ABSTRACT

The objective of this research is to analyze and establish the effect of corporate governance on tunneling incentive and on financial distress and their impact of corporate turnaround on manufacturing companies as listed in Indonesia Stock Exchange over 2013-2018. Data were obtained from the Statistics Indonesia Stock Exchange (IDX) or Bursa Efek Indonesia (BEI) using 32 companies listed in IDX as sample.
The outcome of this research shows that the Board of Commissioners has direct effects on financial distress and on independent commissioner that has the effect on tunneling incentive and on financial distress, while financial distress has also the effect on corporate turnaround. On the other hand, Independent Commissioner, the Board of Commissioners, institutional ownership and tunneling have no effect on company turnaround. In addition to that, the Board of Commissioners and Institutional Ownership also do not have the effect on tunneling incentive. In this regard, independent commissioner and institutional ownership do not make financial distress. Another
result of this analysis on the indirect influence between corporate governance and company turnaround as mediated by tunneling incentives and financial distress indicates that there is no indirect effect between corporate governance and company turnaround mediated by tunneling incentive and financial distress.

Keywords : Turnaround, Mechanism of Corporate Governance, The Board of Commissioners, Independent Commissioner, Institutional Ownership, Tunneling Incentive and Financial Distress