Firm Value: Does Corporate Governance and Research & Development Investment Matter?

Authors

  • Cut Sri Murinda Faculty of Economic and Business of Syiah Kuala University, Banda Aceh Indonesia
  • Islahuddin Islahuddin Faculty of Economic and Business of Syiah Kuala University, Banda Aceh Indonesia
  • Nuraini A Faculty of Economic and Business of Syiah Kuala University, Banda Aceh Indonesia

DOI:

https://doi.org/10.22219/jrak.v11i2.16786

Keywords:

Enterprise Risk Management Disclosure, Good Corporate Governance, Intellectual Capital, Research & Development Investment

Abstract

This study aims to examine the factors that affect firm value. This research uses purposive sampling method. The sample of the research is 45 financial companies (128 year-firm observations) listed in Indonesia Stock Exchange for the period of 2017-2019. Multiple regression analysis with unbalanced panel data was applied to analyze the data. A corporate governance index published by Globe and Mail with 4 sub-indices is adopted, namely board composition, shareholding and compensation policies, shareholder rights and disclosure. The results of this study indicate that good corporate governance and research & development investment have no effect on firm value. This explains that the implementation of good corporate governance and firm investment in research & development are not the main information for investors in making investments. However, intellectual capital and enterprise risk management disclosure have effect on firm value. The results can be used as a reference for researchers, especially in the accounting sector related to the development of measuring instruments for good corporate governance.

Downloads

Download data is not yet available.

References

Aditya, O., & Naomi, P. (2017). Penerapan Manajemen Risiko Perusahaan dan Nilai Perusahaan di Sektor Konstruksi dan Properti. Esensi: Jurnal Bisnis Dan Manajemen, 7(2), 167–180. https://doi.org/10.15408/ess.v7i2.4981

Alam, A., Uddin, M., Yazdifar, H., Shafique, S., & Lartey, T. (2020). R&D investment, firm performance and moderating role of system and safeguard: Evidence from emerging markets. Journal of Business Research, 106(November 2018), 94–105. https://doi.org/10.1016/j.jbusres.2019.09.018

Ammann, M., Oesch, D., & Schmid, M. M. (2011). Corporate governance and firm value: International evidence. Journal of Empirical Finance, 18(1), 36–55. https://doi.org/10.1016/j.jempfin.2010.10.003

Ararat, M., Black, B. S., & Yurtoglu, B. B. (2017). The effect of corporate governance on firm value and profitability: Time-series evidence from Turkey. Emerging Markets Review, 30, 113–132. https://doi.org/10.1016/j.ememar.2016.10.001

Bae, K. H., Baek, J. S., Kang, J. K., & Liu, W. L. (2012). Do controlling shareholders’ expropriation incentives imply a link between corporate governance and firm value? Theory and evidence. Journal of Financial Economics, 105(2), 412–435. https://doi.org/10.1016/j.jfineco.2012.02.007

Basgoze, P., & Sayin, H. C. (2013). The Effect of R&D Expenditure (investments) on Firm Value: Case of Istanbul Stock Exchange. Journal of Business, Economic & Finance, 2(3), 5–12. https://dergipark.org.tr/en/pub/jbef/issue/32415/360484

Bchini, B. (2015). Intellectual Capital and Value Creation in the Tunisian Manufacturing Companies. Procedia Economics and Finance, 23(October 2014), 783–791. https://doi.org/10.1016/s2212-5671(15)00443-8

Berthelot, S., Morris, T., & Morrill, C. (2010). Corporate governance rating and financial performance: A Canadian study. Corporate Governance, 10(5), 635–646. https://doi.org/10.1108/14720701011085599

Black, B. S., Kim, W., Jang, H., & Park, K. S. (2015). How corporate governance affect firm value? Evidence on a self-dealing channel from a natural experiment in Korea. Journal of Banking and Finance, 51, 131–150. https://doi.org/10.1016/j.jbankfin.2014.08.020

Brigham, E. F., & Houston, J. F. (2014). Fundamental of Financial Management. South-Western Cengange Learning.

Chahal, H., & Bakshi, P. (2015). Examining intellectual capital and competitive advantage relationship: Role of innovation and organizational learning. International Journal of Bank Marketing, 33(3), 376–399. https://doi.org/10.1108/IJBM-07-2013-0069

Chen, S., Liu, W., & Song, H. (2020). Broadband Internet, Firm Performance, and Worker Welfare: Evidence and Mechanism. Economic Inquiry, 58(3), 1146–1166. https://doi.org/10.1111/ecin.12854

Chen, Y. L., Chuang, Y. W., Huang, H. G., & Shih, J. Y. (2020). The value of implementing enterprise risk management: Evidence from Taiwan’s financial industry. North American Journal of Economics and Finance, 54, 1–14. https://doi.org/10.1016/j.najef.2019.02.004

Cherkasova, V., & Kurlyanova, A. (2019). Does corporate R&D investment support to decrease of default probability of Asian firms? Borsa Istanbul Review, 19(4), 344–356. https://doi.org/10.1016/j.bir.2019.07.009

Cheung, Y.-L., Conelly, J. T., Estanislao, J. P., Limpaphayom, P., Lu, T., & Utama, S. (2014). Corporate governance and firm valuation in Asian emerging markets. CSR, Sustainability, Ethics & Governance, 10, 27–53.

Dang, H. N., Nguyen, T. T. C., & Tran, D. M. (2020). The impact of earnings quality on firm value: The case of Vietnam. Journal of Asian Finance, Economics and Business, 7(3), 63–72. https://doi.org/10.13106/jafeb.2020.vol7.no3.63

Desender, K. A., & Lafuente, E. (2011). The Influence of Board Composition, Audit Fees and Ownership Concentration on Enterprise Risk Management. SSRN Electronic Journal, March 2016. https://doi.org/10.2139/ssrn.1495856

Devi, S., Budiasih, I. G. N., & Badera, I. D. N. (2017). Pengaruh Pengungkapan Enterprise Risk Management Dan Pengungkapan Intellectual Capital Terhadap Nilai Perusahaan. Jurnal Akuntansi Dan Keuangan Indonesia, 14(1), 20–45. https://doi.org/10.21002/jaki.2017.02

Edi, E., & Susanti, E. (2021). The Role of Firm Reputation and Management Experience for Firm Performance after Merger and Acquisition. Jurnal Reviu Akuntansi Dan Keuangan, 11(1), 150–167. https://doi.org/10.22219/jrak.v11i1.14067

Farah Freihat, A. R., & Kanakriyah, R. (2017). Impact of R&D Expenditure on Financial Performance: Jordanian Evidence. European Journal of Business and Management, 9(32), 73–83. www.iiste.org

Fatchan, I. N., & Trisnawati, R. (2018). Pengaruh Good Corporate Governance Pada Hubungan Antara Sustainability Report dan Nilai Perusahaan (Studi Empiris Perusahaan Go Public di Indonesia Periode 2014-2015). Riset Akuntansi Dan Keuangan Indonesia, 1(1), 25–34. https://doi.org/10.23917/reaksi.v1i1.1954

Firer, S., & Mitchell Williams, S. (2003). Intellectual capital and traditional measures of corporate performance. Journal of Intellectual Capital, 4(3), 348–360. https://doi.org/10.1108/14691930310487806

Florio, C., & Leoni, G. (2017). Enterprise risk management and firm performance: The Italian case. British Accounting Review, 49(1), 56–74. https://doi.org/10.1016/j.bar.2016.08.003

Gogan, L. M., Artene, A., Sarca, I., & Draghici, A. (2016). The Impact of Intellectual Capital on Organizational Performance. Procedia - Social and Behavioral Sciences, 221(0), 194–202. https://doi.org/10.1016/j.sbspro.2016.05.106

Gupta, K., Banerjee, R., & Onur, I. (2017). The effects of R&D and competition on firm value: International evidence. International Review of Economics and Finance, 51, 391–404. https://doi.org/10.1016/j.iref.2017.07.003

Hejazi, R., Ghanbari, M., & Alipour, M. (2016). Intellectual, Human and Structural Capital Effects on Firm Performance as Measured by Tobin’s Q. Knowledge and Process Management, 23(4), 259–273. https://doi.org/10.1002/kpm.1529

Hoyt, R. E., & Liebenberg, A. P. (2015). Evidence of the Value of ERM. Journal of Applied Corporate Finance, 27(1), 1–9. http://eds.b.ebscohost.com/eds/pdfviewer/pdfviewer?vid=3&sid=53e4dfb0-3246-4286-91d5-20c6aa4faafc%40sessionmgr103

Huang, P., Lu, Y., & Wee, M. (2020). Corporate governance analysts and firm value: Australian evidence. Pacific Basin Finance Journal, 63, 101430. https://doi.org/10.1016/j.pacfin.2020.101430

Iswajuni, I., Manasikana, A., & Soetedjo, S. (2018). The effect of enterprise risk management (ERM) on firm value in manufacturing companies listed on Indonesian Stock Exchange year 2010-2013. Asian Journal of Accounting Research, 3(2), 224–235. https://doi.org/10.1108/ajar-06-2018-0006

Kim, J. M., Yang, I., Yang, T., & Koveos, P. (2020). The impact of R&D intensity, financial constraints, and dividend payout policy on firm value. Finance Research Letters, 101802. https://doi.org/10.1016/j.frl.2020.101802

Kim, W. S., Park, K., Lee, S. H., & Kim, H. (2018). R & D investments and firm value: Evidence from China. Sustainability (Switzerland), 10(11). https://doi.org/10.3390/su10114133

Kiraci, M., & Celikay, F. (2016). The Effects of Firms’ R & D Expenditures on Profitability: An Analysis with Panel Error Correction Model for Turkey. International Journal of Business and Social Science, 7(5), 233–240.

Krause, T. A., & Tse, Y. (2016). Risk management and firm value: Recent theory and evidence. International Journal of Accounting and Information Management, 24(1), 56–81. https://doi.org/10.1108/IJAIM-05-2015-0027

Lechner, P., & Gatzert, N. (2018). Determinants and value of enterprise risk management: empirical evidence from Germany. European Journal of Finance, 24(10), 867–887. https://doi.org/10.1080/1351847X.2017.1347100

Li, Q., Wu, Y., Ojiako, U., Marshall, A., & Chipulu, M. (2014). Enterprise risk management and firm value within China’s insurance industry. Acta Commercii, 14(1), 1–10. https://doi.org/10.4102/ac.v14i1.198

Li, Y., & Zhao, Z. (2018). The dynamic impact of intellectual capital on firm value: evidence from China. Applied Economics Letters, 25(1), 19–23. https://doi.org/10.1080/13504851.2017.1290769

Lin, Y. M., Lee, C. C., Chao, C. F., & Liu, C. L. (2014). The information content of unexpected stock returns: Evidence from intellectual capital. International Review of Economics and Finance, 37, 208–225. https://doi.org/10.1016/j.iref.2014.11.024

Malik, M. F., Zaman, M., & Buckby, S. (2020). Enterprise risk management and firm performance: Role of the risk committee. Journal of Contemporary Accounting and Economics, 16(1), 100178. https://doi.org/10.1016/j.jcae.2019.100178

Mardiyanto, H. (2009). Intisari manajemen keuangan. Jakarta: Grasindo

Min, B. S., & Smyth, R. (2015). Determinants of R&D intensity and its impact on firm value in an innovative economy in which family business groups are dominant: The case of South Korea. 00008. http://www.bloomberg.com/rank

Nandaria, D., & Kusuma, H. (2014). Pengaruh intellectual capital dan corporate governance terhadap business performance: pendekatan persamaan struktural. Jurnal Akuntansi & Auditing Indonesia, 18(1), 16–33. https://doi.org/10.20885/jaai.vol18.iss1.art2

Nisasmara, P. W., & Musdholifah, M. (2016). Cash Holding, Good Corporate Governance and Firm Value. Jurnal Dinamika Manajemen, 7(2), 117–128. https://doi.org/10.15294/jdm.v7i2.8196

Niu, F. F. (2006). Corporate governance and the quality of accounting earnings: A Canadian perspective. International Journal of Managerial Finance, 2(4), 302–327. https://doi.org/10.1108/17439130610705508

Novitasari, P., & Handayani, R. S. (2020). Do The Investors React to Risk Management Disclosure? (an Empirical Study on Companies in Property, Real Estate, and Building Construction Industry Listed on The Indonesia Stock Exchange Period 2016 - 2018). Riset Akuntansi Dan Keuangan Indonesia, 5(2), 193–201. https://doi.org/10.23917/reaksi.v5i2.10406

Nuryaman. (2015). The Influence of Intellectual Capital on The Firm’s Value with The Financial Performance as Intervening Variable. Procedia - Social and Behavioral Sciences, 211, 292–298. https://doi.org/10.1016/j.sbspro.2015.11.037

Posecion, O. T., & Alajlani, S. E. (2018). Adeptness in Conflict Management of Expatriates deployed in Government , Semi-Government and Private Service Operations in the United Arab Emirates. 10(6), 146–154.

Pulic, A. (2004). Intellectual capital - does it create or destroy value? Measuring Business Excellent, 8(1), 62–68.

Rodrigues, R., Samagaio, A., & Felício, T. (2020). Corporate governance and R&D investment by European listed companies. Journal of Business Research, 115, 289–295. https://doi.org/10.1016/j.jbusres.2019.11.070

Sardo, F., & Serrasqueiro, Z. (2017). A European empirical study of the relationship between firms’ intellectual capital, financial performance and market value. Journal of Intellectual Capital, 18(4), 771–788.

Siagian, F., Siregar, S. V., & Rahadian, Y. (2013). Corporate governance, reporting quality, and firm value: evidence from Indonesia. Journal of Accounting in Emerging Economies, 3(1), 4–20. https://doi.org/10.1108/20440831311287673

Sukiati, W., Nuryani, N., & Leviany, T. (2015). Pengaruh Modal Intelektual, Kinerja Keuangan, Investasi Pada Riset Dan Pengembangan Terhadap Nilai Perusahaan (Pada Perusahaan Manufaktur Yang Terdaftar Di Bei). Jurnal ASET (Akuntansi Riset), 7(2), 29. https://doi.org/10.17509/jaset.v7i2.8860

Wahyudin, A., & Solikhah, B. (2017). Corporate governance implementation rating in Indonesia and its effects on financial performance. Corporate Governance (Bingley), 17(2), 250–265. https://doi.org/10.1108/CG-02-2016-0034

Widarjo, W. (2011). Pengaruh Modal Intelektual Dan Pengungkapan Modal Intelektual Pada Nilai Perusahaan Yang Melakukan Initial Public Offering. Jurnal Akuntansi Dan Keuangan Indonesia, 8(2), 157–170. https://doi.org/10.21002/jaki.2011.10

Wijayanto, K. (2018). Corporate Governance, Laverage and Firm Performance. Riset Akuntansi Dan Keuangan Indonesia, 3(2), 127–138. https://doi.org/10.23917/reaksi.v3i2.6894

Xu, J., & Liu, F. (2020). The impact of intellectual capital on firm performance: A modified and extended vaic model. Journal of Competitiveness, 12(1), 161–176. https://doi.org/10.7441/joc.2020.01.10

Xu, J., & Wang, B. (2018). Intellectual capital, financial performance and companies’ sustainable growth: Evidence from the Korean manufacturing industry. Sustainability, 10(12). https://doi.org/10.3390/su10124651

Downloads

Published

2021-08-27

Issue

Vol. 11 No. 2: Jurnal Reviu Akuntansi dan Keuangan

Section

Articles

License

Copyright (c) 2021 Cut Sri Murinda, Islahuddin Islahuddin, Nuraini A

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Creative Commons License
Jurnal Reviu Akuntansi dan Keuangan is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

 Authors who publish with this journal agree to the following terms:

    1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
    2. 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 acknowledgement of its initial publication in this journal.
    3. 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).