ABSTRACT
The purpose of this study is to investigate the impact of internal governance structures in relation to managerial performance in Indonesian companies. In this research, we employed three proxy variables to measure internal governance structures such as: board, ownership, and compensation structure as independent variables, and Tobins Q as a proxy of managerial performance. The sample of the study were the companies whose stocks are actively traded on the Indonesia Stock Exchange. The data used were panel data, namely, the data of cross section and time series from the period of 2006 to 2011. The sampling was simple random sampling, and the analytical techniques were logistics regression analysis. The findings generally suggest a strong effect of internal governance structure measures in this data set. First, it is found that independent commissioners are effective in monitoring managerial performance, but the impact is negative. Secondly, the small proportion of managerial ownership is also found to be important result in this analysis. A higher proportion of insider ownership leads to decrease in managerial performance. Finally, there is a strong support for the view that the provision of executive bonuses has a positive impaction of managerial performance. The results suggest that granting incentive compensation to managers is an appropriate way to increase their performance.
