THE ROLE OF FINANCIAL PERFORMANCE TO MEDIATE THE EFFECT OF CORPORATE GOVERNANCE ON FIRM VALUE

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 onfirm value.