The Effect of Corporate Governance Mechanism on Company Value with Earnings Quality as Mediation

Gracio Isaac Febrian Tenggono, Lodovicus Lasdi () and Natalia Kristina
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Gracio Isaac Febrian Tenggono: Universitas Katolik Widya Mandala Surabaya, Accounting Department, Faculty of Business
Lodovicus Lasdi: Universitas Katolik Widya Mandala Surabaya, Accounting Department, Faculty of Business
Natalia Kristina: Universitas Katolik Widya Mandala Surabaya, Accounting Department, Faculty of Business

A chapter in Proceedings of the 4th Asia Pacific Management Research Conference (APMRC 2022), 2023, pp 690-707 from Springer

Abstract: Abstract Firm value is an investor's response to the company, usually associated with stock prices. Companies with high stock prices are considered to have high company values. This is because public interest can affect stock prices in the market. One of the factors that can increase public interest is the quality of reported earnings. Earnings will be called more qualified if the reported earnings follow the company's actual state. However, the reality is that reporting quality earnings is not easy. This is because there is a conflict of interest between the owner and the manager. Therefore, good corporate governance is expected to minimize these conflicts, so that reported earnings can be of higher quality and ultimately affect the public interest and company value. This study aims to examine and analyze the effect of the size of the board of directors, institutional ownership, managerial ownership, and independent commissioners on firm value with earnings quality as a mediating variable. The object of research is a manufacturing company listed on the Indonesia Stock Exchange (IDX) for the 2018–2020 period. The research sample consisted of 58 manufacturing companies selected by the purposive sampling technique. The research data analysis technique uses a path analysis model. The results showed that earnings quality could mediate the size of the board of directors and managerial ownership on firm value. However, earnings quality has not mediated institutional ownership and independent commissioners on firm value.

Keywords: Corporate Governance; Firm Value; Quality of Reported Earnings (search for similar items in EconPapers)
Date: 2023
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DOI: 10.2991/978-94-6463-076-3_53

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