The Dynamics of Corporate Governance, Earnings Management, and Market Risk in Enhancing Corporate Value: Evidence from the Indonesian Sharia Capital Market
DOI:
https://doi.org/10.30983/es.v8i1.8589Keywords:
corporate governance., earnings management, dividend policies, market riskAbstract
This study aims to examine and analyse the factors influencing the value of companies in the Indonesian Sharia capital market, including corporate governance, earnings management, market risk, investment decisions, and dividend policy. Using secondary data from the Annual Report, Factbook IDX, and ICMD, and descriptive analysis using SPSS 28 and PLS-SEM, the study focuses on 71 sample companies from the Indonesian Sharia Stock Index (ISSI) during 2017-2022. The findings indicate that dividend policy and investment decisions significantly influence the mediating role of corporate governance on firm value, with a negative impact on firm value when corporate governance is high. Dividend policy does not significantly moderate the impact of earnings management and market risk on firm value, and investment decisions do not moderate the impact of earnings management. However, investment decisions significantly mediate the impact of market risk on firm value, with risk-orientated investors increasing firm value through short-term transactions, providing a new perspective on the relationship between investment decisions and firm value.
References
Abbas, A., & Ayub, U. (2019). Role of earnings management in determining firm value: An emerging economy perspective. International Journal of Advanced and Applied Sciences, 6(6), 103–116. https://doi.org/10.21833/ijaas.2019.06.015
Adelina, Y. E., Trilaksono, T., & Rohi-Mone, R. (2020). Do Corporate and Sharia Compliance Governance Affect Enterprise Risk Management Implementation? Jurnal Keuangan Dan Perbankan, 24(1), 1–19. https://doi.org/10.26905/jkdp.v24i1.3768
Al-ahdal, W. M., Alsamhi, M. H., Tabash, M. I., & Farhan, N. H. S. (2020). The impact of corporate governance on financial performance of Indian and GCC listed firms: An empirical investigation. Research in International Business and Finance, 51, 101083. https://doi.org/10.1016/j.ribaf.2019.101083
Anwer, Z., Mohamad, S., Paltrinieri, A., & Hassan, M. K. (2021). Dividend payout policy of Shariah compliant firms: Evidence from United States. Pacific-Basin Finance Journal, 69, 101422. https://doi.org/10.1016/j.pacfin.2020.101422
Aspirandi, R. M., & Varisa, B. C. (2021). Is There A Role for Earnings Management in Dividend Policy? JUARA (Jurnal Riset Akuntansi), 11(2), 186–205. https://doi.org/10.36733/juara.v11i2.2833
Bilan, Y., & Jurickova, V. (2021). Detection of earnings management by different models. SHS Web of Conferences, 92, 02005. https://doi.org/10.1051/shsconf/20219202005
Brigham, E. F., & Houston, J. F. (2019). Fundamentals of financial management (Fifteenth edition). Cengage.
Chin, W. W. (2010). How to Write Up and Report PLS Analyses. In V. Esposito Vinzi, W. W. Chin, J. Henseler, & H. Wang (Eds.), Handbook of Partial Least Squares (pp. 655–690). Springer Berlin Heidelberg. https://doi.org/10.1007/978-3-540-32827-8_29
Chung, K. H., & Pruitt, S. W. (1994). A Simple Approximation of Tobin’s q. Financial Management, 23(3), 70. https://doi.org/10.2307/3665623
Cohen, J. (1988). Statistical power analysis for the behavioral sciences (2nd ed). L. Erlbaum Associates. https://www.taylorfrancis.com/books/9781134742707
Crowther, D., & Seifi, S. (2011). Corporate Governance and International Business. Ventus Publishing ApS. https://bookboon.com/en/corporate-governance-and-international-business-ebook
Dama, H., Franssisca Dungga, M., & Salma Hasiru, F. (2020). Investment Decision, Market Capitalization, and Company Value. International Journal of Advanced Research, 8(12), 696–704. https://doi.org/10.21474/IJAR01/12200
Damayanti, C. R., & Palinggi, Y. A. (2023). Factors Affecting Dividend Policy: An Evidence From Indonesian Financial Companies. Management Analysis Journal, 12(1), 1–16. https://doi.org/10.15294/maj.v12i1.57970
Dechow, P. M., Hutton, A. P., Kim, J. H., & Sloan, R. G. (2012). Detecting Earnings Management: A New Approach. Journal of Accounting Research, 50(2), Article 2. https://doi.org/10.1111/j.1475-679X.2012.00449.x
Elhalaby, S., Sarea, A., Alnesafi, A., & Al-Absy, M. S. M. (2023). The Adoption of AAOIFI Standards by Islamic Banks: Understanding the Microeconomic Consequences. Economies, 11(2), 39. https://doi.org/10.3390/economies11020039
Faizi, F., & Bin Shuib, M. S. (2024). Sharia Governance in Islamic Financial Institutions: A Comparative Review of Malaysia and Indonesia. EL DINAR: Jurnal Keuangan Dan Perbankan Syariah, 12(1), 89–107. https://doi.org/10.18860/ed.v12i1.25135
Fajri, A. M., Yunita, I., & Mulyana, E. (2023). Effect of Profit Management and Earning per Share on Company Value with Company Size as a Moderation Variable. Proceeding of International Conference on Business Management and Accounting (ICOBIMA), 2(1), 18–33. https://doi.org/doi.org/10.35145/icobima.v2i1.3922
Giovanni, A., Khayati, A., Jauzaa, A., & Utami, D. W. (2022). Business Risk, Efficiency, and Quality of Investment Decisions. Jurnal Ekonomi Dan Manajemen, 16(1), 37–53. https://doi.org/10.30650/jem.v16i1.3300
Gitman, L. J., & Zutter, C. J. (2019). Principles of managerial finance (25th ed., global ed). Pearson.
Hair, J. F., Hult, G. T. M., Ringle, C. M., Sarstedt, M., Danks, N. P., & Ray, S. (2021). Partial Least Squares Structural Equation Modeling (PLS-SEM) Using R: A Workbook. Springer International Publishing. https://doi.org/10.1007/978-3-030-80519-7
Hairudin, & Desmon. (2020). The Effect of Capital Structure on Firm Value by Using Dividend Policy as an Intervening Variable (Study on Pharmaceutical Sub Sector Companies). Diskursus Ilmu Manajemen STIESA, 17(01), 70–87. https://ojs.stiesa.ac.id/index.php/dimensia
Hamid, R. S., & Anwar, S. M. (2019). Structural Equation Modeling (SEM) Berbasis Varian: Konsep Dasar dan Aplikasi dengan Program SmartPLS 3.2.8 dalam Riset Bisnis (1st ed.). PT Inkubator Penulis Indonesia.
Handayani, Y. D., & Ibrani, E. Y. (2023). The Role of Dividend Policy in Explaining Corporate Governance and Profitability on Firm Value. Ekuilibrium : Jurnal Ilmiah Bidang Ilmu Ekonomi, 18(1), 22–36. https://doi.org/10.24269/ekuilibrium.v18i1.2023.pp22-36
Hartono, J. (2020). Teori Portofolio dan Analisis Investasi (3rd ed., Vol. 1). Universitas terbuka.
Hernawati, R. I., Ghozali, I., Yuyeta, E. N. A., & Prastiwi, A. (2021). The Effect of Income and Earnings Management on Firm Value: Empirical Evidence from Indonesia. The Journal of Asian Finance, Economics and Business, 8(4), 105–112. https://doi.org/10.13106/JAFEB.2021.VOL8.NO4.0105
Hernawati, R. I., Ghozali, I., Yuyetta, E. N. A., & Prastiwi, A. (2021). The Effect of Income and Earnings Management on Firm Value: Empirical Evidence from Indonesia. Journal of Asian Finance, Economics and Business, 8(4), 0105–0112. https://doi.org/10.13106/jafeb.2021.vol8.no4.0105
Iqbal, S., Nawaz, A., & Ehsan, S. (2019). Financial performance and corporate governance in microfinance: Evidence from Asia. Journal of Asian Economics, 60, 1–13. https://doi.org/10.1016/j.asieco.2018.10.002
Jones, J. J. (1991). Earnings Management During Import Relief Investigations. Journal of Accounting Research, 29(2), Article 2. https://doi.org/10.2307/2491047
Karimah, R., Rahayu, S. M., & Damayanti, C. R. (2024). The Influence of Corporate Governance, Capital Structure, Company Growth on Dividend Policy and Firm Value in Consumer Goods Industry. PROFIT: Jurnal Administrasi Bisnis, 18(1), 30–45. https://doi.org/10.21776/ub.profit.2024.018.01.3
Latan, H., & Ghozali, I. (2012). Partial Least Squares Knsep, Teknik dan Aplikasi Menggunakan Program SmartPLS 2.0 M3 Untuk Penelitian Empiris (1st ed.). Badan Penerbit Universitas Diponegoro.
Mansour, W., Saci, K., & Khalifa, S. (2019). How Do Financing Conditions Impact Firm Behavior? Evidence from the Gulf Zone. Emerging Markets Finance and Trade, 53(4), 952–967. https://doi.org/10.1080/1540496X.2016.1248555
Manurung, A. D. P. (2022). The Effect of Good Corporate Governance on Firm Value with Financial Performance As an Intervening Variable. Neo Journal of Economy and Social Humanities, 1(4), 242–254. https://doi.org/10.56403/nejesh.v1i4.54
Ma’sum, H., Purnomo, B. S., & Purnamasari, I. (2024). The Effect of Market Risk, Business Risk, and Financial Risk on Stock Returns in Automotive Companies. Journal of Economics, Entrepreneurship, Management Business and Accounting, 2(1), 1–15. https://doi.org/10.61255/jeemba.v2i1.288
Monica, L., & Achmadi, U. (2017). Struktur Modal dan Keputusan Investasi terhadap Nilai Perusahaan. Agregat: Jurnal Ekonomi dan Bisnis, 1(2), 221–230. https://doi.org/10.22236/agregat_vol1/is1pp221-230
Munawaroh, F., & Munandar, A. (2024). Investment Decisions’ Impact on Corporate Value: Analyzing Profitability, Leverage, Company Size, and Age Moderation Effects. International Journal of Social Science and Business, 8(1), 105–116. https://doi.org/10.23887/ijssb.v8i1.73628
Munifatussa’idah, A. (2021). Sharia Compliance, Islamic Corporate Governance, Intellectual Capital, and Earning Management toward Financial Performance in Indonesia Islamic Banks. IQTISHADIA, 14(2), 251. https://doi.org/10.21043/iqtishadia.v14i2.10152
Murinda, C. S., Islahuddin, I., & A, N. (2021). Firm Value: Does Corporate Governance and Research & Development Investment Matter? Jurnal Reviu Akuntansi Dan Keuangan, 11(2), 266–284. https://doi.org/10.22219/jrak.v11i2.16786
Nanda, S. T., Zenita, R., Salimiah, N., & Adino, I. (2022). Earning Management: The Moderating Effect of Corporate Governance and The Effect Management Overconfidence. Jurnal Ilmiah Ekonomi Dan Bisnis, 19(1), 11–19. https://doi.org/10.31849/jieb.v19i1.7588
Naveed, F. (2021). Institutional shareholding and the dividend payout policy of Islamic mutual funds: Evidence from international Islamic funds industry. Borsa Istanbul Review, 21(2), 125–132. https://doi.org/10.1016/j.bir.2020.09.002
Nazar, M. (2021). The Dynamic Impact of Corporate Governance on Investment Decisions of Non-Financial Companies in Sri Lanka. Journal of Contemporary Issues in Business and Government, 27(1), 1404–1413.
Nugroho, M., & Halik, A. (2021). The Effect of Growth and Systematic Risk on the Firmâ€TMs Value: Profitability as a Mediating Variable. Journal of Economics, Business, & Accountancy Ventura, 23(3), 466–476. https://doi.org/10.14414/jebav.v23i3.2468
Nurdin, D., & Yunus Kasim, M. (2018). Moderator Effect of Corporate Governance on the Relationship of Financial Performance and Dividend Policy, and Its Impact on Firm Value in Indonesia Stock Exchange. International Journal of Economics & Management Sciences, 07(01), 1–7. https://doi.org/10.4172/2162-6359.1000499
Nurlela, Sulastri, Aj, U. H., & Hanafi, A. (2019). The Influence Of Investment Decisions And Financing Decisions On Firm Value With Profitability As Intervening Variables(Empirical Study On Companies Listed In Indonesian Sharia Stock Index). International Journal of Multicultural and Multireligious Understanding, 6(2), 447. https://doi.org/10.18415/ijmmu.v6i2.758
OJK, D. P. (2020). Roadmap Pasar Modal Syariah 2020—2024. https://ojk.go.id/id/berita-dan-kegiatan/publikasi/Pages/Roadmap-Pasar-Modal-Syariah-2020---2024.aspx
Paniagua, J., Rivelles, R., & Sapena, J. (2018). Corporate governance and financial performance: The role of ownership and board structure. Journal of Business Research, 89, 229–234. https://doi.org/10.1016/j.jbusres.2018.01.060
Phuong Hong, N. T., & Khanh Linh, D. T. (2020). Effects of Earnings Management to Investor Decision –Empirical Evidence in Vietnam Stock Market. WSEAS TRANSACTIONS ON ENVIRONMENT AND DEVELOPMENT, 16, 84–97. https://doi.org/10.37394/232015.2020.16.9
Pranesti, A., & Kusuma, I. W. (2021). The Moderating Effect of Earnings Management and Dividend Policy on Relationship Between Corporate Governance and Institutional Foreign Ownership. Jurnal Reviu Akuntansi Dan Keuangan, 11(3), 599–617. https://doi.org/10.22219/jrak.v11i3.18096
Sa’diyah, C. (2021). Relationship Between Profitability, Investment Decisions On Firm Value: A Study Of Listed Banks In Indonesia. JBMP (Jurnal Bisnis, Manajemen Dan Perbankan), 7(2), 69–88. https://doi.org/10.21070/jbmp.v7i2.1469
Sari Yulis Terfiadi, Muhammad Jais, Sayed Mahdi, & Ratna Husein. (2023). The Potential of The Islamic Capital Market (ICM) as an Investment Model for the Baitul Mal. Journal of Trends Economics and Accounting Research, 3(4), 620–628. https://doi.org/10.47065/jtear.v3i4.635
Sugiyono. (2019). Metode Penelitian kuantitatif, kualitatif dan R & D. Alfabeta.
Sumaji, Y. M. P., Hsu, W.-H. L., & Salim, U. (2017). Analysıs of Market Rısk in Stock Investment Usıng Value at Rısk Method (Study on Manufacturıng Companıes in Lq-45 Lısted on Indonesıa Stock Exchange). Asia Pacific Management and Business Application, 6(1), 1–14. https://doi.org/10.21776/ub.apmba.2017.006.01.1
Syahri, A., & Robiyanto. (2020). The Effect Investment, Funding, and Dividend Policy Toward the Company Value. International Journal of Social Science and Business, 4(3), 372–382. https://ejournal.undiksha.ac.id/index.php/IJSSB/index
Tandelilin, E. (2017). Pasar Modal: Manajemen Portofolio & Investasi (G. Sudibyo, Ed.; 1st ed., Vol. 1). PT Kanisius.
Wahyudi, S. M., & Chairunesia, W. (2019). The Effect of Good Corporate Governance on Investment Decisions and Profitability and Its Impact on Corporate Value. International Journal of Academic Research in Accounting, Finance and Management Sciences, 9(3), Pages 140-149. https://doi.org/10.6007/IJARAFMS/v9-i3/6353
Wani, A. S., & Dar, S. H. (2022). Prospects of Sharia Governance in Islamic Finance Industry: Jurisdictions, Standards, and Implications. Talaa : Journal of Islamic Finance, 2(1), 21–32. https://doi.org/10.54045/talaa.v2i1.523
Widyasari, F. (2019). Analisis Dampak Struktur Kepemilikan terhadap Nilai Perusahaan dan Risiko pada Perusahaan yang Tercatat di Bursa Efek indonesia [Disertasi]. UGM.
Wijaya, H., Cahyadi, H., Salim, S., & Morgan, C. E. B. (2023). The Effect of Corporate Governance, Dividend Policy, Conservatism, and Liquidity On The Value of Family Manufacturing Companies In Indonesia Stock Exchange. International Journal of Application on Economics and Business, 1(4), 2613–2625. https://doi.org/10.24912/ijaeb.v1i4.2613-2625
Downloads
Published
Issue
Section
Citation Check
License
Copyright (c) 2024 Tajus Sauqi
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike 4.0 International License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
