The Effect of Profitability, Liquidity, and Capital Structure on Firm Value With Mediation of GCG

Abstract

This study provides empirical evidence regarding good corporate governance (GCG) mediation in the relationship between profitability and firm value in Indonesian non-primary consumer goods companies. Utilizing purposive sampling methodology, we examined 26 non-primary consumer goods companies listed on the Indonesia Stock Exchange (IDX) during 2019-2023, resulting in 130 observations. The analysis employed WarpPLS version 8.0 software for PLS-SEM analysis. Our findings reveal that profitability (ROA), liquidity (CR), and capital structure (DER) demonstrate significant positive effects on firm value (Tobin's Q). Additionally, profitability exhibits a positive influence on good corporate governance. The mediation analysis confirms that good corporate governance successfully mediates the relationship between profitability and firm value, providing crucial insights for strategic governance implementation in emerging markets.