The Effect of Corporate Governance Disclosures, Accounting
Conservatism and Ownership Structure on Firm Value
(Study in Industrial Sub-Sector of Indonesian Stock Exchange on 2018-2020)
DINO LIGIA ZELVIAN
Department Accounting, Bhayangkara Jakarta Raya University
INDONESIA
ALOYSIUS HARRY MUKTI
Department Accounting, Bhayangkara Jakarta Raya University
INDONESIA
Abstract: This research was conducted to analyze, observe and test the effect of corporate governance
disclosure, accounting conservatism, ownership structure on firm value. The object of this research is the
industrial sub-sector companies listed on the IDX during the 2018-2020 period. The sample selection used the
purposive sampling method with a total of 96 samples that met the criteria. The analytical method used multiple
linear regression analysis with help of the SPSS statistical program. The results show that (1) The corporate
governance disclosure has a positive effect on firm value., (2) accounting conservatism has a positive effect on
firm value, (3) managerial ownership has no effect on firm value, (4) institutional ownership has no effect on
firm value.
Keywords: Corporate Governance Disclosure, Accounting Conservatism, Ownership Structure, Firm Value
Received: August 25, 2021. Revised: October 19, 2022. Accepted: November 25, 2022. Published: December 31, 2022.
1 Introduction
Firm value is an illustration of the condition of a
company where there is a special value from
potential investors on the company's financial
performance. High corporate value is the desire of
the company owner, this is because with high
corporate value, it will also provide high prosperity
for shareholders [1]. An increase in the value of the
company will also increase the reaction of the stock
market because it is assumed that the returns
received will be higher and the risks borne by
investors will be lower [2]. Therefore investors will
be more confident in buying shares of companies
that have high value. Case in 2018 [3] cited that in
MYRX's 2016 annual financial report it was proven
to have violated capital market laws because it
recognized revenue in advance and presented a sale
and purchase agreement in the annual financial
report. Financial Services Authority sanctioned Mr.
Benny Tjokrosaputri alias Bentol as Main Director
of Hanson International. According to the Financial
Services Authority, there are values that conflict
with capital market laws, including the recognition
of revenue using the full accrual method for the sale
of ready-to-build plots worth IDR 732 billion which
was reported in the financial statements for that
period. This revenue recognition led to an overstated
December 2016 financial report with a value of IDR
613 billion. The directors of MYRX and Tabrani
were judged to be responsible for the financial
statements, so they were sanctioned in the amount
of IDR 100 million, while Hanson International was
penalized in the amount of IDR 500 million and
ordered by the ojek to present the financial
statements again. In fact, in Indonesia there are
already references in recording the preparation of
financial reports, SAK gives freedom to managers to
choose the method according to their wishes in
order to produce different financial reports
according to the needs and conditions in the
company. The choice is intended so that the
company presents financial statements that reflect
the actual condition of the company but sometimes
it is used for other purposes. Financial report
manipulation usually occurs for several reasons [4].
Good corporate governance is one way to minimize
agency conflicts that occur within the company
between management and company shareholders
[5]. Provisions related to GMS for Public
Companies have been regulated in the Financial
Services Authority Regulation SE OJK.04/2021
concerning Planning and Organizing
Meetings.Public Company Shareholders, Regulation
of the Capital Market and Financial Institution
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Supervisory Agency Number IX.J.1, Attachment to
the Decree of the Chairman of the Capital Market
and Financial Institution Supervisory Agency
Number:.KEP-179/BL/2008 dated 14 May.2008
concerning Main Articles of Association of
Companies Conducting Public Offerings of Equity
and Implied Securities.Limited Company. Based on
research [6] Stating that the size of the board of
commissioners has a positive effect on firm value,
while managerial ownership, public ownership, and
foreign ownership have a negative effect on firm
value. Institutional ownership and amnesty have no
effect on firm value. According to [7] that corporate
governance affects firm values. Accounting
conservatism can be interpreted as a principle to
avoid cumulative profits by maximizing the worst
possible and minimizing the best possible. research
says that conservatism has an effect on profits and
firm value [8]. In addition to the factors of good
corporate governance and accounting conservatism,
the ownership structure also influences the value of
the company. In principle, the ownership structure
has several distributions within the company. Some
researchers say that ownership structure has an
effect on firm value [9].
2 Hypothesis Development
2.1. The Effect of Disclosure of Good Corporate
Governance on Firm value
According to [10] examines corporate governance
on firm value and the results state that corporate
governance of the board of commissioners has a
positive effect on firm value. In this study in line
with research [11] which also shows that good
corporate governance has a positive effect on firm
value. This means that if the company uses good
corporate governance, the value of the company will
also improve.
Based on the description above regarding the
relationship between good corporate governance
and firm value, the research hypothesis is proposed
as follows:
H1 : Good corporate governance has a positive
effect on firm value
2.2. The Effect of Accounting Conservatism on
Firm Value
According to [12] tested accounting conservatism
on firm value and the results stated that accounting
conservatism had a positive effect on firm value. In
this study in line with research [13] which also
shows that accounting conservatism has a positive
effect on firm value. This means that if the company
uses accounting conservatism, the company will be
slow in recognizing profits.
Based on the description above regarding the
relationship between accounting conservatism and
firm value, the research hypothesis is proposed as
follows:
H2 : Accounting conservatism has a positive effect
on firm value.
2.3. The Effect of Managerial Ownership on
Firm Value
According to [14] examines managerial ownership
of firm value and the result is that managerial
ownership has a positive effect on firm value. In this
study in line with research [15] which also shows
that managerial ownership has a positive effect on
firm value.
Based on the above research regarding managerial
ownership and firm value, the research hypothesis is
proposed as follows:
H3 : Managerial ownership has a positive effect on
firm value
2.4. The Effect of Institusional Ownership on
Firm Value
According to [16] examines institutional ownership
on firm value and the result is that institutional
ownership has a positive effect on firm value. In this
study in line with [15] which also shows that
institutional ownership has a positive effect on firm
value.Based on the above research related to
institutional ownership research with firm value, the
research hypothesis is proposed as follows:
H4 : Institutional ownership has a positive effect on
firm value
3 Research Method
3.1 Operational Research Variables
Dependent Variables
1) Firm Value
The variable in this research is firm value Firm
value can be measured using several formulas, one
of which is the company's share price because the
company's stock market price reflects the overall
investor assessment of each equity owned [14] The
Price book value (PBV) formula compares the
market price per share to the value of the share the
formula as follows:
𝑃
𝐵𝑅𝑎𝑡𝑖𝑜 = 𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
𝐵𝑜𝑜𝑘 𝑣𝑎𝑙𝑢𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
Independent Variables
1) Governance Disclosure
According to [17] Good Corporate governance or
corporate governance is a system that runs and
increases the value of shares. A system that
regulates the relationship between management and
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owners, both majority and minority shareholders in
a company.
2) Accounting Conservatism
Accounting conservatism is vigilance in dealing
with uncertainties in economic and business
activities. Accounting conservatism is considered a
reaction that shows a cautious attitude in view of
uncertainty in the future [18]. Accounting
conservatism formula :
𝐶𝑖𝑜 = 𝑁𝑖𝑜 − 𝐶𝐹𝑜
Cio : Company conservatism level at time t
Nio : Net profit form the company operation
CFo : Cash flow from operating activities
3) Management Ownership
Management ownership, namely shareholders who
actively participate in decision making in the
company [19]. Management ownership in research
is measured by the formula below:
𝑂 𝑀 = 𝑇𝑜𝑡𝑎𝑙 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑓 𝑡ℎ𝑒 𝑚𝑎𝑛𝑎𝑔𝑒𝑟𝑖𝑎𝑙
𝑇𝑜𝑡𝑎𝑙 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑓 𝑠𝑢𝑏𝑠𝑖𝑑𝑖𝑎𝑟𝑦 𝑥 100%
O M : Ownership Manajerial
4) Institusional Ownership
Institutional ownership, namely the ownership of
company shares by institutions, such as banks,
insurance companies, investment companies and
other institutions [20].
𝑂 𝐼 = 𝑇𝑜𝑡𝑎𝑙 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑓 𝑡ℎ𝑒 𝑖𝑛𝑠𝑡𝑖𝑡𝑢𝑡𝑖𝑜𝑛𝑎𝑙
𝑇𝑜𝑡𝑎𝑙 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑓 𝑠𝑢𝑏𝑠𝑖𝑑𝑖𝑎𝑟𝑦 𝑥 100%
O I : Ownership Institutional
3.2 Data Source and Method
In taking the sample of this study using the
purposive sampling method, the total sample of the
study was 96 respondents. This study uses data
analysis methods which include descriptive
statistical analysis, classical assumption testing, and
hypothesis testing using multiple linear regression
4 Result and Discussion
4.1 Hypothesis Testing
The results of hypothesis testing in this study were
used to test the effect of the independent variables,
namely Disclosure of Corporate Governance (X1),
Accounting Conservatism (X2), Managerial
Ownership (X3), Institutional Ownership (X4),
Against Firm Value (Y). Hypothesis testing was
carried out using the t test and f test.
4.1.1 Coefficient of Determination Test (R-
Square)
The coefficient of determination test was carried out
to find out how far the model's ability to explain
independent variation. If the research uses simple
regression analysis, then what is used as a
consideration is the R Square value. However, when
using multiple regression analysis, the Adjuster R
Square value is considered. In this study using
multiple linear regression analysis, so that what is
seen is the Adjuster R Square value. The magnitude
of the coefficient of determination is between 0 and
1. If the value is close to 0, it indicates that the
independent variables in explaining the dependent
variable are very limited. Meanwhile, if the value is
close to 1, the independent variable will provide
almost all the information needed to predict the
dependent variable.
Table 1. Coefficient of Determination (R-Square)
Model
R
R Square
Std. Error
of the
Estimate
1
0.816a
0.665
0.87422
a. Predictors: (Constant), Corporate governance disclosure,
Accounting conservatism, Managerial ownership,
Institusional ownership
b. Dependent Variable : firm value
Based on table 1, it can be seen that the Adjusted R
Square value is 0.647 or 64.7%. This means that the
ability of the independent variables consisting of
disclosure of corporate governance, accounting
conservatism, managerial ownership, institutional
ownership can explain the influence of the
dependent variable on firm value of 64.7%. While
the remaining (100% - 64.7%) 35.3% is influenced
by other variables not present in this study.
4.1.2 Simultaneous Significance Test (F
statistic test)
The joint regression coefficient test (f test) was
carried out to determine the ability of all the
independent variables used in this study to influence
the dependent variable together. The f test is also
used as an explanation of the independent variable
on the dependent variable and to test whether the
research model is feasible to use. The basis for
decision making from the f test is as follows:
a. If f count > f table or sig value <0.05 then the
research model is feasible to use.
b. If f count < f table or sig value > 0.05 then the
research model is not feasible to use.
The results of testing the hypothesis using the f
test can be seen in table 4.8 as below:
Table 2. F-Test
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Dino Ligia Zelvian, Aloysius Harry Mukti
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Volume 2, 2022
ANOVAa
Model
Sum of
Square
s
df
Mean
Squar
e
F
Sig.
1
Regressio
n
112,335
4
28,084
36,7
46
,000
b
Residual
56,555
74
0,764
Total
168,890
78
a. Dependent Variable : TAV
b. Predictors: (Constant), Corporate governance disclosure,
Accounting conservatism, Managerial ownership,
Institusional ownership, firm value
Based on table 2, it can be seen from the
significance of 0.000 indicating that it is smaller
than 0.05. So that it can be said that the independent
variables consisting of corporate governance
disclosures, accounting conservatism, managerial
ownership, institutional ownership, jointly affect the
dependent variable, namely firm value, and the
variables in this study are declared fit for use or
included in the model. study.
4.1.3 Partial Coefficient (Test Statistical t)
The following are the results of the individual
parameter significance test (t statistical test) in this
study:
Table 3. Test Statistic t
Coefficients
Model
Unstandardiz
ed
Coefficients
Standardiz
ed
Coefficient
s
T
Sig.
B
Std.
Error
Beta
1
(Contan
t)
1.04
2
0.453
2.29
7
0.02
4
(X1)
1.17
9
0.591
0.136
1.99
4
0.05
0
(X2)
3.07
7E-7
0.000
0.806
11.7
78
0.00
0
(X3)
-
0.26
2
0.603
-0.032
-
0.43
5
0.66
5
(X4)
0.36
5
0.346
0.078
1.05
4
0.29
5
Dependent Variable : TAV
Based on table 3, the conclusions that can be
drawn are as follows:
1) The corporate governance disclosure
variable has a significant value of 0.050
equal to 0.050. Thus, H1, the corporate
governance disclosure variable has a
positive effect on firm value.
2) The accounting conservatism variable is
significant, namely 0.000, which is less than
0.05. Thus H2 accounting conservatism
variable has a positive effect on firm value.
3) The management ownership variable has a
significant value of 0.665 which is greater
than 0.05. Thus, H3 is rejected, which
means that managerial ownership has no
effect on firm value.
4) The institutional ownership variable has a
significant value, namely 0.295, greater than
0.05. Thus, H4 is rejected, which means that
institutional ownership has no effect on firm
value.
5) Discussion
1) The Effect of Corporate Governance Disclosure
on Firm Value
Based on the results of statistical tests, the corporate
governance disclosure variable has a positive effect
on firm value. As shown in table 3, the significant
level of the corporate governance disclosure
variable is 0.050 or equal to 0.050 with a coefficient
value of 1.179 so that the first hypothesis is
accepted. With the conclusion that disclosure of
corporate governance has a positive effect on firm
value. The results of this study are in line with the
research [10] examines corporate governance on
firm value and the results state that corporate
governance of the board of commissioners has a
positive effect on firm value. In this study is also in
line with research [11] which also shows that good
corporate governance has a positive effect on firm
value. This means that if the company uses good
corporate governance, the value of the company will
also improve.
2) The Effect of accounting Conservatism on Firm
Value
Based on the results of statistical tests, the
accounting conservatism variable has a positive
effect on firm value. As table 4.9 shows that the
significant level of the accounting conservatism
variable is 0.000 or less than 0.050 with a
coefficient value of 3.078 so that the second
hypothesis is accepted. With the conclusion that
accounting conservatism has a positive effect on
firm value. This research is in line with research
[12] tested accounting conservatism on firm value
and the results stated that accounting conservatism
had a positive effect on firm value. In this study is
also in line with research [13] which also shows that
accounting conservatism has a positive effect on
firm value. This means that if the company uses
accounting conservatism, the company will be slow
in recognizing profits.
3) The Effect of Managerial Ownership on
Firm Value
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Based on the results of statistical tests, the
management ownership variable has no effect on
firm value. As shown in table 3, the significant level
of managerial ownership is 0.665 or greater than
0.05, so the third hypothesis is rejected. This
research is different from the research results [14]
which examines managerial ownership of firm value
and the result is that managerial ownership has a
positive effect on firm value. And [15] which also
shows that managerial ownership has a positive
effect on firm value. The results of this study are in
line [21] examines research on the effect of
company ownership on firm value with the results
of research saying managerial ownership of
managerial ownership on firm value is rejected, this
research is also in line with research [21] examines
the analysis of the effect of institutional ownership
and managerial ownership on firm value, which
states that managerial ownership has no significant
effect on firm value.
4) The Effect of Institutional Ownership on
Firm Value
Based on the results of statistical tests, the
institutional ownership variable has no effect on
firm value. As seen in table 4.9 that the significant
level of institutional ownership is 0.295 or greater
than 0.05 so that the fourth hypothesis rejected.
This research is not in line with research [16]
examines institutional ownership on firm value and
the result is that institutional ownership has a
positive effect on firm value. In this study is also not
in line with research [15] which also shows that
institutional ownership has a positive effect on firm
value. This research is in line with [22] examines
the analysis of the effect of institutional ownership
and management ownership on firm value which
states that institutional ownership has no significant
effect on firm value because it has a significance
value of 0.419 > 0.05.
5. Conclusion and Further Research
Based on the test results and discussion
regarding the effect of corporate governance
disclosures, accounting conservatism, managerial
ownership, institutional ownership in industrial
sector companies recorded on the IDX for the 2018-
2019 period, it can be concluded that:
1) The corporate governance disclosure has a
positive effect on firm value.
2) Accounting conservatism has a positive effect
on firm value.
3) Managerial ownership has no effect on firm
value.
4) Institutional ownership has no effect on firm
value.
Further research can consider several suggestion,
such as:
1) This research focus on industrial sector, but
there’s another sector such as consumer goods
or energy sector
2) time period observation can be more expand in
to 5 years observation
3) next research can consider control variables,
such as leverage or firm size
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