Effects of Independent Commissioners, Institutional Ownership, and Audit Committees on Coal Mining Companies’ Profitability

Abstract

This study examines the effects of independent commissioners, institutional ownership, and audit committees on the profitability of coal mining companies listed on the Indonesia Stock Exchange during 2022–2024. The research is motivated by alleged coal mining corruption in Bengkulu involving nine suspects, eight of whom were company insiders, and estimated state losses of IDR 500 billion. These circumstances highlight the need to strengthen corporate governance so that management decisions are more accountable and support profitability. A quantitative design was employed, with purposive sampling yielding 14 eligible companies from a population of 33 and a total of 42 company-year observations. Panel data regression was conducted using EViews 12, incorporating leverage and firm size as control variables. The analysis included model selection, classical assumption tests, and hypothesis testing. The model selection procedure led to the common effects model. The results show that independent commissioners, institutional ownership, and audit committees have no statistically significant individual effects on profitability, whereas leverage and firm size have significant negative effects. The model is jointly significant and has an adjusted R-squared of 0.162660. These findings suggest that the presence or proportion of formal governance mechanisms alone does not necessarily translate into greater profitability in this industry. Future research should consider audit committee membership requirements and additional explanatory variables because most of the variation in profitability remains outside the model.