and accountable business environment in the real estate and property industry in Indonesia.

Recommendations

Based on the findings of this study, the following recommendations are made:

Increase awareness about GCG: Companies should prioritize increasing awareness about the importance of GCG among their managers and employees.
Tighter supervision from regulators: Regulators should tighten supervision to ensure that companies implement GCG principles effectively.
Continuous improvement of GCG: Companies should continue to improve the quality of GCG implementation to obtain long-term benefits.
Strengthening of the Board of Commissioners and Audit Committee: Companies should strengthen the Board of Commissioners and Audit Committee to ensure that they are effective in overseeing the company's management practices.

Limitations of the Study

This study has several limitations, including:

Limited sample size: The study only analyzed data from 17 companies listed on the IDX.
Limited time period: The study only examined the period from 2007 to 2008.
Limited variables: The study only examined managerial ownership, the Board of Commissioners, and the Audit Committee as independent variables.

Future Research Directions

Future research should aim to:

Examine a larger sample size: Future studies should examine a larger sample size to increase the generalizability of the findings.
Examine a longer time period: Future studies should examine a longer time period to capture the long-term effects of GCG implementation.
Examine additional variables: Future studies should examine additional variables, such as corporate culture and leadership style, to gain a more comprehensive understanding of the relationship between GCG implementation and earnings management practices.
Frequently Asked Questions (FAQs) about the Effect of Quality Implementation of Good Corporate Governance on Real Estate and Property Company Profit Management Practices Listed on the Indonesia Stock Exchange

Q: What is Good Corporate Governance (GCG)?

A: Good Corporate Governance (GCG) is a set of principles and practices that promote transparency, accountability, and fairness in a company's management. It is essential for companies to implement GCG to ensure that they operate in a responsible and sustainable manner.

Q: Why is GCG important for real estate and property companies?

A: GCG is particularly important for real estate and property companies because they often involve significant investment and asset management decisions. Good GCG implementation can help minimize the practice of unethical earnings management and ensure that companies operate in a transparent and accountable manner.

Q: What are the key factors that affect GCG implementation?

A: The key factors that affect GCG implementation include managerial ownership, the Board of Commissioners, and the Audit Committee. These factors are essential for ensuring that companies operate in a transparent and accountable manner.

Q: What are the benefits of GCG implementation?

A: The benefits of GCG implementation include increased transparency and accountability, improved investor confidence, and better reputation in the market. Companies that implement GCG effectively can also enjoy long-term benefits, including increased profitability and sustainability.

Q: What are the challenges of GCG implementation?

A: The challenges of GCG implementation include a lack of understanding or commitment of management to the principles of GCG, pressure to meet market expectations, and the need for continuous improvement. Companies must be aware of these challenges and take steps to address them.

Q: How can companies improve their GCG implementation?

A: Companies can improve their GCG implementation by increasing awareness about the importance of GCG among their managers and employees, strengthening the Board of Commissioners and Audit Committee, and continuously improving their GCG practices.

Q: What is the role of regulators in ensuring GCG implementation?

A: Regulators play a crucial role in ensuring GCG implementation by tightening supervision and enforcement of GCG principles. They must also provide guidance and support to companies to help them implement GCG effectively.

Q: What are the implications of this study for real estate and property companies listed on the IDX?

A: The findings of this study suggest that real estate and property companies listed on the IDX should prioritize GCG implementation to ensure that they operate in a transparent and accountable manner. They should also take steps to address the challenges of GCG implementation and continuously improve their GCG practices.

Q: What are the implications of this study for regulators and policymakers?

A: The findings of this study suggest that regulators and policymakers should prioritize GCG implementation and enforcement to ensure that companies operate in a responsible and sustainable manner. They should also provide guidance and support to companies to help them implement GCG effectively.

Q: What are the limitations of this study?

A: This study has several limitations, including a limited sample size, limited time period, and limited variables. Future studies should aim to address these limitations and provide a more comprehensive understanding of the relationship between GCG implementation and earnings management practices.

Q: What are the future research directions for this study?

A: Future research should aim to examine a larger sample size, examine a longer time period, and examine additional variables, such as corporate culture and leadership style, to gain a more comprehensive understanding of the relationship between GCG implementation and earnings management practices.