Corporate Governance, Ownership Structure, and Firm Value: Evidence from Indonesia

Abstract

Firm value is crucial for every company, but agency problems that arise due to conflicts of interest between managers and shareholders can reduce the value of a company. Based on agency theory, one mechanism to reduce agency problems is the implementation of good corporate governance and ownership structures. Therefore, this study aims to predict whether there is an influence between corporate governance and ownership structure on firm value. This research was conducted on companies in the LQ45 index during the 2020-2022 period. Researchers obtained 87 units of analysis which were then analyzed using structural equation modeling (SEM). This study's results are corporate governance has a positive and significant effect on firm value. However, ownership structure does not affect firm value. Future studies can use different samples, extend the observation period, use other indicators to measure each variable, and use a broader framework.