Abstract
The purpose of this study was to provide empirical evidence that managerial, institutional, and public ownership affect company profitability; provide empirical evidence that managerial, institutional, and public ownership affect firm value; provide empirical evidence that managerial, institutional, and public ownership have an indirect effect on firm value; and provide empirical evidence that managerial, institutional, and public ownership have an indirect effect on firm value. This study uses secondary data from companies listed on the Indonesia Stock Exchange obtained from the Indonesian Capital Market Directory (ICMD) 2013. Samples were collected using the purposive sampling method and then analyzed using Path Analysis. The results showed that managerial ownership has a positive effect on profitability; institutional ownership has a positive effect on profitability; public ownership has a positive effect on profitability; managerial ownership has a positive direct or indirect effect on firm value; institutional ownership has a positive direct or indirect effect on firm value; public ownership has a positive direct or indirect effect on company value; profitability has a positive effect on firm value.
Highlights
The purpose of this study was to provide empirical evidence that managerial, institutional, and public ownership affect company profitability; provide empirical evidence that managerial, institutional, and public ownership affect firm value; provide empirical evidence that managerial, institutional, and public ownership have an indirect effect on firm value; and provide empirical evidence that managerial, institutional, and public ownership have an indirect effect on firm value
The results showed that managerial ownership has a positive effect on profitability; institutional ownership has a positive effect on profitability; public ownership has a positive effect on profitability; managerial ownership has a positive direct or indirect effect on firm value; institutional ownership has a positive direct or indirect effect on firm value; public ownership has a positive direct or indirect effect on company value; profitability has a positive effect on firm value
The average size of the indirect effect is smaller than the direct effect of ownership structure on firm value
Summary
The purpose of this study was to provide empirical evidence that managerial, institutional, and public ownership affect company profitability; provide empirical evidence that managerial, institutional, and public ownership affect firm value; provide empirical evidence that managerial, institutional, and public ownership have an indirect effect on firm value; and provide empirical evidence that managerial, institutional, and public ownership have an indirect effect on firm value. The main objective of the company being established is to increase the value of the company through increasing the prosperity of the owner or shareholders (Ahmad et al, 2018). Bathala et al, (1994) stated that the company's main objective is to increase firm value by increasing the prosperity of owners and shareholders. Firm value is significant because it reflects the company's performance, which can affect investors' perceptions of the company (Mira, 2020). The profitability of the company is the result of the company's operational activities. A conflict of interest occurs when a manager's decision will only maximize his interests and are not in line with the interests of shareholders. The decisions and activities of managers who own company shares will certainly be different from those of pure managers. The existence of a significant block shareholder indicates that the level of dispersion of shareholders by outsiders is smaller
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