Does Profitability Mediate the Influence of Corporate Governance on Firm Value?

Authors

  • Niken Wulandari Universitas Muhammadiyah Surakarta
  • Imronudin Imronudin Universitas Muhammadiyah Surakarta
  • M. Farid Wajdi Universitas Muhammadiyah Surakarta
  • Ihwan Susila Universitas Muhammadiyah Surakarta

DOI:

https://doi.org/10.9744/ijbs.5.2.217-226

Keywords:

Corporate Governance, Profitability, Firms' Value

Abstract

This study examines the effect of corporate governance on firm value with profitability as an intervening variable. This study uses a sample of banking companies listed on the Indonesia Stock Exchange in 2016-2020. The sampling technique used was the purposive sampling technique. This type of research is quantitative with path analysis using the software Eviews 9. The results of this study indicate that: 1) Independent commissioners and institutional ownership have no significant effect on the profitability variable, while the board of directors, public ownership, and managerial ownership have a significant positive effect on profitability. 2) Profitability has a significant positive effect on firm value. 3) Public ownership and managerial ownership have a significant positive effect on firm value, while independent commissioners, board of directors, and institutional ownership have no significant effect on firm value. 4) Independent commissioners and institutional ownership have no significant effect on firm value through profitability. Meanwhile, the board of directors, public ownership, and managerial ownership positively and significantly affect firm value through profitability.

References

Alabdullah, T. T. Y., Ahmed, E. R., & Ahmed, R. R. (2021). Organization features and profitability: Implications for a sample of Emerging Countries. JABE (Journal of Accounting and Business Education), 5(2), 43–52.

Alabdullah, T. T. Y., Yahya, S., & Ramayah, T. (2014). Corporate governance mechanisms and Jordanian companies’ financial performance. Asian Social Science, Canadian Center of Science and Education, 10(22), 247.

Ali, M. (2019). Pengaruh Kepemilikan Institusional, Kepemilikan saham publik, umur perusahaan, dan ukuran perusahaan terhadap profitabilitas dengan jumlah bencana alam sebagai moderasi. Jurnal Magister Akuntansi Trisakti, 6(1).

Anjani, L. P. A., & Yadnya, I. P. (2017). Pengaruh good corporate governance terhadap profitabilitas pada perusahaan perbankan yang terdaftar di BEI. Udayana University.

Azmy, A., Anggreini, D. R., & Hamim, M. (2019). Effect of good corporate governance on company profitability RE & property sector in Indonesia. Jurnal Akuntansi, 23(1), 18–33.

Brigham, E. F., & Houston, J. F. (2021). Fundamentals of Financial Management. Cengage Learning.

Budiandriani, B. (2021). Influence of ownership structure on company profitability and value in companies. ATESTASI: Jurnal Ilmiah Akuntansi, FEB Universitas Muslim Indonesia, 4(1), 112–119.

Buniamin, S., Alrazi, B., Johari, N. H., & Abd Rahman, N. R. (2008). An investigation of the association between corporate governance and environmental reporting in Malaysia. Asian Journal of Business and Accounting, Faculty of Business and Accountancy. University of Malaya, 1(2), 65–99.

Christiawan, Y. J., & Tarigan, J. (2007), Kepemilikan manajerial: kebijakan hutang, kinerja dan nilai perusahaan. Jurnal Akuntansi dan Keuangan, 9(1), 1–8.

Dewi, L. S., & Abundanti, N. (2019). Pengaruh profitabilitas, likuiditas, kepemilikan institusional dan kepemilikan manajerial terhadap nilai perusahaan. E-Jurnal Manajemen Universitas Udayana, 8(10), 6099.

Ekasari, J. C., & Noegroho, Y. A. K. (2020). The impact of good corporate governance implementation on firm value. International Journal of Social Science and Business, 4(4), 553–560.

Fadillah, A. R. (2017). Analisis pengaruh dewan komisaris independen, kepemilikan manajerial dan ke-pe¬milikan institusional terhadap kinerja perusahaan yang terdaftar di LQ45. Jurnal Akuntansi, 12(1), 37–52.

Hardikasari, E., & Pamudji, S. (2011). Pengaruh Penerapan Corporate Governance terhadap Kinerja Keuangan pada Industri Perbankan Yang Terdaftar di Bursa Efek Indonesia (BEI) Tahun 2006-2008. UNDIP: Fakultas Ekonomika dan Bisnis.

Harun, M. S., Hussainey, K., Kharuddin, K. A. M. & Al Farooque, O. (2020). CSR disclosure, corporate governance and firm value: a study on GCC Islamic banks. International Journal of Accounting & Information Management, Emerald Publishing Limited, 28(4), 607–638.

Horne, J. C. V. (2020). Fundamentals of Financial Management.

Hendarto, K., Anastasia, N. and Basana, S.R. (2021). The effect of financial literacy, financial risk tolerance, and financial socialization agents on stock investment decision in the millennial generation. International Journal of Business Studies, 4(1), 11-22.

Ilmi, M., Kustono, A. S., & Sayekti, Y. (2017). Effect of good corporate governance, corporate social responsibility disclosure and managerial ownership to the corporate value with financial performance as intervening variables: case on indonesia stock exchange. International Journal of Social Science and Business, 1(2), 75–88.

Jihadi, M., Vilantika, E., Hashemi, S. M., Arifin, Z., Bachtiar, Y., & Sholichah, F. (2021). The effect of liquidity, leverage, and profitability on firm value: Empirical evidence from Indonesia. The Journal of Asian Finance, Economics and Business, Korea Distribution Science Association, 8(3), 423–431.

Kultys, J. (2016). Controversies about agency theory as theoretical basis for corporate gover¬nance. Oeco¬nomia Copernicana, Instytut Badań Gospodarczych, 7(4), 613–634.

Mai, M. U. (2017). Mediation of CSR and profitability on the influences of gcg mechanisms to the firm value. Jurnal Keuangan dan Perbankan, Universitas Merdeka Malang, 21(2), 253–264.

Manurung, E., Effrida, E., & Gondowonto, A. J. (2019). Effect of financial performance, good corporate governance and corporate size on corporate value in food and beverages. Inter-national Journal of Economics and Financial Issues, EconJournals, 9(6), 100.

Marantika, R. (2013). Pengaruh Dewan Komisaris, Komite Audit, Kepemilikan Institusional dan Kepemilikan Manajerial terhadap Kinerja Ke-uangan Bank Konvensional tang Listing di Bursa Efek Indonesia pada Periode 2009–2012. UNS (Sebelas Maret University).

Michael, C. J., & William, H. M. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, Elsevier BV, 3(4), 305–360.

Permatasari, L. W., & Gayatri, G. (2016). Profitabilitas sebagai pemoderasi pengaruh good corporate governance pada nilai perusahaan. E-Jurnal Akuntansi, 14(3), 2307–2335.

Purbawangsa, I.B.A., Solimun, S., Fernandes, A. A. R., & Rahayu, S. M. (2019). Corporate governance, corporate profitability toward corporate social responsibility disclosure and corporate value (comparative study in Indonesia, China and India stock exchange in 2013-2016). Social Responsibility Journal, 16(7), 983–999.

Rahmawati, N. B., & Handayani, R. S. (2017), Analisis pengaruh karakteristik corporate gover-nance terhadap kinerja perusahaan (studi empiris pada perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia periode 2010-2014). Diponegoro Journal of Accounting, 6(3), 26–37.

Sekaredi, S., & Adiwibowo, A. S. (2011). Pengaruh Corporate Governance terhadap Kinerja Keuangan Perusahaan (Studi pada Perusahaan yang Terdaftar di LQ45 Tahun 2005-2009). Universitas Diponegoro.

Sundaram, A. K., & Inkpen, A. C. (2004). Stakeholder theory and The corporate objective revisited: A reply. Organization Science, INFORMS, 15(3), 370–371.

Varaiya, N., Kerin, R. A., & Weeks, D. (1987). The relationship between growth, profitability, and firm value. Strategic Management Journal, Wiley Online Library, 8(5), 487–497.

Veronica, T. M. (2013). Pengaruh good corporate governance, corporate social responsibility & kinerja keuangan terhadap nilai perusahaan. JDM (Jurnal Dinamika Manajemen), 4(2).

Widyati, M. F. (2013). Pengaruh dewan direksi, komisaris independen, komite audit, kepemilikan mana-jerial dan kepemilikan institusional terhadap kinerja keuangan. Jurnal Ilmu Manajemen, 1(1), 234–249.

Wiranata, Y. A., & Nugrahanti, Y. W. (2013). Pengaruh struktur kepemilikan terhadap profitabilitas perusahaan manufaktur di Indonesia. Jurnal Akuntansi dan Keuangan, 15(1), 15–26.

Wulandari, N. (2006). Pengaruh indikator mekanisme corporate governance terhadap kinerja perusahaan publik di Indonesia. Fokus Ekonomi: Jurnal Ilmiah Ekonomi, 1(2).

Yanto, E. (2018). Effect of corporate social responsi-bility and good corporate governance on the value of company with profitability as moderating variables. JAAF (Journal of Applied Accounting and Finance), 2(1), 36–49.

Yudha, E. P. (2015). Pengaruh corporate governance terhadap kinerja keuangan perusahaan (Studi Empiris Pada Perusahaan Manufaktur Go Public di Bursa Efek Indonesia Tahun 2013). University of Muhammadiyah Malang.

Yusup, A.K., Widyarini, L.A., and Hongdiyanto, C. (2022). Does internal fund create trouble for firms? the effect of investment and dividend policy toward firm value. International Journal of Business Studies, 5(1), 1-9, DOI: https://doi.org/10.9744/ijbs.5.1.1-9

Additional Files

Published

2022-12-15

Issue

Vol. 5 No. 2 (2022): DECEMBER 2022

Section

Articles

License

Copyright (c) 2022 Copyright (c) 2022 Niken Wulandari, Imronudin Imronudin, M. Farid Wajdi, Ihwan Susila

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Petra IJBS  (e-ISSN: 2621-6426) is published by Master of Management program, School of Business and Management, Petra Christian University, Indonesia (MM SBM PCU).