ABSTRACT
This study aimed to examine the effect of Good Corporate Governance on financial performance with the capital structure and earnings management as mediating variable. This study used secondary data from Indonesia Stock Exchange on SOE period 2011-2015. The population in this study were 97 go public SOEs in Indonesia during the period 2011-2015. Sampling technique used was purposive sampling. Of the 97 population, there were 67 state-owned enterprises that matched the criteria to be sampled for this research. Hypothesis testing was done by using Partial Least Squares—with software warpPLS version 5.0. The results of this study showed:1) capital structure mediated the effect of mechanisms of good corporate governance on financial performance; 2) earning management did not mediate the effect of mechanisms of good corporate governance on financial performance; 3) capital structure and earnings management did not mediate the effect of good corporate governance on financial performance.
