CORPORATE GOVERNANCE AFFECTING PROFITABILITY OF THE LISTED COMPANIES IN THE SERVICE INDUSTRY SECTOR IN THE STOCK EXCHANGE OF THAILAND

Abstract

This research aims to study the rates of corporate governance affecting on the profitability of the listed companies in the service industry sector in the Stock Exchange of Thailand. The profitability measured by using the return on assets (ROA) and the return on equity ratio (ROE). The sample consisted of 39 companies listed in the service industry sector in the Stock Exchange of Thailand that had the corporate governance rating with excellence level, very good level, good level, and lower than good level for the consecutive years from 2008 to 2017. The data analysis and statistics used in the quantitative analysis, percentage was calculated and the multiple regression analysis was used to test the hypothesis with the significance levels of 0.01 and 0.05. The results of the study found that the companies with excellence level of the corporate governance were 7 companies or 16.50%, the companies with very good level were 12 companies or 31.50%, the companies with good level were 4 companies or 11.00% and the companies with lower than good level were 16 companies or 41.00%. The hypothesis testing found that the score on corporate governance in terms of independent director and non-duality of CEO were statistically significant affected the profitability measured by using the return on assets (ROA) and the return on equity ratio (ROE). While the ratio of independent directors and board size had no effect on profitability measured by using the return on assets (ROA) and the return on equity ratio (ROE).