The Moderating Role of Good Corporate Governance on the Influence of Profitability, Leverage and Exchange Rates on Firm Value in Food and Beverage Companies Listed on the Indonesia Stock Exchange

Indrawati, Trisa and Budiyanto, Budiyanto and Suhermin, Suhermin (2022) The Moderating Role of Good Corporate Governance on the Influence of Profitability, Leverage and Exchange Rates on Firm Value in Food and Beverage Companies Listed on the Indonesia Stock Exchange. Revue Europeened Studes European Journal Of Military Studies, 12 (4). pp. 560-572.

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Abstract

Competition for food and beverage consumer goods companies has become increasingly tight since the legalization of the World Trade Organization. With the formation of the World Trade Organization (WTO) in 1994, world markets tended to be more open and barrier-free. The development of a country's industry can be used to see national developments in that country. This development can be seen from both the quality of the products produced and the performance of the industry that dominates the companies listed on the Indonesia Stock Exchange (IDX). Competition makes every company try to improve company performance to achieve company goals. In implementing the ASEAN Economic Community (AEC), Indonesia is required to have a highly competitive domestic industry so that it does not just become a market for neighboring countries. One sector that can become a mainstay for the future and still has prospects for development is the food and beverage industry (mamin). The data analysis technique in this study used PLS (Partial Least Square) analysis with an analysis process assisted by the warpPLS application program. The PLS method can be used for any type of data scale (nominal, ordinal, interval, ratio) as well as more flexible assumption requirements. PLS is also used to measure the relationship of each indicator with its latent variables. PLS analysis has two models, namely the inner model and the outer model. The outer model is also known as the outer relation or measurement model which specifies the relationship between latent variables and their indicators. Meanwhile, the inner model, which is also known as the inner relation or structural model, shows the specification of the relationship between research variables. Prior to conducting PLS analysis, descriptive statistical analysis was first carried out. Profitability directly has a significant positive effect on firm value. This means that the higher the profitability, the better the company is in managing capital to make a profit. This means that Food and Beverage companies can use capital effectively and efficiently to generate net profit. Negative leverage is not significant to firm value. This means that excessive use of debt reduces the benefits received from using debt because the benefits received are not proportional to the costs incurred, so that a low proportion of debt will increase the value of the company and an increase in debt will reduce the value of the company. Negative exchange rates are not significant to company value. This means that changes in the rupiah exchange rate do not affect sales volume at Food and Beverage companies so that they do not affect company value. Good Corporate Governance moderates the influence of profitability on firm value. This means that the mechanism of Good Corporate Governance as measured by Independent Commissioners and audit committees shows that the role of the manager as well as the owner minimizes agency conflicts in generating profits so that Good Corporate Governance is able to moderate the effect of profitability on firm value. Good Corporate Governance moderates the effect of leverage on firm value. This means that management is careful in using debt because later debt will burden the profits earned by shareholders. The better the debt management of the company, the more investor confidence will increase which can increase the value of the company. Good Corporate Governance does not moderate the effect of exchange rates on firm value. This means that Good Corporate Governance is not able to strengthen the effect of exchange rates on firm value. Keyword: Moderation of Good Corporate Governance, Profitability, Leverage, Exchange Rates, Corporate Values

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