Exploring how good corporate governance shapes financial performance

Abstract

This research aims to comprehensively investigate the impact of Sharia Supervisory Board, Board of Commissioners, Board of Directors, and Audit Committee on the financial performance of Islamic banks in Indonesia through a literature review approach. Utilizing the SINTA database as the primary source, the study will identify, select, and analyze relevant literature to understand the extent of each supervisory entity's influence on the financial performance. According to the analyzed literatures, the Sharia Supervisory Board profoundly influences Islamic financial institutions, ensuring adherence to Sharia principles, building trust, and mitigating risks, positively impacting financial performance. The Board of Commissioners, integral in strategic decisions, risk management, and governance, shapes overall financial well-being. The Board of Directors significantly influences financial outcomes, overseeing transparency and regulatory compliance. The proposed commissioners' board, with an independent judiciary, aims for unbiased management evaluations, essential for good corporate governance. Lastly, the Audit Committee enhances financial performance by ensuring transparency and mitigating risks, a crucial component mandated for public companies in Indonesia.