Generolo Jono Žemaičio Lietuvos karo akademija

The first objective of this study is to examine the relationship between the size of the Board of Directors and audit committee on the company’s financial performance; the second is to test the size of the Board of Directors and the audit committee on the implementation of Enterprise Risk Management (ERM); the third is to examine the relationship of the application of ERM on the company’s financial performance;, and fourth is to test the relationship of the size of the Board of Directors and audit committee on the company’s financial performance when mediated by the adoption of ERM. The research sample is 70 firm-years Indonesian non-financial companies listed during 2013-2016. Structural equation Modeling (SEM) with the WarpPLS approach has been used for data analysis. The results showed that the size of the Board of Directors affected the company’s financial performance, while the size of the audit committee did not affect the financial performance. The size of the Board of Directors and the audit committee influence the implementation of ERM. The application of ERM affects the company’s financial performance. The application of ERM mediates partially the relationship between the size of the Board of Directors and the company’s financial performance, but the application of ERM does not mediate the relationship between the size of the audit committee and the company’s financial performance. The results of the study have implications for agency theory and resource dependence theory where a large Board of Directors is a solution to the problem of resources for supervision in improving organizational performance through the effective implementation of ERM.