The Effect of Human Capital on the Role of the Board of Commissioners

This study aims to provide empirical evidence of the influence of human capital on the monitoring and the advising role of the board of commissioners. The monitoring of management behavior is needed because of the separation of authority between the shareholder and manager. One of the roles of monitoring is the monitoring of financial statements presented by management. In addition to monitoring, the board of commissioners plays a role in providing strategic advice to formulate corporate strategies and policies. The population is manufacturing companies listing on the Indonesia stock exchange for the period 2008-2014. Sampling using a purposive sampling method and obtained 792 observations. Processing and analyzing data using the Partial Least Square. The findings of this study indicate that human capital influences the monitoring and the advising role of the board of commissioners. This proves that the human capital of the board of commissioners is indispensable in supporting the implementation of roles. The level of knowledge, experience, and expertise of the board of commissioners that is adequate can reduce earning management and increase profitable investment for the company. Thus, when a company chooses a board of commissioners it is necessary to consider human capital.