Examining the Causality of Six Measurements of Good Corporate Governance on Value of Firm: An Empirical Evidence From Firms of Jakarta Islamic Index

Abstract

The objective of this study is to ascertain the effects of GCG, measured by board of director size, board meeting frequency, independent commissioner proportion, audit committee size, and managerial ownership, on firm value utilizing firm size and leverage as control variables. All companies listed in the Jakarta Islamic Index during 2017 to 2021 are the population of this study. Total sample of 18 companies were used using the purposive sampling for analysis. Data from the study were examined using panel data regression analysis. Based on the testing, firm value was positively impacted by the board meetings frequency, number of director board, and percentage of independent commissioners. The audit committee and managerial ownership, in contrast, have no impact on firm value. Firm size, a control variable, has a detrimental impact on firm value. Leverage, however, has no influence on firm value. As the implication, the firms should enhance the standard of good corporate governance and abide by applicable laws in order to boost investor and public confidence and firm value.