GOOD CORPORATE GOVERNANCE, FINANCIAL PERFORMANCE, AND FIRM VALUE IN LQ45 COMPANIES DURING ECONOMIC UNCERTAINTY

Abstract

This research investigates how Good Corporate Governance, financial performance, and economic uncertainty influence firm value among firms categorized within the LQ45 index throughout 2020–2024. The originality of this study lies in the inclusion of economic uncertainty proxied by the BI Rate together with managerial ownership and financial performance in explaining firm value during unstable economic conditions in Indonesia. This study aims to analyze the effect of managerial ownership (KM), Return on Assets (ROA), and the BI Rate on firm value proxied by Price to Book Value (PBV), with firm size used as a control variable. This study employed a quantitative approach using panel data obtained from annual reports and official publications of companies listed in the LQ45 index. The data were analyzed using panel data regression with STATA software. The results indicate that ROA has a positive and significant effect on firm value, while the BI Rate has a negative and significant effect on firm value. Meanwhile, managerial ownership does not significantly affect firm value. Firm size was found to positively influence firm value. These findings imply that profitability and macroeconomic stability are important factors in maintaining investor confidence and increasing firm value during periods of economic uncertainty.

Keywords : Good Corporate Governance, Financial Performance, Economic Uncertainty, Firm Value, BI Rate