Mediating Effect of Financial Performance on Association Between Good Corporate Governance and Firm Value
Abstract
This study aims to determine the effect of good corporate governance that is proxied by managerial ownership, institutional ownership, independent commissioner ownership, and corporate secretary on firm value with financial performance as a mediating variable in manufacturing companies listed on the Indonesia Stock Exchange (BEI) for three years (2014–2016). This study uses a quantitative approach. The method used is purposive sampling. Sampling was obtained from 201 companies. GCG was proxied by managerial ownership, institutional ownership, independent commissioner, and corporate secretary. The hypotheses in this study were tested using linear regression and path analysis, using α 5%. The results of this study revealed that not all GCG proxies in the study have a significant influence on the firm value. Institutional ownership has a significant negative influence on firm value, and independent commissioners have a significant positive influence on firm value, while managerial ownership and corporate secretary have no significant influence on firm value. For the influence of GCG on financial performance, only the corporate secretary as a GCG proxy that has a significant positive influence on financial performance, while another GCG proxies, namely, managerial ownership, institutional ownership, and independent commissioners have no significant influence on financial performance. Financial performance as a mediating variable has significant positive influence on firm value. Financial performance can mediate the effect of good corporate governance proxied by corporate secretary on firm value, and it can be concluded that the corporate secretary has an indirect effect on the firm value through financial performance.
Keywords: corporate secretary, financial performance, firm value, good corporate governance, institutional ownership, independent commissioner, managerial ownership
References
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