The Effect of Good Corporate Governance on The Sharia Firm Value Moderated by Financial Performance on The Jakarta Islamic Index 70
DOI:
https://doi.org/10.70895/jemba.v2i1.48Keywords:
Good Corporate Governance, Profitability, Firm Value, ModerationAbstract
Macroeconomic instability and low investor participation in Indonesia’s capital market—especially among sharia-compliant investors highlight the importance of corporate governance in enhancing firm value. This study examines the effect of Good Corporate Governance (GCG) mechanisms on the value of firms listed in the Jakarta Islamic Index 70 (JII70), and whether profitability, measured by Return on Assets (ROA), moderates this relationship. Using secondary data from 2022–2024 and applying multiple and moderated regression analysis in EViews 13, the results reveal that GCG components (institutional ownership, audit committee, and independent commissioners) do not directly influence firm value. However, profitability significantly moderates the relationship between independent commissioners and firm value. This study contributes to the understanding of GCG effectiveness in sharia firms and highlights the critical role of profitability in strengthening corporate value. The novelty lies in examining this interaction within the context of Indonesia’s sharia capital market, offering practical implications for regulators, investors, and company management.
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