Relationship between Corporate Governance, Leverage and Firm Value: Empirical Evidence from Indonesia

This research investigates the relationship between corporate governance using measurements of company ownership structure in upholding the values of transparency, accountability, equality, and leverage its influence on firm value, and placing growth as a control variable. The research method uses a quantitative approach, analyzing causal relationships through the formulation of hypotheses. The research sample is 175 manufacturing companies in Indonesia which were observed during 2017-2021 with N of 875 observations. The analysis technique uses ordinary least squares with panel regression. The results of the robustness test analysis of the model, growth as a control variable, robustly show that managerial ownership and institutional ownership represent the upholding of corporate governance values with a significantly positive response by investors. Apart from that, the leverage variable positively influences company value. The novelty of the results of this research, firstly, is the enforcement of manufacturing company governance values in Indonesia, represented by managerial ownership and institutional ownership. Second, the company funding structure policy supports the optimal capital structure theory (Modigliani F. and Miller M., 1963)