The Role of Good Corporate Governance Mechanisms in Enhancing Earnings Quality of Islamic Commercial Banks in Indonesia: A Panel Data Analysis

Abstract

This study aims to see the effect of Good Corporate Governance on earnings quality. This research is a quantitative study with a descriptive correlational approach. The population used in this study consists of Islamic Commercial Banks that are actively operating in Indonesia within the 5 years from 2019 to 2023, with a sample of 10 Islamic Commercial Banks selected using a purposive sampling technique. The data used is secondary data, namely, data obtained from annual reports published by each bank. Hypothesis testing was conducted using panel data regression analysis with EViews 12. The independent variables used in this study are the Independent Board of Commissioners, Board of Directors, Sharia Supervisory Board, and Audit Committee, which are examined in relation to Good Corporate Governance and earnings quality as the dependent variables. The results of this study indicate that, partially, the variables of the Independent Board of Commissioners and the Board of Directors have a positive and significant effect on earnings quality, while the Sharia Supervisory Board and Audit Committee do not significantly affect earnings quality. Simultaneously, the Good Corporate Governance variable has a significant positive effect on earnings quality.