The Effect of Leverage, Profitability, Liquidity, and Firm Size on Firm Value with Good Corporate Governance as Moderation

Abstract

Purpose – This study empirically tested the effect of leverage, profitability, liquidity, and firm size on firm value with good corporate governance (GCG) as a moderating variable.

Design/methodology/approach – This research was conducted on non-financial companies listed on the Indonesian Stock Exchange in 2017-2020. The data used is secondary data obtained from the Indonesian Stock Exchange website. The analytical method in this study is panel data regression analysis and moderated regression analysis (MRA) which were processed using Eviews data processing software. The sample is 230 companies.

Findings – Leverage, profitability, and firm size affect firm value, while liquidity does not affect firm value. Then, the next finding is that GCG can moderate which strengthens the effect of leverage and liquidity on firm value. However, GCG does not moderate the effect of profitability and firm size on firm value.

Research limitations/implications – This study has two limitations. This research only used four periods of research data, from 2017 to 2020, and the authors had a time limit in working on this study.

Practical implications – This study can be used by company managers as a reference in order to increase company value. Leverage, profitability, company size, as an independent variable, and GCD as a moderation variable can affect the value of the company, so the management of these variables must be done properly.

Originality/value – By using data and methods as described in the research design, this study has value and contributes to adding references in the study of factors that affect company value.