The Effect of Good Corporate Governance on Investment Decisions and Profitability and Its Impact on Corporate Value

Abstract

This study aims to analyze the effect of Good Corporate Governance on Investment Decisions and Profitability and Its Impact on Corporate Value. The sampling technique used is purposive sampling. The study was conducted on companies that are included in the LQ45 Index with the 2015-2017 study periods. The estimation of the research model used is multiple regression analysis. The purposes of this study are to find out whether Good Corporate Governance has an effect on Investment Decisions and Profitability and Its Impact on Corporate Values. This study involved 4 (three) variables consisting of 1 (one) dependent variable, 3 (two) independent variables (independent), and the dependent variable in this study is Corporate Value. The independent variables in this study are Good Corporate Governance, Investment Decision and Profitability. The results of this study indicate that Managerial Ownership has no effect on investment decisions, institutional ownership has an effect of -2,471 on investment decisions, Managerial Ownership does not affect profitability, institutional ownership does not affect profitability, Managerial Ownership has an effect of 57,587 on firm value, institutional ownership does not influence on firm value, InvestmentDecision has an effect of 0.215 on firm value, Profitability has an influence of 51,670 on Corporate Value Managerial ownership has an effect of 0,00037 on corporate value through intervening variable investment decisions, institutional ownership has an influence of -0,00713 on value company through variable intervening investment decisions, managerial ownership has an effect of 9.633 on firm value through variable intervening profitability, institutional ownership has an effect of 0.0339 on firm value through intervening profitability.

Insider Trading Laws and Corporate Governance Impact on Investment Decision

“…Although these correlations are not strong but they are significant. In support of our results, the studies of Jayaraman (2012) and Wahyudi and Chairunesia (2019) provided strong evidence that the corporate governance, perception of insider trading laws and investment decision are associated with each other. Other studies e.g.…”

“…The study of Miloud (2017) concluded that a good corporate governance practices not only link with investment but eventually played its role in business growth (Fazal, Bhatti, & Ahmad, 2019). Similar results consistent with this study are found in the study of Wahyudi and Chairunesia (2019) which aimed to analyze the impact of good corporate governance practices on investment and profitability. In Vietnam, the corporate structure and managerial decisions taken in 480 Small and Medium Size Industries were investigated by Chi, Van Can, and Duc (2019), the results demonstrated that companies where manager hold shares has more opportunities of investment, whereas the revenue growth and financial leverage have also a positive impact on the investment decisions.…”

Pengaruh Manajemen Keuangan, Manajemen Risiko, Tata Kelola Perusahaan, Terhadap Nilai Perusahaan di PT. XYZ

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“…Kehadiran dewan, independensi dewan, non-dualitas peran CEO-Ketua terhadap nilai perusahaan yang terdaftar adalah penting. Praktik pro-entrenchment cenderung menurunkan laba per saham di perusahaan-perusahaan yang terdaftar baik karena rasa puas diri atau kepentingan pribadi (Wahyudi & Chairunesia, 2019).…”

Pengungkapan Corporate Social Responsibility, Mekanisme Good Corporate Governance dan Nilai Perusahaan

“…uai dengan pen. elitian d. ilakukan o. leh Farida et al (2019), Suryato & Meisa (2016), dan Wahyudi & Chairunesia (2019) menyatakan kepemilikan manajerial berpengaruh positif pada nilai perusahaan.…”