Abstract
This study aims to examine and analyze the ability of the ERM (enterprise risk management) to mediate the influence of the firm size, leverage, profitability, and institutional ownership on the firm value of the insurance sub-sector listed on the Indonesia Stock Exchange for the period 2015-2019. This study used 12 samples from 16 insurance companies listed on the IDX in 2020 that met the criteria for purposive sampling. The data were processed using a path analysis approach. The results of the research show that firm size has a significant positive effect on ERM, DER and ROA has a significant negative effect on ERM, and institutional ownership were found to have no effect on ERM. Meanwhile, DER and institutional ownership have a significant negative effect on firm value, while firm size and ROA have no effect on firm value. Using the Sobel Test it was found that ERM as an intervening variable was unable to mediate the effect of firm size, DER, ROA, institutional ownership on firm value.
Highlights
1.1 Introduce the ProblemThe current development of economic conditions in Indonesia has created increasingly fierce competition among the financial services industry, where financial service companies are competing with each other to improve their performance and firm value
This study aims to examine and analyze the ability of the enterprise risk management (ERM) to mediate the influence of the firm size, leverage, profitability, and institutional ownership on the firm value of the insurance sub-sector listed on the Indonesia Stock Exchange for the period 2015-2019
This study finds empirical evidence that firm size has a significant positive effect on ERM, Debt to Equity Ratio (DER) and Return on Assets (ROA) has a significant negative effect on ERM, while institutional ownership has no effect on ERM
Summary
The current development of economic conditions in Indonesia has created increasingly fierce competition among the financial services industry, where financial service companies are competing with each other to improve their performance and firm value. The main objective of an insurance company listed on the Indonesia Stock Exchange is to increase the prosperity of its stakeholders and shareholders by increasing firm value. According to Harmono (2009), firm value shows the company's performance as reflected by the stock price that is formed from the demand and supply of the capital market as well as a reflection of the public's assessment of the company's performance to maintain and develop its business in providing benefits to its owners. The firm value itself can be proxied by Tobin's Q value which compares the ratio of the company's stock market value to the book value of the company's equity (Hartono, 2000)
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