Corporate Governance, Firm Size, and Firm Value: Does Profitability Matter? Evidence from Indonesian State-Owned Enterprises

Kusmanto Kusmanto

doi:10.61255/jeemba.v4i5.1805

Authors

Kusmanto Universitas Gunung Kidul, Indonesia

DOI:

https://doi.org/10.61255/jeemba.v4i5.1805

Keywords:

Good Corporate Governance, Firm Size, Profitability, Firm Value

Abstract

Purpose – This study examines the effects of Good Corporate Governance (GCG) and firm size on firm value and investigates whether profitability, measured by Return on Assets (ROA), moderates these relationships in Indonesian State-Owned Enterprises (SOEs).

Design/methodology/approach – This study employs a quantitative approach using secondary data from 14 SOEs observed over the 2021–2025 period, resulting in 70 firm-year observations. The data were analyzed using multiple regression and Moderated Regression Analysis (MRA) with IBM SPSS Statistics 26. After outlier screening, 64 observations were used in the final analysis.

Finding/Results – The results show that GCG has a positive and significant effect on firm value, while firm size has a negative and significant effect. ROA has a positive and significant effect on firm value. ROA does not significantly moderate the relationship between GCG and firm value, but significantly moderates the relationship between firm size and firm value in a negative direction. These findings indicate that profitability does not uniformly strengthen the effects of corporate characteristics on market valuation.

Originality/Value – This study contributes to the literature by demonstrating that the role of profitability as a moderator depends on the specific corporate characteristic being examined. The findings imply that SOE management should focus not only on governance quality and asset growth but also on the efficiency and productivity of corporate resources in creating firm value.

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