THE EFFECT OF CORPORATE GOVERNANCE MECHANISMS ON THE VALUE OF THE COMPANY WITH PROFIT QUALITY AS INTERVENING VARIABLES (Research Case of Manufacturing Company Listed in Indonesia Stock Exchange Period 2011-2015)

Abstract

This research examines the effect of corporate governance mechanism on firm value with profit quality as intervening variable. The corporate governance mechanism uses three variables: managerial ownership, institutional ownership, and board composition. The quality of income is measured by Earnings Response Coefficient (ERC), although the value of the firm is measured by Price Book Value (PBV). This study uses empirical data from Indonesia Stock Exchange with 15 manufacturing companies as sample. By using multiple regression analysis as research method, the result of research indicate that earnings quality is measured by firm value influenced by ERC. The existence of audit committees and managerial ownership affects the quality of earnings. Other variables do not affect the quality of earnings, namely the institutional composition and the composition of the board of commissioners. Managerial ownership and institutional ownership affect company value. The composition of the board of commissioners and the audit committee's exceptions does not affect the value of the company. Keywords: Corporate governance mechanism, managerial ownership, institutional ownership, board composition, earnings quality, earnings response coefficient, firm value, book value of price.