Does the Quality of Good Corporate Governance Provide Economic Value for Investors? Evidence from Indonesia

Abstract

This study aims to examine the impact of Good Corporate Governance (GCG) on corporate value by using financial performance proxied by Return on Assets (ROA) and Return on Equity (ROE) as intervening variables. The samples used in this study were Non-financial companies participating in the Corporate Governance Perception Index (CGPI) listed on the Stock Exchange during the period 2012 to 2016. The sampling technique used in this study was purposive sampling technique.The tests that will be carried out are Analysis of Multiple Linear Regression and Hypothesis Test (partial and simultaneous test) using the Eviews program. The test results show that the variable Good Corporate Governance (GCG) has a significant positive effect on Return on Assets (ROA), the Return on Assets (ROA) variable has a significant positive effect on influencing the value of the company. ROA variables are proven to interfere with the influence of Good Corporate Governance (GCG) on company value. While the ROE variable is not proven to mediate the influence of GCG on the value of the company. The direct influence of Good Corporate Governance on company value is also not empirically proven. GCG variables have no effect on ROE. Likewise the ROE variable does not have an influence on the value of the company.