Abstract
Corporate Governance is one of the company's assets that is capable of being a characteristic which reflects the values that built the company. The governance that carried out continuously will affect work pattern and company performance. One of the company's performances is financial performance. The aimed of this research are to analyze the effect of financial performance and corporate governance on firm value as individual variable and to analyze the effect of corporate governance to firm value through the financial performance. The population of this research is all Indonesian companies listed in Corporate Governance Performance Index ( CGPI ) in 2012-2014 as many as 32 companies. The samples used purposive sampling technique and get 22 companies with 66 analysis units. Documentation technique used to collect the data which analyzed by path analysis using Structural Equation Modelling ( SEM ) by Wrap PLS. The results showed that financial performance could be mediating the effect of corporate governance on firm value; proved by there is a significant effect of corporate governance on financial performance and financial performance on firm value, but there is no significant effect of corporate governance on firm value.
Highlights
Corporate governance is a habit of a company that becomes characterizes which reflecting the values that built by the company
Gill (2013) finds a significant positive effect between corporate governance and the value of manufacturing company in America. This is in line with Perdana (2014), which mentions the significant effect between corporate governance and firm’s value
Skerci (2013) states that investors are more fun and easier to compare quantitative information than qualitative information of a company, so this research try to modify some of the previous studies by trying to analyze the roles of the financial performance in the proxy of Debt to equity ratio in mediating the influence between corporate governance mechanisms and firm value armed with a variety of previous studies
Summary
Corporate governance is a habit (governance) of a company that becomes characterizes which reflecting the values that built by the company. Agustina (2016) mentions that it is evidenced by the significant positive effect between company’s performance that proxy in the profitability to the firm’s value in the same observation year. Gill (2013) mentions that the performance of the company proxy in financial leverage and return on assets has positive effect on firm value. Skerci (2013) states that investors are more fun and easier to compare quantitative information than qualitative information of a company, so this research try to modify some of the previous studies by trying to analyze the roles of the financial performance in the proxy of Debt to equity ratio in mediating the influence between corporate governance mechanisms and firm value armed with a variety of previous studies. The hypotheses in this research are below: H1: Corporate Governance effect on financial performance H2: Financial performance effect on firm value H3: Corporate Governance effect on firm value H4: Financial performance mediate the effect of corporate governance on firm value
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