JURNAL AKUNTANSI DAN BISNIS
Jurnal Program Studi Akuntansi
Available online http://ojs.uma.ac.id/index.php/jurnalakundanbisnis
Board Diversity, Managerial Ownership, and Information Transparency on Company Value in Indonesian Public listed
Companies
Leny Suzan*, & Dara Rahma Septia
School of Economics and Business, Telkom University, Bandung, Indonesia Submitted: July 14, 2023; Reviewed: October 9, 2023; Accepted: October 25, 2023
*Coresponding Email: [email protected]
Abstrak
Company values have an important role and need to be the main concern for a company. This is because the value of the company has an important contribution to shareholders, along with the increase in share price. Through signaling theory that is used by several companies in the process of conveying information about the value of the company to investors by utilizing certain signals. The research conducted aims to identify the impact of board diversity, managerial ownership, and transparency of information carried out partially and simultaneously for the value of a company. In this case, researchers utilize secondary data on the IDX (Indonesia Stock Exchange). The research population in the form of non-cyclical consumer companies was listed on the Indonesia Stock Exchange for the 2017-2021 period, with a total of 15 companies being sampled. The sampling process utilizes purposive sampling techniques. The study utilized regression analysis techniques on panel data by utilizing Eviews 12 software. The results shown are board diversity, managerial ownership, and information transparency have a simultaneous impact on the value of a company. Based on the partial aspect, board diversity has an important effect on the value of a company.
However, managerial ownership and transparency of information have no impact for the company.
Keywords: Corporate Value, Board Diversity, Managerial Ownership, and Information Transparency.
How to Cite: Suzan, L & Septia, D. R. (2023). Board Diversity, Managerial Ownership, and Information Transparency on Company Value in Indonesian Public listed Companies. Jurnal Akuntansi dan Bisnis : Jurnal Program Studi Akuntansi. 9 (2): 155-163
INTRODUCTION
The value of the company is able to realize its contribution in the aspect of shareholder welfare in line with the increase in share price. Improving shareholder welfare is the desired goal of a company in order to make a profit. If shareholders are prosperous, there will be an increase in the value of the company. Opinion Donald et al., (2014) Signaling Theory is a step chosen by company management as a reference for investors related to a management's point of view on company opportunities. Signaling theory provides an explanation of the background of the company having a motivation in communicating or sending information related to a company's financial statement as a signal to parties outside the company, such as investors, creditors, or shareholders with the aim of providing important information related to performance and analysis of the company's financial condition. Signaling theory describes the urgency of delivering information provided from companies related to investment decisions of external parties of the company. The information in question is an important part for investors and businesspeople. This is due to the available information containing some notes, descriptions, or visualizations both for past circumstances (Hartono, 2018)
Stock sales tend to be avoided by companies that have profitable future prospects.
A company that has a high value will definitely experience a high stock price increase (Przepiorka &; Berger, 2017). Therefore, the value of the company is able to contribute to shareholders if its shares increase. Signaling theory deals with the value of the company. If a company fails in delivering signals related to company value, then the value of the company will experience a discrepancy (Nguyen, 2018). A company must pay attention to the value of the company as a benchmark. One of the objectives of the company is to develop company value to be visualized in the form of share duties. A company with a high value will increase the attractiveness of investors to work together to invest in the company (Rahma Shafira &; Suzan, 2022). Indriarini (2019) suggests that company value is a reference for investors related to the success of managers in the process of managing company human resources in the form of parties relied on related to stock prices. In 2022, there is a phenomenon where the share price of PT Gudang Garam Tbk (GGRM) is found to be a phenomenon related to company value. Where 7 consecutive days GGRM shares closed in the red. GGRM shares experienced a decline after being in the green zone category for about five days before the dividend distribution Based on RTI Business data, GGRM shares fell by 7.89% at IDR 29,175 / share. Companies with poor performance will affect the decline in stock prices.
There are several aspects that affect the value of a company, including Board Diversity, Managerial Ownership, and Information Transparency. One of the main factors that influence the value of the company is board diversity. Joevanty &; Suzan, (2022) suggest that board diversity is a form of corporate board diversity. This diversity includes gender, age, race, educational background, and nationality. Board diversity or diversity of company officials is the diversity found in the top directors or commissioners related to good corporate governance which can be visualized as differences between boards (Setyasari et al., 2022).
Furthermore, the influential factor for company value is managerial power which is the state when managers own shares of a company. The increasing power of managerial aspects will be a liaison between the company's internal interests and shares, so that it can be a means in the process of making better company decisions (Fauzan &;
Khairunnisa, 2019).
The next influential factor regarding corporate value, namely information transparency, is a form of freedom of communication after political reforms in 1998. The public has the right to obtain and utilize information in line with their needs and existing regulations will guarantee it as a step to realize a just information society. Information transparency is a state of information that is open and accessible to various parties,
especially users of information providers. Information transparency has an important role to increase company value (Kartika &; Irsyad, 2018).
Based on the phenomenon and inconsistencies of previous research, it is one of the reasons researchers conducted a study "Board Diversity, Managerial Ownership, and Information Transparency on Company Value: Companies in the non-cyclical consumers sector on the Indonesia Stock Exchange". The formulation of the problem prepared by the researcher is as follows: "How does board diversity, managerial ownership, and information transparency affect company value in the non-cyclical consumer field that has been recorded on the IDX for the period 2017 to 2021 simultaneously or partially?".
The objectives of the research activity are as follows: "To determine whether board diversity, managerial ownership, and transparency of information affect the value of companies in the field of non-cyclical consumers that have been listed on the IDX in the period 2017 to 2021 have an effect either simultaneously or partially".
Literature Review
Related to signaling theory according to Gumanti, (2009) is an example of the main theory in financial management, signaling itself is interpreted as a signal generated for company managers to investors or external parties to find out what kind of response will be given by outsiders. The signals produced by the company have various forms, conditions that can be observed directly or through analysis first. Signaling theory explains that internal companies basically have better information related to company prospects than external companies. Company managers play a role in providing the necessary information for stock investors or prospective investors to minimize discrepancies in the information obtained and prevent bad views (Dainelli et al., 2013).
Pratiwi (2017) in (Fauzan &; Khairunnisa, 2019) suggests that company value shows the success rate of management performance during the company's management process and visualizes the perspective of investors to the company regarding stock prices, namely the company's value will be high when the stock price is high. The value of the company based on the opinion of Husnan & Pudjiastuti, (2015) is the price paid by the buyer at the time of sale of the company. According to Harmono, (2014) The real value of the company is formed due to the realization of market prices which become the meeting point of price supply balance against securities transaction activities in the capital market that occur between sellers and investors (market equilibrium). Thus, the financial concept in the stock capital market gets the nickname of the principle of corporate value.
According to Joevanty & Suzan, (2022) or the diversity of higher-ups, namely the diversity that occurs in company officials. This diversity is in the form of gender, age, race, nationality and educational background. According to Setyasari et al., (2022) Board Diversity or commonly referred to as high-ranking diversity is a form of diversity of directors or commissioners in terms of realizing good governance illustrating the differences between each official. According to Fauzan & Khairunnisa, (2019) the lack of women at the level of high-ranking commissioners and directors is caused by differences in perspectives seen between women and men when leading the company. Women in general have a very high cautious and conscientious attitude compared to men. This attitude is what causes women not to rush to make decisions. Therefore, the composition of the board of directors requires women because they are believed to be able to reduce risk. The research conducted is in line with the research of Joevanty &; Suzan, (2022) and (Mintah &; Schadewitz, 2019).
H1: Company value is influenced by board diversity.
Managerial power according to Joevanty &; Suzan, (2022) is a form of share ownership from management. Directors and Commissioners participate in the decision- making process. Managerial power is known as a good company management procedure because it is in accordance with the needs of shareholders and managers. According to
Alfinur (2016) in Fauzan &; Khairunnisa, (2019) managerial power is a situation where managers own company shares. So that managers play a role in managing the company and the company's shareholders. This research and the research of Fauzan &;
Khairunnisa, (2019) and (Setyasari et al., 2022) are in line.
H2: Managerial ownership will affect the value of a company.
Transparency based on Tarihoran, (2017) can be defined as a form of information transparency, both in decision making and in submitting material information in accordance with the company. The information that the company puts forward must be relevant, true, and accurate. According to Agoes &; Ardhana (2009) in Ulfa &; Atiningsih, (2019) information transparency is a necessity for managers in implementing the principle of transparency when making decisions and communicating information This research and the research of Ulfa &; Atiningsih, (2019) and (Truong et al., 2022) are in line.
H3: Company value is affected by information transparency.
Figure 1. Model of Study
RESEARCH METHODS
The research method used is quantitative with a total of 15 samples of companies in the field of non-cyclical consumers that have been recorded on the IDX for the period 2017 to 2021. This research utilizes panel data regression analysis techniques utilizing Eviews 12 software. The technique used in the sample collection process, purposive sampling, is a technique in determining samples using certain reviews (Sugiyono, 2019).
The categories determined when conducting this research include: (a) Companies in the field of consumer non-cyclical that have been listed on the IDX from 2017 to 2021. (b) Non-cyclical consumers companies that are consistently listed on the IDX for the period 2017 to 2021. (c) Non-cyclical consumer companies that have board diversity with female gender proxies and managerial ownership on the IDX in 2017-2021. Reviewing the category, there are 15 companies that meet. However, there are 7 outlier data so that the observation data in this study becomes 68 out of 75 observation data. Data testing using descriptive statistical analysis, classical assumption test, selection model and panel data regression analysis, coefficient of determination, simultaneous test (F test), partial test (T test).
Research conducted using the following regression equation:
Yit = α + β1X1it + β2X2it + β3X3it + e Information:
Y : Company Value X1 : Board Diversity
X2 : Managerial Ownership X3 : Information Transparency E : Error term
RESULTS AND DISCUSSION Statistical Descriptive Results
Table 1. Descriptive Statistical Analysis
Keterangan XI X2 X3 Y
Mean 0,17571 0,02898 0,54754 4,49383 Minimum 0,00000 0,00000 0,42466 0,45511 Maximum 1,00000 0,25167 0,67123 82,44443 Std. Dev 0,15357 0,04645 0,06425 12,42801
Source: Eviews processed data 12 (2023)
Based on table 1 above, it illustrates the achievements of the complete descriptive statistical analysis test process of non-cyclical consumers companies that are consistently recorded on the IDX for the period 2017 to 2021. The study uses several research variables, including board diversity, managerial ownership, and information transparency will later describe the highest value, lowest value, average, and standard deviation (SD).
Classical Assumption Test Multicollinearity Test
Table 2. Multicollinearity Test
Source: Eviews processed data 12, (2023)
The table describes the results of testing the value of the relationship coefficient between independent variables not > 0.8. Then, it was concluded that the results of the study did not experience double collinearity on each independent variable and there was no correlation between independent variables.
Heteroscedasticity Test
Tabel 3. Heteroscedasticity Test
Source: Eviews processed data 12 (2023)
Table 3 above shows the probability score for each variable > 0.05. So, it can be concluded in the study that there is no similarity in variance.
Panel Data Regression Analysis
Reviewing the test results of three methods (Hausman Test, Chow Test, and Large Multiplier) that have been carried out, so that it is concluded that the random effect model that matches the research, namely:
Tabel 4. Test Random Effect Model
Source: Eviews processed data 12, (2023)
Table 4 above discusses the equality of the panel data regression method that describes Board Diversity, Managerial Ownership, and Information Transparency for the value of a company in the field that has been listed on the IDX for the 2017-2021 period as follows:
Y = 31.33408 – 20.58747 (X1) – 5.786737 (X2) – 39.50215 (X3) + e Information:
Y : The Value of a Company X1 : Board Diversity
X2 : Managerial Ownership X3 : Information Transparency E : Error term
Coefficient of Determination (R2)
The coefficient of determination of a study has the goal of knowing the capacity of the independent variable when describing the dependent variable. In accordance with the test results of the random effect model contained in table 4, an Adjusted R-Square score of 0.276319 or 27.63% was obtained. The value that has been obtained describing the variables of board diversity, managerial power and transparency of information explains that the dependent variable is the value of the company amounting to 27.63%
and the remaining 72.37% is described by several other variables aside from this study.
Simultaneous Test (Test F)
In accordance with table 4, the value of Prob (F-statistic) shows a score of 0.044503 or <0.05. Therefore, it can be concluded in terms of simultaneous board diversity, managerial power and information transparency have an impact on company value Partial Test (T Test)
Based on table 4, conclusions from partial tests on research activities can be identified, including the following:
1. The probability value of board diversity 0.0044 < 0.05 means rejecting H01 and accepting Ha1 which means that in terms of parsia board diversity has a good influence on company value.
2. The probability value of managerial ownership is 0.7450 > 0.05 so that the conclusion is to accept H02 and reject Ha2 which means that managerial power has no influence on the value of the company
3. The probability value of information transparency of 0.1523 > 0.05 indicates that his decision to accept H03 and reject Ha3 means that partial information transparency has no impact on the value of the company
The Impact of Board Diversity on Corporate Value
In accordance with the test results that have been carried out, the board diversity variable has a coefficient score of -20.58747 and a probability value of 0.0044 < 0.05. The score obtained is less than the significant level of 0.05 so the conclusion is to reject H01 and accept Ha1 which means that board diversity partially has a good impact on the company's value in the field of non-cyclical consumers listed on the IDX from 2017 to 2021.
The Effect of Board Diversity on Corporate Value
Judging from the test results that have been carried out, the board diversity variable has a coefficient value of -20.58747 and a probability score of 0.0044 < 0.05 which has a value smaller than its significant level of 0.05, so that the decision obtained, namely rejecting H01 and accepting Ha1, means that board diversity has a good impact on company value for companies in the field of non-cyclical consumers listed on the IDX in 2017-2021. The data is in line with the hypothesis that suggests that board diversity partially has an influence on company value. It can be concluded that the results of this study are in accordance with the research research of Joevanty &; Suzan, (2022), Fauzan
&; Khairunnisa, (2019) and (Mintah &; Schadewitz, 2019). However, there is a mismatch between this study and the research of Rahma Shafira &; Suzan, (2022) and Pradana &
Khairusoalihin (2021) who argue that board diversity has a negative impact and is important for company value because it is relatively small and the board of directors only exists in a few companies.
Linkage of Managerial Ownership with Company Value
Based on the tests that have been carried out, the managerial ownership variable has a coefficient score of -5.786737 and a probability value of 0.7450 > 0.05. The value obtained is more than the significant level, which is 0.05, which means accepting H02 and rejecting Ha2, meaning that managerial ownership does not have a positive impact on the value of non-cyclical consumer companies recorded on the IDX from 2017 to 2021. The data contradicts the hypothesis that partial managerial ownership has a good impact on company value. According to Joevanty &; Suzan, (2022) managerial ownership can also be described as a state when key management also acts as a company investor as evidenced by the percentage level of share ownership. The results obtained from the research are in line with previous research conducted by Setyasari et al., (2022) and Pradana &; Khairusoalihin, (2021) stated that managerial ownership is related to company value. Therefore, non-cyclical consumer sector companies have more motivation in developing company quality in order to obtain significant profits, so as to realize good corporate value.
The Effect of Information Transparency on Company Value
Based on the tests that have been carried out, the information transparency variable has a coefficient value of -39.50215 with a probability value of 0.1523 > 0.05.
The score turned out to be greater than the significant level of 0.05. This condition means that accepting H03 and rejecting Ha3 means that information transparency does not affect partially for non-cyclical consumer companies on the IDX from 2017 to 2021. This is not in line with the hypothesis that states that segmental information transparency has a positive influence on company value. Information transparency according to Agoes &
Ardhana (2009) in Ulfa &; Atiningsih, (2019) is something that must be implemented by managers in implementing accountable principles in decision-making activities and communicating information. This study and previous research by Bhimavarapu et al., (2022) corresponded, suggesting that information transparency will not affect company value. Creating appropriate information transparency to identify company value can be done through increasing investor confidence, analyzing risk, and building attractiveness for other stakeholders.
CONCLUSION
Stock sales activities will always be avoided by companies that have profitable future prospects. Companies with high company value can be viewed from the increase in their share price (Przepiorka &; Berger, 2017). Therefore, the value of the company is able to contribute to shareholders if its shares increase. The theory that is considered relevant in explaining company value is signalling theory because if the company fails to communicate information related to the company's value, it will have an impact on the mismatch of the company's own value (Nguyen, 2018). In line with the tests that have been carried out through regression analysis of panel data, the achievements obtained, namely board diversity, managerial ownership, and information transparency have a simultaneous effect on the value of companies in the consumer non-cyclical sector that are known to be active in the IDX from 2017 to 2021. In partial terms, board diversity variables affect company value. However, managerial ownership and transparency of such information do not have a particular impact on the value of the company.
This research has limitations, which only focuses on independent variables of board diversity, managerial ownership, and transparency of information as well as non-cyclical consumer companies on the IDX (Indonesia Stock Exchange) 2017-2021. So it is recommended that researchers further refine the limitations of this study such as providing more independent variables, such as health, investment decisions, and cash holding as well as other variables that will then have an impact on the value of a company and conduct research through other sectors and add research periods. For companies, it is expected to place female directors because of the presence of female directors, the company's value will increase.
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