Stock returns and financial performance

as mediation variables in the influence

of good corporate governance on
corporate value
Suhadak Kurniati

Abstract Suhadak Kurniati is based

Purpose – This paper aims to examine the influence of good governance on corporate value, in which at the Brawijaya University,
the stock returns and financial performance act as the mediator of the relationship among them. Malang, Indonesia.
Design/methodology/approach – This research was conducted on companies go public listed on the
Indonesia Stock Exchange and was included in 2011 to 2017 LQ45 index list, with samples taking a
purposive sampling approach through four criteria. Data analysis using WarpPLS with indicator
approaches are formative (mutually exclusive between indicators).
Findings – The findings are as follows: good corporate governance has a significant influence on stock
returns in a negative direction; good corporate governance has no significant influence on financial
performance; good corporate governance has no significant influence on company value; stock returns
have a significant influence on financial performance in a positive direction; financial performance has a
significant influence on stock returns with a positive direction; stock returns significantly influence the
value of the company in a positive direction; financial performance has a significant influence on the
company value in a positive direction.
Originality/value – The novelty in this study is that the relationship between stock returns and financial
performance is reciprocal, which is the relationship among variables that affect each other (back and
forth causality), in which in the previous study, the relationship between variables is only one direction;
besides, the previous study conducted an analysis to find out the influence of good corporate on stock
returns, company value and financial performance separately, with mixed results.
Keywords Governance, Financial performance, Corporate value, Stock return
Paper type Research paper

1. Introduction
This study aims to examine the influence of good governance on corporate value, in which
the Stock Returns and Financial Performance act as the mediator of the relationship among
them. Financial performance is one of the factors that show the effectiveness and efficiency
of an organization in order to achieve its objectives. The effectiveness will be achieved if
management has the ability to choose the right destination or the right tool to achieve the
set goals. Efficiency is interpreted as a ratio (comparison) between input and output, which
in a certain input will result in an optimal output. For a company, improving financial
performance is a necessity so that the company’s shares remain attractive to investors. The
financial statements published by the company are a reflection of the company’s financial
performance. Financial statements are the final results of the accounting process that is
Received 3 October 2018
prepared with the aim of providing financial information for a company. Financial information Revised 12 March 2019
can be used by the users for investment decision making. Financial reports provide Accepted 16 June 2019

DOI 10.1108/CG-10-2018-0308 © Emerald Publishing Limited, ISSN 1472-0701 j CORPORATE GOVERNANCE j

 ’relatively raw’ data. Financial managers need information (processed raw data). The goals
achieved depend on who needs information, and when the information is needed.
According to Brigham et al. (2007), if you want to maximize the value of a company,
management must take advantage of existing strengths and improve weaknesses in the
company. Financial analysis shows company’s performance comparison with other
companies, especially those engaged in the same industry and trends evaluation of the
company’s financial position so far.
This study will help management to identify weaknesses and take corrective steps. An
investor who wants to buy company share with a long-term orientation will see the
company’s ability to generate profits, future prospects, and the risk of investment in the
company. An analyst, in case of interpreting and analyzing financial statements, requires a
certain size. The measure that is often used in the financial analysis is “ratio.” According to
Ross et al. (2009), there are five types of financial ratios frequently used, namely, liquidity
ratio, activity ratio, leverage ratio, profitability ratio and market value ratio. According to
Brigham et al., return on equity (ROE) is one of the most important ratios used to measure
the level of a company’s profitability. ROE is net income for shareholders divided by total
shareholder equity. Shareholders certainly want to get a high rate of return on the capital
they invest, and ROE shows the level they earn. If ROE is high, the stock prices also tend to
be high, and an action increasing ROE is likely to also increase stock prices.
A capital market for the community is one of the means to invest money. Investments which
were initially carried out in the form of deposits, gold, land, or houses can now be made in
the form of stocks and bonds (securities). If investment in the form of a house or land
requires hundreds of millions of rupiah, then the investment in the form of securities can be
done with only no more than 5 million rupiahs. Hence, the capital market is a good means to
invest in amounts that are not too large for most people, if the capital market runs well,
honestly, the growth is stable, and the price is not too turbulent, so this facility will bring
prosperity to the community. In fact, the capital market in Indonesia does not contribute
much to the economy, there are many price frauds, and several cases like Bank Duta, Bank
Pikko, and many delistings so that the capital market is not managed properly (Samsul,
2006).
Practitioners and academics agree that one of the causes of this situation is the low
awareness and understanding of the principles of good corporate governance in
companies in Indonesia (CGPI report, 2004), while Asian Development Bank (ADB)
concludes that there are two causes of economic crisis in Asia, including Indonesia, namely
the supervision mechanism of the board of commissioners and the audit committee in the
company does not function effectively in protecting the interests of shareholders, thus the
application of the concept of good corporate governance in Indonesia is expected to
increase the professionalism and welfare of shareholders without ignoring the interests of
stakeholders.
It is difficult to deny, over the past ten years, good corporate governance has become
increasingly popular. The term is not only popular but also placed in a respectable position.
First, good corporate governance is one of the keys of the company’s success to grow and
be profitable in the long run, while winning global business competition. Second, the
economic crisis in Asian and Latin American regions, which is believed to occur, is due to
the failure of good corporate governance implementation (Daniri, 2005).
In 1999, East Asian countries which were equally affected by the crisis began to experience
recovery, except Indonesia. It must be understood that global competition that occurs is no
longer between countries, but between companies in those countries. Therefore, recovering
or the continued deterioration of a country’s economy depends on each company. This
understanding opens the horizon that companies in Indonesia have not been properly
managed. In a sense, companies in Indonesia never implemented good corporate

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governance (Moeljono, 2005). A survey conducted by Booz Allen in East Asia in 1998
showed that Indonesia had the lowest Corporate Governance index with a score of 2.88 far
below Singapore, Malaysia and Thailand by 8.93, 7.72 and 4.89, respectively. The low
corporate governance index in Indonesia is suspected to be the cause of the fall of these
companies.
Management consultant McKinsey & Co, carrying out a study in 1998, found that part of the
company’s market value in Indonesia listed on the capital market (before the crisis) turned
out to be overvalued.It was stated that around 90 per cent of the market value of public
companies is determined by growth expectation and the remaining 10 per cent is
determined by current earnings streams.For comparison, the value of healthy public
companies in developed countries is determined by the composition of growth expectation
of 30 per cent, and current earnings of 70 per cent which is the actual performance of the
company. Actually, there is “dishonesty” in the game on the capital market which is likely to
be carried out or regulated by those who are greatly benefited by the condition. Attention to
corporate governance was also mainly triggered by spectacular scandals such as Enron,
Worldcom, Tyco, London & Coononwealth, Poly Peck, Maxwell, and others. The collapse of
those public companies was due to the failure of the strategy and fraudulent practices of
top management which went on undetected for quite a long time because of the weak
independent supervision by corporate boards.
Recently, Indonesia has just gone through a reform of the financial services sector oversight
framework with the establishment of the Financial Services Authority (OJK), as mandated in
Law No. 21 of 2011 concerning OJK. This new financial sector oversight framework
emphasizes the importance of Indonesia to have a fundamentally and sustainable health
financial system which is able to protect the interests of consumers and society. The
implication of good corporate governance practices is one of the main contributors to
achieving this goal, which will lead to an increase in economic performance and sustainable
economic growth (OJK, 2014).
Starting in 2015, Indonesia is part of the ASEAN Economic Community; for this reason, there
is a need and encouragement to improve business practices carried out by companies in
Indonesia to be able to increase competitiveness. The strengthening of the competitiveness
of Indonesian companies, through the improvement of corporate governance practices, is
one way to spur financial and operational performance and increase investor confidence,
while providing access to incoming capital.
The aspects of corporate governance are based on the theories of Jensen and
Meckling (1976) in order to function as a medium to balance differences in interests
between management, shareholders and other stakeholders. Actually, the perspectives
contained in corporate governance contain the paradigm of shareholders and
stakeholders (interested parties). This difference refers to an understanding of the
conception of the company’s establishment goal so that influencing the needs of the
governance tools. This perspective changes the company’s mindset that companies
should pay attention to the interests of shareholders and stakeholders because their
activities will have an impact on the community considering the company has interests
with various parties in the external and internal environment of the company. Thus, the
relationship built should be based on the trust and refer to the business ethics in a
strategic-decision making.
A legal approach of corporate governance means that the key mechanism of corporate
governance is a protection of external investors, both shareholders, and creditors, through
a legal system, which can be interpreted by law and its implementation, even though the
reputation and ideas held by managers can assist in reaching for funds. Variations in law
and their implementation are the main things in understanding why companies in some
countries are easier to get funds than other companies.

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 Agency theory says that in a company there is a conflict between the manager and the
owner of the company, for that there is a need for supervision of the management of the
company to work in the interests of the owner of the company, thus the agency costs
appear to reduce the risk of loss. In business decisions, there are two main financial
considerations, namely: risk and return (Bender and Ward, 2002). Every financial decision
presents certain risks and characteristics of certain returns, a combination of these
characteristics can increase or decrease the stock price of a company.
The essence of corporate governance can be traced through two sides, namely the
theoretical-academic dimension and historical practice. The theoretical-academic
dimensions of corporate governance arise from the initial concept of a separation between
shareholders and management. This concept gives a rise to agency theory as proposed by
Jensen and Meckling (1976). Agency problems arise because of differences in interests
and asymmetric information between shareholders and management and other interested
parties, as well as the inability to write complete contracts for all agents/groups.
Asymmetrical information creates a problem of moral danger when managers have the
initiative to pursue their own interests at the expense of shareholders. Asymmetrical
information also creates an adverse selection problem when investors cannot see the true
economic value of the company. Imperfect information about the quality of management
and the economic value of the company results in a greater agency risk charged to
shareholders. Rational investors ask for a premium because they bear agency risk, which
effectively increases the company’s capital costs.
Corporate governance terminology appears as a tool, mechanism and structure used to
check managerial behavior that is self-serving, limits opportunistic behavior of managers,
improves the quality of company information and arranges relationships between all parties
so that their interests can be accommodated in a balanced manner. Interests interaction
arranged in a company also requires intention, trust, integrity, genuine effort and willingness
from all company organizers. The purpose of checking self-serving behavior is to improve
the operational efficiency of the company. Tools that are used to reduce self-serving
behavior and improve accountability cannot be efficient, if these tools hinder the
improvement of company performance. Based on the practical-historical dimension,
various events experienced by the business world both abroad and domestically have
encouraged good corporate governance practices. Those events were stockmarket
crashes in 1929 in the United States, the financial crisis of savings and loans, Bank of credit
and commercial international scandals, and the crisis in Asia in early 1997.
Gogineni et al. (2010) explained that at the time of the ownership functions separation and
the company management so there will be vertical and horizontal agency problems. Vertical
agency problems occur because managers as agents obtain authority from shareholders
as principals to manage the company, but the decisions made are not in accordance with
the interests of shareholders. Whereas horizontal agency problems occur because among
the majority shareholders have control in the company’s decisions by exploiting minority
shareholders.
Vertical agency problems can occur due to the managerial share ownership, both in high
and low ownership proportions. Morck et al. (1988) found that the high proportion of
managerial share ownership led to entrenchment behavior, namely the decision of
managers who prioritized their interests by overriding the interests of other shareholders, as
with the small proportion of managerial ownership, in making a decision, the manager is not
oriented to maximize company’s value. Wen and Jia (2010) explained that the proportion of
managerial ownership is small; managers will collude with institutional shareholders as
controlling shareholders to utilize company resources for their benefit.
In Indonesia, vertical agency problems occur such as information asymmetry (Alwy and
Schech, 2004), an action to manipulate earnings (Herawati, 2008), excessive use of debt

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(Wiliandri, 2011), and are reluctant to distribute free cash flow in the form of dividends to
shareholders (Mai, 2010). Horizontal agency problems in developing countries including
Indonesia are due to the presence of concentrated ownership in institutional shareholders,
which in turn encourages controlling shareholders to expropriate minority shareholders
(Alwy and Schech, 2004). In addition, controlling shareholders can collaborate with
managerial authorities by overriding the interests of other shareholders or taking advantage
of the controlling power (Wen and Jia, 2010). On the other hand, institutional shareholders
as controlling shareholders can more effectively monitor managerial behavior because they
are more capable and have professional resources than individual shareholders (Lotto,
2013).
Signaling theory says that a good quality company will intentionally signal to the market, so
the market is expected to be able to distinguish good and bad quality companies. In order
to create an effective signal, it must be able to be captured by the market and perceived
well. A good quality company is shown through good corporate governance; this will later
provide a signal by submitting financial reports and governance information that the
company has achieved in a certain period of time in a timely manner. Signals given by good
quality companies are considered good news, while signals given by companies with poor
quality are considered bad news.
The return expected by investors in the form of dividends and capital gains, according to
the Residual Theory of Dividends, the company sets a dividend policy after all profitable
investments have been financed. The dividend paid is “residual” after all profitable
investment proposals have been financed (Hanafi, 2012). According to the residual
dividends theory, financial managers will take the following steps:
䊏 establishing optimum capital budgeting. Receiving (implementing) all investment
proposals that have a positive NPV;
䊏 determining the number of shares needed to finance the new investment while
maintaining the ideal capital structure (target);
䊏 using internal funds to fund the funding needs of these shares; and
䊏 paying dividends only if there are remaining funds from internal funds, i.e. after all
investment proposals with a positive NPV are funded (Hanafi, 2012, p. 372)

Companies that are still in the growth stage will need large funds to expand their business,
one of the sources of funds that can be used is the profits obtained. If the company within is
expanding its business uses profits, it will reduce the amount of dividend distribution.
According to Bender and Ward (2002), companies that are in the growth stage tend to set a
relatively small dividend payout ratio compared to companies that are at the maturity stage.
Fuenzalida et al. (2013) examined the influence of good corporate governance on stock
returns in Peru. These research results indicate that the companies which announce in good
corporate governance index produce positive abnormal returns, Rani et al. (2013) found a
strong influence of Corporate Governance Score on Indian company stock returns
measured using Abnormal Return, Brammer et al. (2009) states conversely, corporate
governance has a negative effect on stock returns measured using Abnormal return. While
Chen et al. (2004) found a significant positive effect of corporate governance on stock
returns as measured by using expected return, but Drobetz et al. (2003) found a negative
influence. Kouwenberg et al. (2014) found an interesting finding that the poor governance
portfolio has a significant effect on the high returns measured using realized returns,
compared to good portfolio corporate governance.
Chaghadari (2011) found corporate governance (board independence, CEO duality,
ownership structure, and board size) as a mechanism that helps to align management
objectives with stakeholders to improve company’s performance (ROE and ROA).

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 Kyereboah-Coleman (2007) found that corporate governance (CEO Duality, Board Size,
Frequent of Board Meeting, Size of Audit Committee, Audit Committee Independence,
Organizational Size, Organizational Age, Institutional Share Holdings) has a significant and
positive influence on company’s performance as measured by ROA and ‘Tobin’s Q.
Mashayekhi and Bazaz (2008) found that corporate governance (Board Size, Board
Independence, CEO duality, Institutional Directors) has a negative influence on financial
performance (Tobin’s Q, ROE, ROA, EPS and Annual Stock Returns).
Some studies examine the relationship between good corporate governance and company
value. Wahab et al. (2007) examined 440 companies listed on the Malaysia Exchange, they
found a significant increase in corporate governance (Corporate Governance index) and
gave a large influence on shareholder wealth measured using Market to book value of
equity. Connelly et al. (2012) found that corporate governance (Board Size, Board
Independence) has a negative influence on company value (Tobin’s Q, ROA, Firm Size,
Capital Expenditures, Financial Leverage, Corporate Index, and Family Ownership). Jauhar
(2014) found that corporate governance (The proportion of Independent Audit committees,
the proportion of Independent Commissioners) has a significant and positive effect on
company value (MBR, Tobin’s Q, and Closing Price). Unlike (Wulandari and Widaryanti,
2008; Sulong and Mat Nor, 2008) stated that good corporate governance has no influence
on company value.
Johnson et al. (2005) investigated companies included in the Inverstorability Responsibility
Research Center (IRRC) having governance index and stock returns from the Center for
Research in Security Price (CRSP), they found a significant effect of stock returns
(Abnormal Return) on company’s performance (Tobin’s Q) . Jiao (2010) found that stock
returns (Stock returns) have a positive effect on company’s performance (NPM, Sales
Growth, Tobin, s Q, Size, Age, B/M Ratio).
Riley et al. (2003) in his study found that accounting earnings (EPS) significantly related to
stock returns. Alwathainani (2009) in his research shows that the consistency of growth in
the past company’s financial performance can predict future returns. But it is different from
the research conducted by Trueman et al. (2003) who found little evidence that returns can
be explained well by disclosed earnings reports. Lehn and Makhija (1996) in their study
found that financial performance (EVA, MVA, ROA, ROE, and ROS) has a positive effect on
Stock Returns. Sharma’s (2009) research result shows that the financial performance (ROA,
MVE, BVE, B/M ratio) has a non-significant effect on stock returns.
Huang et al. (2011) in their study found that investors need to seriously assess corporate
governance when making investment decisions because good governance does not only
have a positive effect on stock returns but also can stabilize stock prices during a crisis.
Jiao’s (2010) research result shows that the higher the stock returns, the higher the trust of
shareholders, so that the company’s value gets better (Tobin’Q and B/M Ratio). Johnson
et al. (2005) found that there is a significant effect of stock returns on company value.
Varaiya et al. (1987) found that financial performance has a significant effect on company
value, this is consistent with the research conducted by Ghosh and Ghosh (2008) finding
that profitability ratios have a significant and positive effect on company value. In contrast to
the research conducted by Manaje (2012), it shows that financial performance has a
negative relationship with company value.
Based on the previous research result, it can be concluded that there has been a fairly
fundamental gap regarding the influence of good corporate governance on stock returns,
the influence of good corporate governance on financial performance, the influence of good
corporate governance on company value, the influence of stock returns on performance
finance, the influence of financial performance on stock returns, the influence of stock
returns on company value, and the influence of financial performance on company value.

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This has created a gap that provides an opportunity to do a more in-depth study of these
variables.
This research is basically extended replication from the previous studies. The novelty in this
study is that the relationship between stock returns and financial performance is reciprocal,
which is the relationship among variables that affect each other (back and forth causality),
in which in the previous study, the relationship between variables is only one direction,
besides, the previous study conducted an analysis to find out the influence of good
corporate on stock returns, company value, and financial performance separately, with
mixed results. The diversity of the results is influenced by the different locations of the
company (country), type of industry, research period, and the analytical methods used.

2. Theoretical review
This study examined seven influences among variables. The theory that becomes the basis
for testing the influence among variables will be explained next.

2.1 The influence of good corporate governance on stock return

There are four theories that can be used as the basis for testing the effect of good corporate
governance on stock returns, namely:

2.1.1 Agency theory. Agency theory (Jensen and Meckling, 1976) is a theory that studies
how to design contracts that can motivate rational agents to act on behalf of the principal
when the interests of the agent are contrary to the interests of the principal. If both parties
(owners and agents) have a conflict of interest, where the agent does not always act in
accordance with the interests of the owner, then this conflict can be minimized through
agency cost, namely the sum of the costs of supervision by the owner through the board of
commissioners, institutional ownership, and public ownership in terms of dividend
distribution and supervision of share prices. Regarding agency problems, the concept of
good corporate governance is expected to be a tool that gives investors’ confidence that
they get a return on invested funds. Shleifer and Vishny (1997) stated that good corporate
governance concerns how investors control managers to provide benefits and behave
honestly in the management of company resources. Messier et al. (2000) revealed that a
good corporate governance system is needed so that managers can be supervised and
guided in investing and managing corporate resource; therefore, corporate governance
consists of all relevant parties, processes, and activities placed to ensure the accuracy of
the management of company assets.

2.1.2 Residual theory of dividend. Residual theory of dividend states that the company sets
a dividend policy after all profitable investments have been financed. A company still in the
stage of growth usually requires large funds to expand their business, one source of funds
that can be used is the profits obtained. If the company within is expanding its business
using profits, it will reduce the amount of dividend distribution (Bender and Ward, 2002).

2.1.3 Empirically testing the clientele effec.t The clientele effect theory states that the group
(clientele) of different shareholders will have different preferences for the company’s
dividend policy. The argument underlying Miller and Modigliani regarding the existence of
the clientele effect is that investors expecting current income from investments will buy
shares from the company that pays high dividends, while investors who do not need cash
income now will invest their funds in companies that pay low dividends. The consequences
of the arguments from Miller and Modigliani lead to:
䊏 The company has set a certain dividend payment policy that can attract the attention of
the clientele consisting of investors who like such dividend policies.

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 䊏 The tax rate difference between dividends and capital gains may lead to the tendency
for each company to attract certain clientele consisting of investors who have biases in
dividend policy or dividend payments (Brigham, 1995).
2.1.4 The theory of power. There are two main competing powers within the company,
namely shareholders and managers. Managers exactly have the power to make all
decisions on behalf of the company, while the shareholders have the power to determine
the direction of the company through their voting rights. Shareholders also have a tendency
to work together to form a ruling group because the concentration of ownership can reduce
agency problems between shareholders and managers. If the manager also serves as a
shareholder, the greater the power in the company. The greater the ownership by one party
(institution, management, or block), the most dominant party can determine company
policy, for example in determining dividend distribution and stock price (Smith and Watts,
1992):
H1. Good corporate governance has a significant influence on stock returns.

2.2 Influence of good corporate governance on financial performance

There is one theory that can be the basis of the influence of good corporate governance on
financial performance:
2.2.1 Agency theory. Agency theory (Jensen and Meckling, 1976) is a theory that studies
how to design contracts that can motivate rational agents to act on behalf of the principal
when the interests of the agent are contrary to the interests of the principal. If both parties
(owners and agents) have a conflict of interest, where the agent does not always act in
accordance with the interests of the owner, then this conflict can be minimized through
agency cost, namely the sum of the costs of supervision by the owner through the board of
commissioners, institutional ownership, and public ownership as a tool, mechanism and the
structure used to check self-serving managerial behavior, limits opportunistic behavior of
managers, improves the quality of company information and arranges relationships
between all parties so that their interests can be accommodated in a balanced manner.
Interests interaction arranged in a company also requires intention, trust, integrity, genuine
effort and willingness from all company organizers. The purpose of checking self-serving
behavior is to improve the operational efficiency of the company which can ultimately
improve the company’s financial performance.
H2. Good corporate governance has a significant influence on financial performance

2.3 The influence of good corporate governance on company value

There is one thing that can be the basis of the influence of good corporate governance on
the company value:
2.3.1 Agency theory. Agency theory is a theory that studies how to design contracts that
can motivate rational agents to act on behalf of the principal when the interests of the agent
are contrary to the interests of the principal. This agency theory was proposed by Jensen
and Meckling (1976). The assumption in this study is that the company is separated from its
owner. Agency relations are contracts between one or more people as owners and others
as agents to act in the interests of the owner, including delegating decision-making
authority to agents with the aim of maximizing the value of the company. If both parties
(owners and agents) have a conflict of interest by the agent does not always act in
accordance with the interests of the owner, this conflict can be minimized through agency
cost, which is the sum of the costs of supervision by the owner, the cost of the agent, and
residual loss.
H3. Good corporate governance has a significant influence of company value.

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2.4 The influence of stock returns on financial performance
There are two theories that form the basis of the influence of stock returns on financial
performance:
2.4.1 Residual theory of dividend. The return expected by investors are in the form of
dividends and capital gains, according to the Residual Theory of Dividends, the company
sets a dividend policy after all profitable investments have been financed. Dividends paid
are “residuals” after all profitable investment proposals have been financed (Hanafi, 2012).
This residual dividends theory is supported by Bender and Ward (2002) which states that
companies that are in the growth stage tend to set a dividend payout ratio which is relatively
smaller than companies that are at the maturity stage.
2.4.2 Signaling theory. Signaling theory (Ross, 1977) is about how companies should signal
to report users, in the form of information about what the manager has done in realizing the
owner’s desires. Signals can be in the form of stock returns, or other information which
states that the company is better than other companies.
H4. Stock returns have a significant influence on Financial Performance

2.5 The influence of financial performance on stock returns

There are two theories that form the basis of the influence of financial performance on stock
returns:
2.5.1 Signaling theory. Signaling theory (Ross, 1977) is about how companies should signal
to report users, in the form of information about what the manager has done in realizing the
owner’s desires. Signals can be in the form of financial performance which is important for
some parties. For shareholders, profit is one of the factors that determine dividend policy,
the greater the profit earned, the higher the dividends will earn, and usually will be well
responded by the market so that the share price will go up. For investors, profit is an
attraction to invest funds in the company.
2.5.2 Asymmetry theory. Asymmetry theory states that parties related to the company do
not have the same information about the prospects and risks of the company. Managers
usually have better information than outside parties such as investors.
Net Income Approach Static Trade of Theory and Free Cash Flow Hypothesis proposed by
Jensen and Meckling (1976) explain that a company with good profits will be seen as a
good place to invest capital and will be a target, especially from large investors who will
invest their capital for a long period of time in the hope of getting dividends in a sustainable
manner and of course increasing capital Gain.
H5. Financial Performance has a significant influence on Stock Returns

2.6 The influence of stock returns on company value

There are two theories that form the basis of the influence of stock returns on company
value:
2.6.1 The bird in the hand theory. The bird in the hand theory (Gordon et al., 2012 and
Lintner, 1956) states that dividend policy will increase the value of the company because of
the uncertainty of the company’s cash flow in the future, investors prefer the more certain
dividends now than uncertain capital gains in the future.
2.6.2 Teori clientele effect. This theory states that groups (clientele) of different shareholders
will have different preferences for the company’s dividend policy. The shareholder group
that currently needs income prefers a high dividend payout ratio, whereas the group of
shareholders who don’t need money very much now prefers if the company holds up a
large portion of the company’s net income. Tax differences for individuals (for example

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 elderly people are taxed lighter), then shareholders who are imposed tax higher prefer
capital gains because they can delay payment of taxes. This group prefers if the company
shares a small dividend.
The argument underlying Miller and Modigliani regarding the existence of the clientele
effect is that investors who want current income from investment will buy shares in
companies that pay high dividends, while investors who do not need cash income now will
invest in companies that pay low dividends. This consequence of Miller’s argument and
modification led the company to establish a certain dividend policy, which then drew from
the clientele consisting of investors who like such dividend policies, and the tax rate
difference between dividends and capital gains might lead to a tendency for each company
to attract attention of certain clientele which consists of investors who have a tendency to
dividend policy or dividend payment (Brigham, 1995).
The existence of groups with different views on dividends and capital gains can be
explained through Gordon’s thoughts about bird in the hand theory. This group prefers to
get current income in the form of dividends so they want companies to distribute large
amounts of dividends This group considers the risks and the certainty of return that will be
received based on the understanding that current income in the form of dividends is more
valuable than capital gains because it minimizes risk and reduces uncertainty. Other
groups based on Litzenberger and Ramaswamy’s thinking about tax preference theory
tend to dislike dividend payments and like capital gains for some reasons related to taxes
for higher dividends compared to capital gains. Another consideration of this group is that
companies with low dividend payments so the retained earnings will be reinvested in
profitable investment projects in the future. If you use this assumption, then the value of the
company’s shares will increase. The difference in the current value shares with the shares
value in the future is what causes investors to tend to like capital gains.
H6. Stock returns have a significant influence on Company Value

2.7 The influence of financial performance on company value

There is one theory that becomes the basis of the influence of financial performance on the
company value:
2.7.1 Empirically testing asymmetry theory. Asymmetry theory states that parties related to
the company do not have the same information about the prospects and risks of the
company. Managers usually have better information than outside parties such as investors.
2.7.2 Signaling theory. Signaling theory (Ross, 1977) is about how companies should signal
to report users, in the form of information about what the manager has done in realizing the
owner’s desires. Signals can be in the form of financial performance which is important for
some parties. For shareholders, profit is one of the factors that determine dividend policy,
the greater the profit earned, the higher the dividends will earn, and it usually will be well
responded by the market so that the share price will go up. For companies that go public,
the value of the company is reflected in the price of their shares. The higher the stock price,
the higher the value of the company (Husnan, 2012).
H7. Financial performance has a significant influence on company value.

3. Methodology
This research was conducted on companies go public listed on the Indonesia Stock
Exchange and was included in 2011 to 2017 LQ45 index list. The companies chosen to be
included in the LQ45 list as research objects are with consideration that the company
shares generally have a certainty of return and have good market performance and
corporate fundamentals (blue chips stock). The LQ45 index only consists of 45 shares

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selected through various selection criteria, so that it will consist of stocks with high liquidity
and market capital and have good growth prospects and financial conditions, besides, the
companies included in the LQ45 consist of various moving companies in various sectors, so
that it is expected to represent companies listed on the Indonesia Stock Exchange.
As many as 84 populations (Issuers) listed on the Stock Exchange throughout 2011-2017,
with samples taking a Purposive Sampling approach through 4 criteria, namely consecutive
registered, publish financial statements, distribute dividends, and those who have
implemented good corporate governance. From the calculation results, it is obtained that 25
companies which meet the criteria, and the size of the observation is 7  25 = 175
observations.
Exogenous variables are variables that affect endogenous variables, both those with
positive effects and negative effects (Ferdinan, 2006). The exogenous variable used in this
study is good corporate governance (X) with the following indicators: The proportion of
independent commissioners (X1.1), institutional ownership (X1.2), managerial ownership
(X1.3), public ownership (X1.4).
Exogenous and endogenous variables used in this study are stock returns and financial
performance, with following indicators:
䊏 stock returns (Y1) with following indicators: abnormal return (Y1.1), dividend yield (Y1.2);
and
䊏 financial performance (Y2) with following indicators: free cash flow (Y2.1), return on
assets (Y2.2), ROE (Y2.3).

Endogenous variable of this research is Company Value with following indicator: Company
Value (Y3) with following indicators:
䊏 market to book value of equity (Y3.2); and
䊏 price earning ratio (Y3.3).

Data analysis using WarpPLS with indicator approaches are formative (mutually exclusive
between indicators), and structural models as presented in Figure 1.

Figure 1 Research model

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 4. Results and discussion
There are seven influences between the variables tested; in this study, they will be
discussed as follows:

4.1 The influence of good corporate governance on stock returns

H1 which states that good corporate governance (consisting of the proportion of
independent commissioners, institutional ownership, managerial ownership, and public
ownership) has a significant effect on stock returns (consisting of abnormal returns and
yield dividends) received with path coefficients 0.023 and P 0.00. The effect of good
corporate governance on stock returns is negative meaning the greater the good corporate
governance, the smaller the stock returns, or every 1 per cent increase in good corporate
governance will reduce stock returns by 0.023 per cent, and from the four indicators of
good corporate governance used in this study, indicators of managerial ownership and
institutional ownership most strongly reflect good corporate governance. This result is not in
accordance with the theory and previous research which becomes the basis for the
formulation of the hypothesis.
The results of this study do not support agency theory which states that good corporate
governance should have a positive impact on stock returns (abnormal return and dividend
yield). The practice of good corporate governance is possible to have a significant effect on
the negative direction of stock returns based on the thought implications of Jensen and
Meckling (1976) which have revealed that there are differences of interests between
company managers and company shareholders, among others, when the company has a
low managerial shareholding (even managers do not have company share ownership), the
company manager prefers the proportion of retained earnings that is greater than dividends
with the intention of pursuing growth and bonuses for his performance. Institutional
shareholders also have the potential to not want dividends because the tax rate imposed on
dividends is higher than the level of tax imposed on capital gains. Independent board of
commissioners, according to Siregar and Siddharta (2005), state that the appointment of an
independent board of commissioners by the company may only be done to comply with
regulations. This condition is also confirmed by the survey results of the Asian Development
Bank (2002) which states that the strong control of the company’s founder and majority
share ownership makes the board of commissioners not independent. The supervisory
function that should be the responsibility of the board of commissioners is ineffective.
The research results confirm several previous studies on the effect of good corporate
governance on stock returns. A study carried out by Brammer et al. (2009) with the results
showing that companies included in the top 100 companies produce negative abnormal
returns, but these companies tend to be in a period of growth. Erkens et al. (2012) through
their research results during the crisis showed that the independent board and higher
institutional ownership experienced worse stock returns. Unlike the research conducted by
Fuenzalida et al. (2013) showing that companies included in the good corporate
governance index produce positive abnormal returns, as well as the one conducted by Rani
et al. (2013) revealing that companies with high rankings in corporate governance produce
positive abnormal returns.

4.2 The influence of good corporate governance on financial performance

H2 stating that good corporate governance has a significant effect on financial performance
is rejected with a path coefficient 0.004 and a p-value of 0.064. The direction of the
influence of good corporate governance on financial performance is negative. The direction
of negative influence means that the greater the good corporate governance (the proportion
of independent commissioners, institutional ownership, managerial ownership, and public
ownership), the smaller the financial performance (free cash flow, ROA and ROE). This

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result is not in accordance with the theory and previous research which becomes the basis
for the formulation of the hypothesis.
Agency theory proposed by Jensen and Meckling (1976) with the principle of basic thinking
that states the separation of managerial functions and share ownership of the company. If
both parties have a conflict of interest, where the agent does not always act in accordance
with the interests of the owner, then this conflict should be minimized through agency cost,
namely, the sum of the costs of supervision by the owner through the board of
commissioners, institutional ownership, and public ownership as tools, mechanisms,
structures that are used to check self-serving managerial behavior. The purpose of
checking self-serving behavior is to improve the operational efficiency of the company
which in turn can improve the company’s financial performance. However, in practice,
independent commissioners appointed for supervisory and advisory duties do not work
optimally, as well as managerial ownership, because the proportion of ownership is still so
small so having not been able to align the interests of management and shareholders.
This research results confirm several previous studies about the effect of good corporate
governance on financial performance. The study conducted by Kyereboah-Coleman (2007)
show that CEO ownership and institutional ownership can increase profitability and provide
a positive signal to investors. Bauer et al. (2008), through their research results, show that
companies that govern governance well have better company performance than
companies that manage the company poorly. Chaghadari’s (2011) research results show
that corporate governance has a positive effect on company performance. Wahyu (2013)
the results of his research show that corporate governance has an effect on financial
performance. Other studies show different results, such as the study conducted by Fallatah
and Dickins (2012) showing that corporate governance has no influence on financial
performance. Jauhar’s (2014) research results show that corporate governance has a
significant and negative influence on financial performance.

4.3 The influence of good corporate governance on company value

H3 states that good corporate governance has a significant influence on rejected corporate
values with path coefficient 0.021 and p-value 0.803. The direction of the influence of
good corporate governance on company value is negative. The direction of this negative
influence means the greater the good corporate governance (the proportion of independent
commissioners, institutional ownership, managerial ownership, and public ownership), the
smaller the value of the company (MBE and PER). This result is not in accordance with
the theory and previous research which becomes the basis for the formulation of the
hypothesis.
Based on the theoretical-academic dimensions of corporate governance arises from the
initial concept of a separation between shareholders and management. This concept bears
agency theory proposed by Jensen and Meckling (1976). At the time of separation of
ownership and management functions, agency problems will occur, where the manager as
an agent who obtains authority from shareholders to manage the company acts in
accordance with the interests of the shareholders. Independent commissioners appointed
by shareholders to oversee and provide advice to companies do not work optimally,
managerial ownership is still small, has not been able to balance interests that are oriented
towards maximizing company value. Wen and Jia (2010) explains that the proportion of
managerial ownership is small, managers will collude with institutional shareholders as
controlling shareholders, to utilize company resources for their benefit. Morck et al. (1988)
state that the proportion of managerial ownership is small, managers in making decisions
are not oriented towards maximizing company value.
The results of this study confirm several previous studies about the effect of good corporate
governance on company value. The study conducted by Fallatah and Dickins (2012) show

j CORPORATE GOVERNANCE j
 that corporate governance has an influence on company value. Wahyu’s (2013) research
result reveals that corporate governance has a positive influence on company value. Jauhar
(2014) the results of his research show that corporate governance has a positive effect on
company value.

4.4 The influence of stock returns on financial performance

H4 states that stock returns (consisting of Abnormal return and Dividend yield) have a
significant influence on financial performance (consisting of Free cash flow, ROA, and ROE)
received with path coefficients of 0.677 and p-values of 0.00. The direction of stock returns
influence on financial performance is positive. This direction can be interpreted by the
greater stock returns, the greater the financial performance. Stock returns in this study
indicate that the most dominant dividend yield indicator shapes stock returns. This result is
in accordance with theory and previous study which becomes the basis of the hypothesis
formulation.
Signaling theory (Ross, 1977) is about how companies should signal to users of the report,
in the form of information about what has been done by the manager in realizing the wishes
of shareholders. Miller and Modigliani stated that companies are reluctant to reduce
dividend payments because they have anticipated a high increase of profits in the future,
and conversely, reduction in dividend payments is a signal to investors who predict
companies to have bad profits in the future. The implication of the signaling model from
dividends is that dividend changes should be followed by profitability changes in the
direction of the same relationship.
The results of this study confirm several previous studies about the effect of stock returns on
financial performance. Those studies were carried out by Johnson et al. (2005) whose
results show that there is a significant influence of stock returns on company performance,
Jiao’s (2010) research result shows that the higher the stock returns, the higher the trust of
shareholders, so that the company’s performance gets better, besides that stock returns
have a significant positive influence on company’s performance.

4.5 The influence of financial performance on stock returns

H5 states that financial performance (consisting of free cash flow, ROA, and ROE) has a
significant influence on stock returns (consisting of abnormal returns, and dividend yields)
received with a path coefficient of 0.676 and a p-value of 0.000. The direction of the
financial performance influence on stock returns is positive meaning means the greater the
financial performance, the greater the stock returns. Financial performance meant in this
study shows that the most dominant return on assets (ROA) shapes financial performance.
This result is in accordance with the theory and previous research which becomes the basis
of the hypothesis formulation.
The appropriate theory to connect the influence of financial performance on stock returns is
the signaling theory. Companies that have high financial performance will attract investors
to invest in hopes of getting high returns, both in the form of dividends and capital gains.
The high interest of investors to buy company shares as a result of the company’s good
performance results in an increase in the price of the company so that abnormal returns will
also increase. As with the dividend policy, companies will increase their dividends as a
result of the company’s financial performance increase because the size of dividends
received by shareholders depends on the size of the profits obtained by the company.
Nowadays, there are many company leaders who base the company’s performance on
financial performance. The paradigm adopted by many companies is profit oriented.
Companies being able to earn large profits can be said to be successful or have good

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performance. Conversely, if the profits obtained by the company are relatively small, it can
be said that the company is less successful or poor performance.
Return on assets (ROA) is one of the important elements of profitability. This ratio shows the
company’s ability to make efficient use of assets for the company’s operations. Return on
assets provides an overview to investors about how the company converts money invested
in net income. Therefore, ROA is an indicator of a company’s profitability in using its funds
to generate net income. The higher the ROA, the more effective the company’s
performance will be, and will further increase the attractiveness of the company to investors
and thus have an impact on increasing the company’s stock price.
The results of this study confirm several previous studies on the influence of financial
performance on stock returns. The influence of financial performance on stock returns has
been empirically proven by several researchers. Those studies were conducted by Lehn
and Makhija (1996) revealing that all variables show a positive relationship with the stock
returns, a study conducted by Riley et al. (2003) show that accounting earnings significantly
influence stock returns, and Alwathainani’s (2009) research results show that the
consistency of the company’s past financial performance growth can predict future returns.

4.6 The influence of stock return on company value

H6 states that stock returns have a significant influence on company value received with
path coefficient 0.211 and p-value of 0.000. The influence of stock returns (consisting of:
abnormal return and dividend yield) on company value (MBE and PER) is positive meaning
the greater the stock returns, the greater the value of the company, or 1 per cent increase in
stock returns will increase the value of the company by 0.211 per cent. Stock returns
variables use two indicators that form these variables, namely; abnormal return and
dividend yield. Of the two indicators, the biggest form of stock returns is the dividend yield
indicator with an estimated standardized weight of 0.993. This result is in accordance with
the theory and the previous study which forms the basis of the hypothesis formulation.
The appropriate theory to connect the influence of stock returns on company value is the
bird in hand theory (Gordon et al., 2012 and Lintner, 1956) which states that dividend policy
will increase the company value due to uncertainty in the company’s cash flow in the future.
There is a tendency for stock prices to rise if there are announcements of dividend
increases, and prices will drop if there are announcements of dividend reductions (Hanafi,
2012). For companies go public, the company value is reflected in the price of their shares.
The higher the stock price, the higher the company value (Husnan, 2012).
Dividend signaling theory reveals that dividend changes are a signal about the company’s
prospects in the future. The decrease in the amount of dividends by investors is considered
bad news because it indicates the condition and prospects of the company in a bad
condition, resulting in the stock price falling. Conversely, the increase in dividend payments
by companies to the shareholders is considered good news because it indicates the
company’s condition and prospects are in good condition, resulting in a positive reaction
from investors and this can affect the increase in stock prices. Other information contained
in high dividend payments indicates that the company has a high cash flow signaling
hypothesis. In addition, companies that pay dividends will reflect that the company has a
low risk. Papadopoilos and Charalambidis (2007) stated that dividends can be used not
only as a tool to provide signals about the company’s prospects in the future but also to
manipulate stock prices so it can increase.
This research result confirm several previous studies. The influence of stock returns on
company value has been empirically proven by several researchers. Those studies were
conducted by Akhigbe et al. (1993); Denis et al. (1994) whose results show that an increase
in dividends has a positive relationship to stock prices. Johnson et al. (2005) revealed that
there is a significant influence on stock returns on company value. Jiao’s (2010) research

j CORPORATE GOVERNANCE j
 results show that the higher the stock returns, the higher the trust of shareholders, so that
the performance and value of the company get better.

4.7 The influence of financial performance on company value

H7 states that financial performance has a significant influence on accepted company value
with path coefficient of 0.699 and p-value of 0.000. The direction of the financial
performance influence (free cash flow, ROA, and ROE) on company value (MBE and PER)
is positive, which means the better the financial performance the higher the company value,
or every 1 per cent increase in financial performance will increase the company value by
0.699 Financial performance in this study shows that the most dominant indicator of return
on assets (ROA) forms the company value. This result is in accordance with the theory and
the previous study which forms the basis of the hypothesis formulation.
The appropriate theory to connect the influence of financial performance on company value
is signaling theory (Ross, 1977). It is about how companies should provide signals to users
of reports in the form of information about the company’s financial performance. According
to Easterbrook (1984), there is a cheaper method for companies to give investors signal that
companies can publish announcements about prospects and the ability of companies to
generate profits by hiring the external company to test the company’s books or other
material and provide opinions whether or not managers say the truth.
According to Brigham et al. (2007), if having an intention to maximize the company value,
management must take advantage of existing strengths and improve weaknesses in the
company. An investor will buy company shares with a long-term orientation, will see the
company’s ability to generate profits, future prospects, and investment risk in the company,
thus companies that have good financial performance is one good signal in increasing the
value of the company.
This research result confirms several previous studies. The influence of financial
performance on company value has been empirically proven by several researchers. Those
studies were carried out by Varaiya et al. (1987), it revealed that financial performance has
a positive influence on company value. Wahyu’s (2013) research results show that financial
performance measured using indicators of ROA, ROE, and NPM has a significant influence
on company value by using Tobin’s Q, PER, and closing price indicators. Jauhar’s (2014)
research results show that financial performance with ROA and ROE indicators have a
positive influence on company value with the MBR, Tobin’s Q and closing price indicator. In
contrast to the research conducted by Manaje (2012), revealing that financial performance
has a negative influence on company value.

4.8 Contribution of research result

There are three theories used to construct this research hypothesis. A summary of the result
suitability to the theory can be seen in the following Table I:

4.9 Research limitation

There are limitations to this study, namely:

Table I The summary of conformity and incompatibility of research results with theory
No. Theory Hypothesis result

1 Agency theory H1, H2, H3 (do not support agency theory)

2 Signaling theory H4, H5, H7 (support signaling theory)
3 The bird in the hand theory H6 (support the bird in the hand theory)
Source: Data processed

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䊏 Managerial ownership as one of the indicators of good corporate governance variables
is expected to help to unify interests between managers and shareholders so
managers share directly the benefits of decisions taken and also bear the losses as a
consequence of making wrong decisions. That argumentation indicates the importance
of managerial ownership in the company ownership structural, but the research result
produce managerial ownership data which is still very small, of the 22 companies
studied, only 6 companies have managerial share ownership with an average of under
1 per cent.
䊏 Public ownership as one of the indicators of good corporate governance variables
indicates public confidence in the company that can have a great strength in
influencing the company through mass media in the form of criticism or comments, the
research result shows that public ownership data is quite large with an average of 38.35
per cent, exceeding the minimum 7.5 per cent limit determined by the ISE, but not
strong reflecting the closeness of the relationship with good corporate governance.

5. Conclusion and suggestion

Based on the results of the analysis and discussion which has been conducted, the
following seven conclusions are as follows:

1. Good corporate governance has a significant influence on Stock Returns in a negative

direction. The direction of negative influence means that high good corporate
governance results in low stock returns. The results of this study confirm agency theory
(Jensen and Meckling, 1976) which states that there are differences of interests
between shareholders and managers, among others, when a company has a low
manager’s stock (not even company shares), then the company’s manager prefers a
greater proportion of retained earnings than dividends with the intention to pursue
growth and bonuses for their work performance. Institutional shareholders also have
the potential to not want dividends because the tax rate imposed on dividends is higher
than the level of tax imposed on capital gains. The results of the study conducted by
Brammer et al. (2009) shows that companies included in the top 100 companies show
negative abnormal returns, but these companies tend to be in the growth stage.
2. Good corporate governance has no significant influence on financial performance. The
influence direction of the good corporate governance on financial performance is
negative, which means the greater the good corporate governance, the smaller the
financial performance. These research results are not in accordance with the agency
theory (Jensen and Meckling, 1976) which states that supervision by owners through
independent commissioners, institutional ownership, and public ownership should be
used as a tool to check managerial behavior benefiting themselves to improve
operational efficiency companies that can ultimately improve financial performance.
Fallatah and Dickins’ (2012) research results state that corporate governance has no
influence on financial performance.
3. Good corporate governance has no significant influence on company value. The
influence direction of good corporate governance on company value is negative
meaning that the greater the good corporate governance, the smaller the company
value. The results of this study are not in accordance with the agency theory (Jensen
and Meckling, 1976) which should be used as the right contract designer to harmonize
the interests of shareholders and managers in the event of a conflict of interest.
Independent boards of commissioner appointed to oversee and provide advice to
companies do not work optimally, managerial ownership that is still small has not been
able to balance interests oriented to maximizing company value. A study conducted by
Fallatah and Dickins (2012), Wahyu (2013), Jauhar (2014) indicate that good corporate
governance has a significant influence on company value.

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 4. Stock returns have a significant influence on financial performance in a positive
direction, meaning that the greater the stock returns, the greater the financial
performance. These research results confirm signaling theory (Ross, 1977) about how
companies should signal to report users, in the form of information about what has been
done by managers in realizing the wishes of shareholders. The implication of the
dividends signaling model is that dividend changes should be followed by changes in
profitability in the direction of the same relationship. The result of the study conducted
by Johnson et al. (2005) and Jiao (2010) show that there is a significant influence of
return on Financial performance.

5. Financial performance has a significant influence on stock returns with a positive

direction, meaning that the greater the financial performance, the greater the stock
returns. This research results confirms Signaling theory (Ross, 1977). Companies with
high financial performance are a good signal for investors to invest in hopes of getting
highr return too. A study conducted by Lehn and Makhija (1996), Riley et al. (2003) and
Alwathainani (2009) reveal that there is a significant influence of financial performance
on stock returns.

6. Stock returns significantly influence the value of the company in a positive direction,
meaning that the greater the stock returns, the greater the value of the company The
results of this study confirm the bird in the hand theory (Gordon et al., 2012 and Lintner,
1956) which states that a high dividend policy will increase the company value because
of the uncertainty of cash flow in the future. A study conducted by Akhigbe et al. (1993),
Jiao (2010) shows that stock returns have a significant influence on company value.

7. Financial performance has a significant influence on the company value in a positive

direction, meaning that the better the financial performance, the better the company
value. The results of this study confirm the signaling theory (Ross, 1977) about how
companies should give users a signal of information about company financial
performance. An investor will buy company share with a long-term orientation, will see
the company’s ability to generate profits, future prospects, and investment risk of the
company, thus companies that have good financial performance is one good signal in
increasing the company value. A study conducted by Varaiya et al. (1987), Wahyu
(2013), and Jauhar (2014) show that financial performance has a significant influence
on company value.
Based on the limitations of the study and the results obtained, the suggestions from this
study for further research are:
䊏 Further research is recommended to develop variables, especially exogenous
variables, because this study uses only one exogenous variable, namely the good
corporate governance variable. The exogenous variables recommended for further
research are capital intellectuals and financial psychology.
䊏 Further research is recommended to develop observations with diverse industries and
even compare companies that have implemented good corporate governance with
companies that have not implemented good corporate governance.

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Further reading
Hiraki, T., Inoue, H. and Masuda, H. (2003), “Corporate governance and firm value in Japan: evidence
from 1985 to 1998”, Pacific-Basin Finance Journal, Vol. 11 No. 3, pp. 239-265, available at: www.elsevier.
com/locate/econbase
PT. Bursa Efek Indonesia (2011), “Pedoman tata kelola perusahaan (cod of corporate governance) versi
1.0”.

Corresponding author
Suhadak Kurniati can be contacted at: kurniaty.ub@gmail.com

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