The Effect of Corporate Governance Internal Mechanism to the Stock Return: A Literature Review

Purpose: This paper would like to review the past studies related to the influence of corporate governance internal mechanism on a firm's stock return. Materials and Methods: This study uses systematic literature review to synthesize the relationship between corporate governance internal mechanism and the firm’s stock return. Results: Past researchers found several indices that can measure internal corporate governance mechanisms. The measurement is calculated based on variables such as board size, board compositions, board process, board structure, board characteristics, gender diversity and ownership concentration practice. Those indicators which contribute to a company's sustainable orientation, improved business performance and better stock return. Research Limitations or Implications: The terms of corporate governance and its underlying factors are very popular among researchers, but the comparison between different industries and different regions remains an interesting subject to be explored. Originality/Value: This article compiles various research about corporate governance from different industries and different parts of the world.