Bram Hadianto

Supervisory board plays an essential role to implement good governance in firm. If this governance is implemented well, the increase in firm value will occur. Related to this statement, the main question that appears is about the number and independence rate of supervisory board members needed to enhance firm value. Besides supervisory board, debt policy holds an important role for firm because of bankruptcy issue. Firm with good governance tries to avoid this issue by decreasing the amount of its debt to create high value.
The aim of this study is to test and analyze the effect of board governance, consisting of size and independence of supervisory board, and debt policy on value of non-financial firms forming the Kompas 100 Index on Indonesia Stock Exchange. To be able to generalize results on all non-financial firms forming this index, stratified random sampling method is used to take firms as the sample from the population. Method of data analysis used is fixed effect regression model.
This study infers that the number of supervisory board members has no effect on firm value, whereas board independence and debt policy have the effect on firm value: firm with high portion of supervisory board independence and the amount of debt significantly tends to have low value.

The distribution of funds becomes the identity and function of banks. By performing this function well, the banks can get profit to survive. One of the considered factors affecting this channeling function is the issuance of government bonds to finance the state budget, which may be harmful to this bank channeling function. Therefore, to prove this situation, it is necessary to check a causal relationship between the government bond value and the bank intermediary function through this study, adding bank size and loans as a control variable.
This study utilizes the banks listed on the capital market of Indonesia as the population. Furthermore, the Slovin formula and a simple random sampling method are employed to determine the number of banks to be the samples and take them. Also, the regression model with pooled data and the t-statistic test are used to estimate its coefficients and examine the proposed hypotheses, respectively.
Overall, this study demonstrates that the government bond value positively affects the bank intermediary function. This indicates that the crowding-out does not exist. By this evidence, the government does not need to worry because this debt does not disturb the bank function to deliver the credit to society. Likewise, bank size and bad loans have a positive impact on this function. Thus, banks must be able to diversify risks among their assets and restructure bad loans when performing this function.

Issuing bonds is one of the alternative ways for non-financial companies to get money from the public besides borrowing money from banks. Compared with getting money banks, obtaining money from the bond market is slightly economical because the companies are not essential to borne the intermediation cost anymore. As a consequence, the companies in the bond market will get the assessment from the appointed agency. Furthermore, the rating of bonds will determine their reputation.
Mentioning the literature review, the bond ratings are affected by the features of the supervisory board: size, independence, and audit committee. Therefore, this research intends to attain two goals. Firstly, it aims to prove and analyze the impact of the supervisory board size and independence, as well as the audit committee size on the company’s possibility to get a high bond rating with profitability as the control variable. Secondly, it intends to know the accuracy rate of grouping the company bond ratings through the classification matrix.
The population originates from the non-financial companies. The total samples are determined by the Slovin formula with a boundary of the fault of 10%. Based on this formula, the total samples are 36 companies. Furthermore, they are randomly grabbed from the population. The ordered probit regression model and the classification matrix are utilized to analyze the data.
Based on the data analysis, this research finds out that the supervisory board size and independence, the audit committee size, and profitability positively affect the bond ratings. It means that the number of the commissioner board and the members of the audit committee have to be added until achieving the maximum level to monitor the performance of the directors so that the company can reach a high bond rating. To sum up, board governance is effective in improving the company’s bond rating.