CORPORATE GOVERNANCE DAN INTERDEPENDENSI ANTARA LEVERAGE, PROFITABILITAS SERTA KEBIJAKAN DIVIDEN DALAM MENCAPAI NILAI PERUSAHAAN

Abstract

This research aimed to find out and to analyze the role of corporate governance mechanism in utilizing the
interdependence among funding decisions, financial performance, and dividend policy in an attempt to increase
the value of the company. The study was conducted at the manufacturing companies listed in Indonesia Stock
Exchange, with the observation in the period of 2000-2012. A pooled data with a total of 290 companies were
analyzed using path analysis. This study proved that the escalation in the value of the company was mainly
influenced by the company’s ability to increase the profitability and dividend payments. Institutional ownership
and board size as a proxy of corporate governance mechanism played a crucial part to encourage companies
to enhance its return on equity, while the independent board persuaded the companies to amplify its
dividend payments. The Board size showed a strong role in inspiring companies to improve its profitability,
and it had a positive effect on firm value.