Comprehensive measurement of corporate governance

Oct 13, 2025 by windailys.com 148 views

Analysis of the Effect of Corporate Governance on Company Value in Banking Companies on the IDX

Introduction

The banking sector is a crucial component of the Indonesian economy, and the Indonesia Stock Exchange (IDX) plays a significant role in facilitating the growth and development of this sector. However, the banking sector is also subject to various risks and challenges, including regulatory risks, market risks, and operational risks. In this context, corporate governance becomes a critical factor in ensuring the sustainability and growth of company value in the banking sector. This study aims to explore the impact of corporate governance on company value in the banking sector listed on the IDX during the 2007-2009 period.

Methodology

The data used in this study was taken from the financial statements of each sample company published on the official website www.idx.co.id. The analysis method applied in this study is a quantitative method, which involves a classical assumption test and statistical analysis, especially multiple linear regression analysis. For the selection of samples, the purposive sampling method is used with research variables including corporate governance which is proxied through the existence of independent commissioners, managerial ownership, institutional ownership, foreign ownership, and auditor quality as an independent variable, and company value as a dependent variable. The total sample analyzed consists of 18 companies each year.

Results

The results showed that partially, the five independent variables tested did not have a significant influence on the company's value. This indicates that the proxy corporate governance, which includes independent commissioners, managerial ownership, institutional ownership, foreign ownership, and auditor quality, is not considered a big influence on the value of these companies.

Additional Analysis and Explanation

The effect of corporate governance on company value is often a hot topic in management and financial literature. Good corporate governance is believed to increase investor confidence, which in turn can have a positive impact on the company's value. However, in the context of this research, the results obtained show that although the company has a corporate governance practice that is considered good, it is not always reflected in high company value.

One reason might lie in the characteristics of the banking industry that is very regulated. In this sector, many external factors such as government policy, economic conditions, and market risk that can affect the value of the company. Thus, although good corporate governance can help manage risk and increase efficiency, these external factors also have a significant influence.

In addition, it is important to consider that company value is not only influenced by corporate governance but also by operational performance, business strategies that are applied, and product and service innovation. Companies that are able to adapt quickly to market changes and meet customer needs tend to have a better company value, regardless of the existing corporate governance structure.

The Role of Auditor Quality

The quality of the auditor, which is often considered as an indicator of corporate governance, also needs to be evaluated more deeply. High-quality auditors can provide guarantees to shareholders about the integrity of financial statements, but if the report does not reflect the real performance of the company, the impact on the company's value remains minimal.

Limitations and Future Research Directions

From the results of this study, it appears that the measurement of corporate governance must be more comprehensive. For example, adding other variables such as financial performance, employee satisfaction, and company reputation can provide a clearer picture of the relationship between corporate governance and company value.

Conclusion

Overall, this research emphasizes the importance of understanding that corporate governance is one of the many factors that affect the company's value. Therefore, for investors and managers, it is important to not only focus on aspects of corporate governance, but also pay attention to other internal and external factors that can affect the sustainability and growth of company value in the future.

Recommendations

Based on the findings of this study, the following recommendations are made:

Comprehensive measurement of corporate governance: The measurement of corporate governance should be more comprehensive, including other variables such as financial performance, employee satisfaction, and company reputation.
Focus on operational performance: Companies should focus on improving their operational performance, business strategies, and product and service innovation to increase their company value.
Pay attention to external factors: Investors and managers should pay attention to external factors that can affect the sustainability and growth of company value, such as government policy, economic conditions, and market risk.
Evaluate auditor quality: The quality of the auditor should be evaluated more deeply to ensure that the report reflects the real performance of the company.

Future Research Directions

Future research should focus on exploring the relationship between corporate governance and company value in other industries, such as manufacturing and service sectors. Additionally, research should be conducted to investigate the impact of other variables, such as financial performance, employee satisfaction, and company reputation, on the relationship between corporate governance and company value.
Q&A: Analysis of the Effect of Corporate Governance on Company Value in Banking Companies on the IDX

Q: What is the main objective of this study?

A: The main objective of this study is to explore the impact of corporate governance on company value in the banking sector listed on the Indonesia Stock Exchange (IDX) during the 2007-2009 period.

Q: What are the research variables used in this study?

A: The research variables used in this study include corporate governance, which is proxied through the existence of independent commissioners, managerial ownership, institutional ownership, foreign ownership, and auditor quality as an independent variable, and company value as a dependent variable.

Q: What is the significance of this study?

A: This study is significant because it provides insights into the relationship between corporate governance and company value in the banking sector, which is a crucial component of the Indonesian economy.

Q: What are the limitations of this study?

A: The limitations of this study include the use of a limited sample size and the reliance on secondary data.

Q: What are the implications of this study for investors and managers?

A: The implications of this study for investors and managers are that they should not only focus on aspects of corporate governance, but also pay attention to other internal and external factors that can affect the sustainability and growth of company value in the future.

Q: What are the recommendations of this study?

A: The recommendations of this study include the need for a more comprehensive measurement of corporate governance, a focus on operational performance, and attention to external factors that can affect company value.

Q: What are the future research directions suggested by this study?

A: The future research directions suggested by this study include exploring the relationship between corporate governance and company value in other industries, such as manufacturing and service sectors, and investigating the impact of other variables, such as financial performance, employee satisfaction, and company reputation, on the relationship between corporate governance and company value.

Q: What are the key findings of this study?

A: The key findings of this study are that partially, the five independent variables tested did not have a significant influence on the company's value, and that the measurement of corporate governance must be more comprehensive.

Q: What are the implications of this study for policymakers?

A: The implications of this study for policymakers are that they should consider the need for a more comprehensive measurement of corporate governance and the importance of paying attention to other internal and external factors that can affect company value.

Q: What are the implications of this study for regulators?

A: The implications of this study for regulators are that they should consider the need for a more comprehensive measurement of corporate governance and the importance of paying attention to other internal and external factors that can affect company value.

Q: What are the implications of this study for auditors?

A: The implications of this study for auditors are that they should consider the need for a more comprehensive evaluation of auditor quality and the importance of providing guarantees to shareholders about the integrity of financial statements.

Q: What are the implications of this study for employees?

A: The implications of this study for employees are that they should consider the need for a more comprehensive evaluation of employee satisfaction and the importance of paying attention to other internal and external factors that can affect company value.

Q: What are the implications of this study for customers?

A: The implications of this study for customers are that they should consider the need for a more comprehensive evaluation of company reputation and the importance of paying attention to other internal and external factors that can affect company value.