Do Financial Performance and Corporate Governance Effect on Firm Value: Evidence from Manufacturing Sector

Nur Indah Farawansyah; Sovi Ismawati Rahayu; Nazma Riska Zhafiraah

doi:10.58777/rbm.v2i1.184

Authors

Nur Indah Farawansyah Faculty of Economics and Business, YARSI University, Jakarta
Sovi Ismawati Rahayu Faculty of Economics and Business, YARSI University, Jakarta
Nazma Riska Zhafiraah Faculty of Economics and Business, YARSI University, Jakarta

DOI:

https://doi.org/10.58777/rbm.v2i1.184

Keywords:

Firm Value, Financial Performance, Profitability, Solvency, Liquidity, Independent Board of Commissioners, Audit Committee

Abstract

This study attempts to investigate, either partially or simultaneously, the effects of Financial Performance as determined by Profitability, Solvency, liquidity well, and Good Corporate Governance, as decided by the Audit Committee on Firm Value and the Independent Board of Commissioners. The study approach is quantitative and makes use of secondary data-manufacturing firms registered on the Indonesia Stock Exchange. The population in this study is made up of 143 manufacturing firms. In the interim, the sample for this study was chosen through the technique of purposeful sampling. The analysis method used is multiple linear regression analysis. The Kolmogrof-Smirnof test, multicollinearity test, heteroscedasticity test, t-test, and coefficient of determination test were all employed in this investigation. The study's findings demonstrate that the factors Independent Board of Commissioners, Profitability, Solvency, Liquidity, and Audit Committee each partially positively impact firm value. Managerial implications related to the influence of financial performance and good corporate governance are increased focus on financial performance, increased transparency and disclosure of information, implementation of good corporate governance practices, and risk and compliance management. The valuation of the firm is key in the transfer of business decisions, such as mergers, acquisitions, and stock offerings.

References

Affiah, A., & Muslih, M. (2018). The Influence of Leverage, Profitability, and Good Corporate Governance on Financial Distress (Case Study of Mining Firms Listed on the Indonesian Stock Exchange 2012-2016). Expansion: Journal of Economics, Finance, Banking And Accounting, 10(2), 241–256. https://jurnal.polban.ac.id/akuntansi/article/view/1213

Aldi, MF, Erlina, E., & Amalia, K. (2020). The Influence of Firm Size, Leverage, Profitability and Liquidity on Firm Value with Dividend Policy as a Moderating Variable in Consumer Goods Industry Firms Registered on BEI for the 2007-2018 Period. Journal of Socio Humanities Science, 4(1), 264–273. https://doi.org/10.22437/jssh.v4i1.9921

Alfian, N. (2020). Corporate Governance Mechanisms on Financial Performance in Banking Firms Registered on BEI. Jiafe (Scientific Journal of Accounting, Faculty of Economics), 5(2), 209–218. https://doi.org/10.34204/jiafe.v5i2.2057

Alfianita, A., & Santosa, PW (2022). Effect Of Dividend Policy, Capital Structure, Profitability, And Growth On Firm Value. Journal Of Accounting, Management, And Economics Research (Jamer), 1(1), 1–16. https://doi.org/10.33476/jamer.v1i1.3

Arif, MS, & Djasuli, M. (2022). "Good Governance from an Islamic Perspective (Explanation of the Qur'an)". "Journal of Economics, Management, Business and Social Affairs, E-Issn: 2747-0938," 2(2), 207-2

Curry, K., & Banjarnahor, E. (2018). Financial Distress in Property Sector Firms Going Public in Indonesia. Proceedings of the National Expert Seminar, 207–221. https://doi.org/10.25105/pakar.v0i0.2722

Dewi, C., & Susanto, L. (2022). The Influence of Profitability, Solvency, Institutional Ownership, and Firm Age on the Value of Manufacturing Firms. Multiparadigm Journal of Accounting, Iv(2), 540–549.

Dewinta, I., & Setiawan, P. (2018). The Influence of Firm Size, Firm Age, Profitability, Leverage, and Sales Growth on Tax Avoidance. Udayana University Accounting E-Journal, 14(3), 1584–1615.

Dhani, IP, & Utama, A. . G.S. (2017). The Influence of Firm Growth, Capital Structure, and Profitability on Firm Value. Airlangga Accounting and Business Research Journal, 2(1). https://Doi.Org/10.31093/Jraba.V2i1.28

Dwipayana, M., & Suaryana, I. (2017). The Influence of Debt to Assets Ratio, Dividend Payout Ratio, and Return on Assets on Firm Value. Udayana University Accounting E-Journal, 17(3), 2008–2035.

Dzahabiyya, J., Jhoansyah, D., & Danial, RDM (2020). Analysis of Firm Value Using the Tobin's Q. Jad Ratio Model: Dewantara Accounting & Finance Research Journal, 3(1), 46–55. https://Doi.Org/10.26533/Jad.V3i1.520

Dzikir, A., Syahnur, & Tenriwaru. (2020). The Influence of Corporate Social Responsibility on Firm Value with Profitability as a Moderating Variable (Empirical Study of the Mining Sector Listed on the Indonesian Stock Exchange for the 2016-2018 Period). Teaching, 3(2), 219–235. https://doi.org/10.35129/ajar.v3i02.134

Effendi, MA, (2016). The Power of Good Corporate Governance: Theory and Implementation. Jakarta: Salemba Empat

Fahmi, Irfan. (2012). Introduction to Financial Management, Bandung. First Edition, Alphabeta.

Harahap, Sofyan Safri, (2013), Critical Analysis of Financial Reports, Edition 1-11, PT. Rajawali Press : Jakarta

Henry. (2017). Accounting Research Review. Jakarta: PT Grasindo Publisher.

Himawan, HM, & Andayani, W. (2020). The Influence of Profitability, Firm Size, and Leverage on Firm Value in Property and Real Estate Firms that Go Public on the Indonesian Stock Exchange for the 2016-2018 Period. Student Scientific Journal Feb Universitas Brawijaya, 25–27.

Husnan, S., & Pudjihastuti, E. (2015). Basics of Financial Management. Upp Stim Ykpn.

Kalbuana, N., Yohana, Y., Bp, AI, & Cahyadi, CI (2021). The Influence of Firm Size, Debt Policy, and Profitability on Firm Value (Case Study of Property Firms Listed on the Indonesian Stock Exchange 2016-2020). Politala Accounting Research Journal, 4(2), 58–66. https://doi.org/10.34128/jra.v4i2.79

Khairani, S.-. (2019). The Influence of Profitability, Financial Distress, Independent Board of Commissioners and Audit Committee on Firm Value Mediated by Tax Avoidance (Empirical Study of Consumer Goods Industry Sector Firms Listed on the Indonesian Stock Exchange Period 2. Accounting Journal, 9(1), 47–64. https://Doi.Org/10.33369/J.Akuntansi.9.1.47-64

Khaniya, D., Lapae, K., & Santoso, P. W. (2023). The Effect of Good Corporate Governance, Firm Age, and Leverage on Firm Value. Research of Business and Management, 1(1), 1–9. https://doi.org/10.58777/rbm.v1i1.8

Mardiana, N., & As’ari, H. (2023). Effect of Corporate Governance Implementation on Financial Performance. Research of Accounting and Governance, 1(2), 40–49. https://doi.org/10.58777/rag.v1i2.59

Mediyanti, S., Kadriyani, E., Sartika, F., Astuti, IN, Eliana, E., & Wardayani, W. (2021). Tobin's Q Ratio as a Tool for Measuring the Value of Sharia Bank Firms. Jupiis: Journal of Social Sciences Education, 13(1), 242. https://Doi.Org/10.24114/Jupiis.V13i1.24193

Mindra and Erawati. (2014). The Influence of Earning Per Share, Firm Size, Profitability and Leverage on Firm Value. Journal of Accounting, 2(2).

Nanok Fitriyadi. (2019). The Influence of Firm Financial Performance on Firm Value with Dividend Policy as a Moderating Variable. Proceedings of Frima (Management and Accounting Scientific Research Festival), 6(2), 27–37. https://Doi.Org/10.55916/Frima.V0i2.14

Narwastu, N., & Rusli, D. (2023). The Influence of Corporate Social Responsibility on Financial Performance with Good Corporate Governance as Moderating Variable. Research of Finance and Banking, 1(1), 47–60. https://doi.org/10.58777/rfb.v1i1.35

Nurhayati, Mafizatun. (2013). Profitability, Liquidity, and Firm Size Influence on Dividend Policy and Firm Value in the Non-Service Sector. Journal of Finance and Business. 5(2)

Panjaitan, I. V., & Supriyati, D. (2023). The Effect of Profitability and Leverage on Firm Value with Firm Size as a Moderating Variable. Research of Finance and Banking, 1(1), 34–46. https://doi.org/10.58777/rfb.v1i1.34

Puspitaningtyas, Z. (2017). Moderating Effect of Dividend Policy on Manufacturing Firm Value. Journal of Accounting, Economics and Business Management, 5(2), 173–180. https://doi.org/10.30871/jaemb.v5i2.538

Rahmawati, IA, Rikumahu, Brady., and Dillak, VJ (2017). The Influence of the Board of Directors, Board of Commissioners, Audit Committee, and Corporate Social Responsibility on Firm Financial Performance. Journal of Accounting and Economics, 2(2), 54–70

Rahmawati, IA, Rikumahu, Brady., and Dillak, VJ (2017). The Influence of the Board of Directors, Board of Commissioners, Audit Committee, and Corporate Social Responsibility on Firm Financial Performance. Journal of Accounting and Economics, 2(2), 54–70.

Saputri, N. A., & Santoso, P. R. (2023). Influence of Profitability, RETA, Liquidity, Leverage, Firm Size, and Corporate Governance on Financial Distress. Research of Accounting and Governance, 1(1), 1–12. https://doi.org/10.58777/rag.v1i1.6

Sari, RN (2017). The Influence of Profitability and Dividend Policy on Manufacturing Firm Stock Returns with Firm Value as an Intervening Variable for the 2010-2014 Period. Journal of Education and Economics, 6(1), 88–95.

Serolin, A. (2023). Effect of Corporate Social Responsibility, Leverage, Firm Age and Size on Firm Value. Research of Economics and Business, 1(2), 95–104. https://doi.org/10.58777/reb.v1i2.81

Sihombing, P., Hutajalu, C. B. B., & Suparyati, A. (2023). Financial Performance and Capital Structure on Firm Value with Commodity Prices as a Moderating Variable. Research of Business and Management, 1(2), 57–66. https://doi.org/10.58777/rbm.v1i2.80

Subagio, KMP, Dzulkirom Ar, M., & Hidayat, RR (2017). Analysis of Working Capital Management in Efforts to Increase Liquidity and Profitability (Study at Pt. Gudang Garam Tbk 2014-2016 Period). Journal of Business Administration, 51(1), 15–24.

Sudiani Ayu, NK, & Darmayanti Ayu, NP (2016). The Influence of Profitability, Liquidity, Growth, and Investment Opportunity Set on Firm Value. Management, 5(7), 4545–4574.

Suhendro, D. (2017). Profitability and Liquidity Analysis to Assess Financial Performance at Pt Siantar Top Tbk. Journal of Islamic Economics and Business, 4(2), 218–235.

Utomo, MN (2019). Environmentally Friendly and Firm Value. CV. Jakad.

Widiastari PA, & Yasa GW 2018. The Influence of Profitability, Free Cash Flow, and Firm Size on Firm Value. Accounting E-Journal. Udayana University 23(2) May (2018): 957-981. https://doi.org/10.24843/EJA.2018.v23.i02.p06

Zakaria SJ & Surjana MT. (2017). Analysis of the Influence of Ownership Structure and Good Corporate Governance Mechanisms on Earning Management in Retail Firms Listed on the Indonesian Stock Exchange. Accountotechnology: Scientific Journal of Accounting and Technology – 9(2) (2017).