THE EFFECT OF FINANCIAL THE EFFECT OF FINANCIAL PERFORMANCE, - PowerPoint PPT Presentation

THE EFFECT OF FINANCIAL THE EFFECT OF FINANCIAL PERFORMANCE, CORPORATE PERFORMANCE, CORPORATE GOVERNANCE, AND GOVERNANCE, AND CORPORATE SOCIAL CORPORATE SOCIAL RESPONSIBILITY ON RESPONSIBILITY ON FIRM VALUE FIRM VALUE Geni Enka Lestari / 23211029 Advisor: Dr. rer. pol. Ir. Sudaryanto M.Sc

Introduction • Background : – The goal of company – Factors which affect firm value • Research Objectives This research aims at analyze the effect of financial This research aims at analyze the effect of financial performance, corporate governance, and corporate social responsibility on firm value of financial entities.

Literature Review • Signaling Theory – Financial performance – Corporate Social Responsibility • Agency Theory • Agency Theory – Corporate Governance

Research Method • Type and Source Data: Secondary data in the form of annual report is obtained from official website of IDX and each entities. • Sample: 21 Financial Entities • Dependent Variables: Firm value (Tobin’s Q) • Dependent Variables: Firm value (Tobin’s Q) • Independent Variables: ROA, Managerial Ownership Rate, Institutional Ownership Rate, Independent Commissioner Proportion, Audit Committee Number, and CSR • Analysis Method: Multiple Regression Analysis

Result and Discussion Summary of Statistic t Test Model Sig. β (Constant) 0,942 0,000 Return on Asset 0,039 0,000 Managerial Ownership Rate -0,013 0,000 Institutional Ownership Rate -0,002 0,008 Independent Commissioner Proportion 0,003 0,035 Audit Committee Number 0,006 0,575 Corporate Social Responsibility -0,013 0,091 (Constant) 0,949 0,000 Return on Asset Return on Asset 0,040 0,040 0,000 0,000 Managerial Ownership Rate -0,013 0,000 Institutional Ownership Rate -0,002 0,008 Independent Commissioner Proportion 0,003 0,025 Corporate Social Responsibility -0,011 0,106 (Constant) 0,928 0,000 Return on Asset 0,040 0,000 Managerial Ownership Rate -0,013 0,000 Institutional Ownership Rate -0,001 0,017 Independent Commissioner Proportion 0,003 0,031 Dependent Variable: Firm Value Source: Secondary data was processed by SPSS 20, 2015

Result and Discussion Summary of Multiple Regression Analysis Model 3 Variable Coefficient Sig (t) (Constant) 0,928 0,000 Return On Asset 0,040 0,000 Managerial Ownership Rate -0,013 0,000 Institutional Ownership Rate Institutional Ownership Rate -0,001 -0,001 0,017 0,017 Independent Commissioner Proportion 0,003 0,031 Adjusted R Square= 0,478 ; Sig (F)= 0,000 Source: Secondary data was processed by SPSS 20, 2015 Y = 0,928 + 0,040 ROA – 0,013 MOR – 0,001 IOR + 0,003 ICP + e

Result and Discussion • Return on Asset – Base on coefficient regression, if ROA increase of 1, then firm value will increase of 0,040. Conversely, if ROA decrease of 1, then firm value will decrease of 0,040. – Base on t statistic then H1 is accepted. It means that ROA has effect on firm value.

Result and Discussion • Managerial Ownership Rate – Base on coefficient regression, if managerial ownership increase of 1, then firm value will decrease of 0,013. Conversely, if managerial ownership decrease of 1, then firm value will increase of 0,013. – Base on t statistic then H2 is accepted. It means that managerial ownership has effect on firm value.

Result and Discussion • Institutional Ownership Rate – Base on coefficient regression, if institutional ownership increase of 1, then firm value will decrease of 0,001. Conversely, if institutional ownership decrease of 1, then firm value will increase of 0,001. – Base on t statistic then H3 is accepted. It means that institutional ownership has effect on firm value.

Result and Discussion • Independent Commissioner Proportion – Base on coefficient regression, if independent commissioner proportion increase of 1, then firm value will increase of 0,003. Conversely, if independent commissioner proportion decrease of 1, then firm value will decrease of 0,003. then firm value will decrease of 0,003. – Base on t statistic then H4 is accepted. It means that independent commissioner proportion has effect on firm value.

Result and Discussion • Audit Committee Number – Base on coefficient regression, if audit committee number increase of 1, then firm value will increase of 0,006. Conversely, if audit committee number decrease of 1, then firm value will decrease of 0,006. – Base on t statistic then H5 is rejected. It means that audit committee number does not have effect on firm value.

Result and Discussion • Corporate Social Responsibility – Base on coefficient regression, if CSR increase of 1, then firm value will decrease of 0,013. Conversely, if CSR decrease of 1, then firm value will increase of 0,013. – Base on t statistic then H6 is rejected. It means that CSR does not have effect on firm value.

Conclusion and Suggestion • Conclusion ROA, managerial ownership, institutional ownership, and independent commissioner affect firm value. While audit committee and CSR do not affect firm value. • Suggestion for Further Research • Suggestion for Further Research – Adding others variable for financial performance, and corporate governance – Using time lag for CSR variable at least 1 year

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