The Effect of Good Corporate Governance on Firm Value, with Profitability as A Mediator, in Companies in The Non-Cyclical Consumer Sector Listed on The Indonesia Stock Exchange for The Period 2022–2024

Abstract

This study evaluated the effect of Good Corporate Governance (GCG) on financial performance and firm value among consumer non-cyclicals companies listed on the Indonesia Stock Exchange during the 2022–2024 period, while also examining the mediating role of financial performance. Employing a quantitative research design with a purposive sampling method, the study used a sample of 44 companies, resulting in 100 observations. The empirical data were analyzed using multiple linear regression, path analysis, and the Sobel test with SPSS version 27. The findings showed that Good Corporate Governance (GCG) components had varying effects on profitability and firm value. Independent commissioners positively influenced profitability, whereas audit committee size negatively affected profitability, and board size had no statistically significant effect. Board size and audit committee size negatively affected firm value, while independent commissioners did not have a statistically significant effect on firm value. Profitability positively influenced firm value and successfully mediated the effects of independent commissioners and audit committee size; however, it did not mediate the relationship between board size and firm value. Board size had the highest mean value, indicating that it was the most dominant governance factor associated with profitability and firm value.