Good Corporate Governance on Firm Value in the LQ45 Index (Indonesia Stock Exchange)

Nurlisa Borliani Siregar (), Isfenti Sadalia and Amlys Syahputra Silalahi
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Nurlisa Borliani Siregar: Universitas Sumatera Utara
Isfenti Sadalia: Universitas Sumatera Utara
Amlys Syahputra Silalahi: Universitas Sumatera Utara

A chapter in Proceedings of the 19th International Symposium on Management (INSYMA 2022), 2023, pp 151-157 from Springer

Abstract: Abstract The company does not only aim to seek profit but also to maximize its value, which is reflected in the company’s share price. Good corporate governance is a system that regulates the relationship between managers, creditors, and employees by considering their rights and obligations to create added value for the company. This study aims to examine the effect of good corporate governance on firm value. The research was conducted on companies listed on LQ45 on the Indonesian Stock Exchange from 2017 to 2021. The sample was determined by purposive sampling with a sample size of 45. In this study, the independent variables were board independence, institutional ownership, and audit committee, while the dependent variable was firm value. The researchers used multiple linear regression analysis with EViews as a calculation tool to get good results. The EViews 10 testing tool was utilized, which includes descriptive statistics and a t-test. The findings of this study show that board independence has no impact on business value, and institutional ownership has no impact on firm value. Other studies have found that the audit committee has a considerable impact on the firm’s worth. To enhance good governance and consider investing in the firm, corporations are encouraged to pay more attention to board independence, institutional ownership, and audit committees.

Keywords: good corporate governance; board independence; institutional ownership; audit committee; firm value (search for similar items in EconPapers)
Date: 2023
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DOI: 10.2991/978-94-6463-008-4_20

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