THE INFLUENCE OF PROFITABILITY AND AUDIT OPINION ON COMPANY VALUE WITH GOOD CORPORATE GOVERNANCE AS A MODERATING FACTOR

Abstract

This study aims to examine the influence of profitability and audit opinion on firm value. It is also purposeful for testing the role of good corporate governance (GCG) in strengthening the relationship between profitability and firm value as well as audit opinions and firm value. The hypotheses in this study were developed based on stakeholder theory, signaling theory, and agency theory. This study was conducted on banking companies listed on the Indonesian Stock Exchange during the period 2019-2022. Using purposive sampling methods, a sample of 36 companies and a total of 115 observation data were collected. Data were company's annual report and were analyzed using multiple linear regression analysis. Results of this study prove that profitability and audit opinions have no influence on increasing the firm value. Furthermore, this study proves that GCG does not play a role in enhancing the relationship between profitability, audit opinions, and firm value. Although this study failed to prove the hypotheses, the conclusions in this study imply that investors tend to consider long-term factors in investing. In addition, this study also provides insights for future study to consider other proxy, in addition to the number of audit committees, in measuring GCG. Measuring GCG through the amount of audit committees a company possesses may be less measuring the effectiveness of GCG in a company.