The Effect of Good Corporate Governance on Financial Performance (Empirical Study on Rural Banks in Denpasar City Period 2018-2020)

ABSTRACT : Financial performance is a picture of the state of an organization or company as measured through financial analysis, so that the condition of a company can be known whether it is in good condition or not within a certain period of time. The implementation of good corporate governance mechanism will lead to an increase in the financial performance of a company. The purpose of this study was to obtain empirical evidence regarding the effect of good corporate governance on financial performance. This research was conducted at BPRs in the Denpasar City area for the 2018-2020 period. The number of samples used was 19 BPRs with non-probability sampling method. Data was collected using non-participant observation methods. The data collected was then analyzed using multiple linear regression analysis techniques. The results of this study indicate that good corporate governance has a positive effect on financial performance. Theoretically, this study contributes to agency theory in explaining financial performance. The practical implication of this research for BPRs is to maximize the application of good corporate governance mechanisms in order to achieve better financial performance and for people who want to invest in BPRs, it can be considered in determining the location to invest.

KEYWORDS: Good corporate governance, Financial performance, Size, Rural Banks