Pharmaceutical companies are one of the crucial sub-sector companies in Indonesia since the COVID-19 pandemic, where the need for medicine increased to cure people of their sicknesses and increase general endurance. Many companies in Indonesia especially the pharmaceutical sub-sector need to ensure that their company implements good corporate governance as their operational basis as it can be beneficial for the business and can help the business reach success.
This study aims to analyze whether good corporate governance that is proxied by the board of commissioners, board of directors, and audit committee can influence the company’s profitability that is measured by Return on Assets (ROA) and Return on Equity (ROE) both partially and simultaneously.
The research will be using the quantitative research method with a sample of 10 pharmaceutical companies that are listed on the Indonesia Stock Exchange within 2017 – 2021 that have been chosen through the purposive sampling criteria with the data analysis technique of panel data regression model. The data analysis technique used is descriptive statistical analysis and panel data regression analysis.
Based on the hypothesis testing performed, it can be concluded that the audit committee has a negative and significant effect on Return on Assets (ROA) but does not have a significant effect on Return on Equity (ROE) and the board of commissioners, board of directors, and audit committee simultaneously affect Return on Assets (ROA) but has no effect on Return on Equity (ROE), while the board of commissioners and board of directors have no significant effect on Return on Assets (ROA) and Return on Equity (ROE). Board of Commissioners, board of directors, and audit committee can explain the variable of Return on Assets (ROA) (Y1) by 15.8% while the 84.2% are explained by other variables out of this research, meanwhile for the variable Return on Equity (ROE) (Y2) can be explained by the independent variables by 1.94% while the 98.06% are explained by other variables out of this research.
Keywords: Good Corporate Governance, Profitability, Pharmaceutical Companies