DETERMINANTS OF

FINANCIAL
PERFORMANCE
NATHANIA KRISTIN
201450120
 TABLE OF CONTENT

I. CHAPTER I - INTRODUCTION
II. CHAPTER II - THEORETICAL FRAMEWORK AND HYPHOTESES
DEVELOPMENT
III. CHAPTER III – RESEARCH METHOD
 TABLE OF CONTENT

I. CHAPTER I – INTRODUCTION
1.1 Research Background
1.2 Research Problems
1.3 Research Objectives and Contributions

1.3.1 Research Objectives

1.3.2 Research Contribution
 TABLE OF CONTENT

II. CHAPTER II - THEORETICAL FRAMEWORK AND HYPHOTESES

DEVELOPMENT
2.1 Grand Theory
2.2 Previous Research
2.3 Research Model
2.4 Hypotheses Development
 TABLE OF CONTENT

III. CHAPTER III – RESEARCH METHOD

3.1 Research Design and Research Object
3.2 Operational Definition of Variables and Measurement
3.3 Data Analysis Methods
 1.1 RESEARCH BACKGROUND

The Determinants of Financial Performance in Property and Real Estate Sector

Listed in Indonesia Stock Exchange (IDX)

The Determinants of Financial Performance

FINANCIAL
STATEMENT

FINANCIAL
PERFORMANCE

GOOD
CORPORATE
GOVERNANCE

THE BOARD OF
DIRCETORS
 THE DIFFERENCES BETWEEN PREVIOUS
RESEARCH WITH THIS RESEARCH

PREVIOUS RESEARCH
DIFFERENCES THIS RESEARCH SUPPORTED BY
Priya and Nimalathasan (2013)

- Board of Directors Meeting

- Board of Directors Meeting
- Average Age
- Average Age
- Number of Woman in Board
- Number of Woman in Board
- Board Composition
- Inside Directors
VARIABLE - Board Size
- CEO Duality
- Liquidity Deitiana and Habibuw (2015)
- Board Composition
- Leverage Deitiana and Habibuw (2015)
- Board Size
- Managerial Ownership Deitiana and Habibuw (2015)

- Using hotels and restaurants - Using property and real estates

SAMPLE
in Sri Lanka sectors on IDX

PERIOD 2008 - 2012 2014-2016

 1.2 RESEARCH PROBLEM
1. BOD Meeting
Does
2. Average Age
3. Number of
Woman in Board
4.Board Influence Financial
Composition Performance
5. Board Size
6. Leverage
7. Liquidity
8. Managerial
Ownership
 1.3.1 RESEARCH OBJECTIVES

The 3. Number 4. Board 8.

1. BOD 2. Average 5. Board On Financial
Influence of Woman Compositi 6. Leverage 7. Liquidity Managerial
Meeting Age Size Performance
Of : in Board on Ownership
1.3.1 RESEARCH CONTRIBUTION
2.1 GRAND THEORY

Agent

Principle
 2.2 PREVIOUS RESEARCH
Indepent Variables Previous Researchers Effect to Financial Performance

- Ntim and Osei (2011) - Positive

1. Board of Directors Meeting - Sakilu and Kibret (2015) - Positive
- Priya k. and Nimalathasan (2013) - No Correlation

- Dagsson and Larrson (2011) - Positive

2. Average Age - Abdullah and Ismail (2013) - Negative
- Priya K. and Nimalathasan B. (2013) - No Correlation

- Shrader et al (1997) - Positive

- Erhardt, Werbel and Shrader (2003) - Positive
3. Number of Woman in Board
- Adams and Ferreira (2009) - Postive
- Priya K. and Nimalathasan B. (2013) - Positive
Indepent Variables Previous Researchers Effect to Financial Performance

- Voß (2014) - Negative

- Manini and Abdillahi (2015) - Negative
- Sakilu and Kibret (2015) - No Correlation
- Rao and Desta (2016) - No Correlation

- Ghabayen (2012) - Negative

- Babatunde and Olaniran (2009) - Negative
- Mangena et al (2012) - Negative
4. Board Composition
- Abdulazeez et al (2016) - Negative
- Bebeji (2015) - Positive
- Priya K. and Nimalathasan B. (2013) - No Correlation

- Bebeji et al (2015) - Negative

- Ongore et al (2015) - Negative
- Manini and Abdillahi (2015) - Negative
5. Board Size
- Babatunde and Olaniran (2009) - Positive
- Mangena et al (2012) - Positive
- Abdulazeez et al (2016) - Positive
Indepent Variables Previous Researchers Effect to Financial Performance

- Ghabayen (2012) - No Correlation

- Priya and Nimalathasan (2013) - No Correlation
- Sakilu and Kibret (2015) - No Correlation
- Rao and Desta (2016) - No Correlation

- Almajali (2012) - Positive

- Xu and Banchuenvijit (2013) - Positive
6. Liquidity
- Omondi and Muturi (2013) - Positive
- Deitiana and Habibuw (2015) - No Correlation

- Babatunde and Olaniran (2009) - Positive

- Aquino (2010) - Positive
- Mandaci and Gumus (2010) - Positive
- Almajali (2012) - Positive
7. Leverage
- Omondi and Muturi (2013) - Negative
- Xu and Banchuenvijit (2013) - Negative
- Voβ (2014) - Negative
- Deitiana and Habibuw (2015) - Negative
Indepent Variables Previous Researchers Effect to Financial Performance

- Mangena et al (2012) - Negative

- Babatunde and Olaniran (2009) - Negative
8. Managerial Ownership
- Mandaci and Gumus (2010) - No Correlation
- Deitiana and Habibuw (2015) - No Correlation
 2.3 RESEARCH MODEL

Board
Board Size
Composition

NWB in Board Liquidity

Average Age Leverage

BOD Financial Managerial

Meetings Performance Ownership
 2.4 HYPOTHESES DEVELOPMENT
Ha1: Board of directors meeting has
influence on financial performance
Ha2: Average age of board of directors has
influence on financial performance
Ha3: Number of women in board of
directors has influence on financial
performance.
Ha4: Board composition of directors has
influence on financial performance.
Ha5: Board director’s size has influence on
financial performance
Ha6: Leverage has influence on financial
performance.
Ha7: Liquidity has influence on financial
performance
Ha8: Managerial ownership has
influence on financial performance.
 3.1 RESEARCH DESIGN AND RESEARCH
OBJECT

• Causality Research
Classified

• property and real estate firms listed in IDX

Population

• property and real estate firms listed in IDX from 2014 to

Sample 2016
CRITERIA FOR THE RESEARCH SAMPLE

1. Property and real estate firms that are consistently listed in

Indonesia Stock Exchange from 2014 until 2016 as a property
and real estate firms

2. Property and real estate firms that published their financial

statements and annual reports as of 31 December from 2014
until 2016
 3.2 OPERATIONAL DEFINITION OF VARIABLES
AND MEASUREMENT
Independent Variable Operational Definition Measurement
Board of Directors Meetings Number of regular meetings held by BOD Meeting
the board of directors during each = The number of regular meetings
fiscal year
Average Age The age of each member in the 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑎𝑔𝑒
board = The average age of BOD′ s member

Number of Woman in Board The diversity of gender in the firms 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑜𝑚𝑎𝑛 𝑖𝑛 𝑏𝑜𝑎𝑟𝑑
= 𝑇ℎ𝑒 𝑟𝑎𝑡𝑖𝑜 𝑜𝑓 𝑡ℎ𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑓𝑒𝑚𝑎𝑙𝑒
𝑑𝑖𝑟𝑒𝑐𝑡𝑜𝑟𝑠 𝑡𝑜 𝑏𝑜𝑎𝑟𝑑 𝑠𝑖𝑧𝑒

Board Composition The proportion of non-executive Board Composition

directors to total number of directors 𝑁𝑜𝑛 − 𝑒𝑥𝑒𝑐𝑢𝑡𝑖𝑣𝑒 𝑑𝑖𝑟𝑒𝑐𝑡𝑜𝑟𝑠
=
in board. 𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑖𝑟𝑒𝑐𝑡𝑜𝑟𝑠 𝑖𝑛 𝑏𝑜𝑎𝑟𝑑
Independent Variable Operational Definition Measurement
Board Size The size of the board of directors Board Size
that the company has = Total number of directors in board

Liquidity The ease with which an individual 𝐶𝐴

CR =
or company can meet their 𝐶𝐿
financial obligations with the
liquid assets available to them
Leverage The percentage of company’s 𝑇𝐿
DER =
equity which are provided by 𝑇𝐸
creditors
Managerial Ownership The proportion of stock held by Managerial Ownership =
the commissioner and the board of Dummy variable
director from total share
outstanding but In Indonesia
dichotomous of managerial
ownership is using the dummy
variable
Dependent Variable Operational Definition Measurement
Financial Performance Profitability for all 𝐸𝐵𝐼𝑇
ROA =
contributors of capital 𝑇𝐴
3.3 DATA ANALYSIS METHOD

Descriptive
Data
Statistics
Quality Test
Test

Classical
Hypotheses
Assumption
Test
Test