The Effect of Good Corporate Governance on Corporate Performance: Evidence from Multinational Companies in Indonesian

Abstract

Corporate performance is a critical indicator of an organization’s ability to achieve strategic objectives and maintain business sustainability. In multinational companies characterized by complex organizational structures, cross-border operations, and multiple stakeholder interests, the quality of corporate governance becomes increasingly important. This study examines the effect of Good Corporate Governance (GCG) on corporate performance among multinational companies operating in Indonesia. A quantitative approach with a verification method was employed. Primary data were collected through questionnaires distributed to division heads and managers. Of 80 questionnaires distributed, 50 usable responses were obtained, representing a response rate of 62.5%. Good Corporate Governance was measured through five dimensions: transparency, accountability, responsibility, independency, and fairness, while corporate performance was assessed using the Balanced Scorecard perspectives. Data were analyzed using Structural Equation Modeling–Partial Least Squares (SEM-PLS). The results show that Good Corporate Governance has a positive and statistically significant effect on corporate performance. These findings indicate that stronger implementation of corporate governance principles is associated with higher corporate performance. The study highlights that GCG should not merely be regarded as a compliance mechanism but also as a strategic governance capability that supports effective decision-making, stakeholder confidence, and sustainable corporate performance.