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The Impact of Capital Structure, Company Size, and Good Corporate Governance on Financial Performance and Company Value

Author

Listed:
  • Fahmi Mayasari
  • Budiyanto
  • Nur Fadjrih Asyik

Abstract

This study aims to resolve the inconsistencies in prior research regarding the effects of capital structure, firm size, and good corporate governance (GCG) on company value. Additionally, it investigates the moderating role of corporate social responsibility (CSR) in the relationship between financial performance and company value, offering new insights into this dynamic interaction. This study utilizes a saturated sample or census approach, including all population members, due to the small population size and the researcher's ability to access the required data. Data from 71 manufacturing companies listed on the Indonesia Stock Exchange (IDX) between 2018 and 2022 were obtained from their financial statements and annual reports. A quantitative analysis was conducted using Partial Least Square (PLS) regression with the SmartPLS 4.0 software. The results indicate that capital structure, company size, and GCG significantly impact financial performance. Additionally, capital structure was found to significantly affect company value, while company size and GCG did not. Financial performance significantly influenced company value, but CSR did not directly affect company value and did not moderate the relationship between financial performance and company value.Â

Suggested Citation

  • Fahmi Mayasari & Budiyanto & Nur Fadjrih Asyik, 2024. "The Impact of Capital Structure, Company Size, and Good Corporate Governance on Financial Performance and Company Value," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 13(4), pages 38-47, October.
    • Handle: RePEc:rbs:ijfbss:v:13:y:2024:i:4:id:3757
    DOI: 10.20525/ijfbs.v13i4.3757
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    References listed on IDEAS

    as
    1. Lee Siew Tee & Ismail Nizam, 2020. "The Influence of Corporate Governance on Financial Performance Mediated by Gender Diversity," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 10(1), pages 61-79, January.
    2. repec:bla:jfinan:v:43:y:1988:i:1:p:1-19 is not listed on IDEAS
    3. Muhammad Farhan Basheer* & Salman Khan & Saira Ghulam Hassan & Muzafar Hussain Shah, 2018. "The Corporate Governance and Interdependence of Investment and Financing Decisions of Non-Financial Firms in Pakistan," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 316-323:5.
    4. Dian Ferriswara & Nur Sayidah & Edwin Agus Buniarto, 2022. "Do corporate governance, capital structure predict financial performance and firm value?(empirical study of Jakarta Islamic index)," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2147123-214, December.
    5. Thi-Hanh Vu & Van-Duy Nguyen & Manh-Tung Ho & Quan-Hoang Vuong, 2019. "Determinants of Vietnamese Listed Firm Performance: Competition, Wage, CEO, Firm Size, Age, and International Trade," JRFM, MDPI, vol. 12(2), pages 1-19, April.
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    7. repec:eme:mfppss:mf-06-2018-0269 is not listed on IDEAS
    8. Tee, Lee Siew & Nizam, Ismail, 2020. "The Influence of Corporate Governance on Financial Performance Mediated by Gender Diversity," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 10(1), pages 61-79.
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