Proceedings of the 19th International Symposium on Management (INSYMA 2022)

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Control Mechanism Analysis in Mediating Market Valuation on Firm Performance in Indonesia

Authors
Nisrul Irawati1, *, Lisa Marlina1
1Universitas Sumatera Utara, Medan, Indonesia
*Corresponding author. Email: nisrulirawati@yahoo.com
Corresponding Author
Nisrul Irawati
Available Online 5 December 2022.
DOI
10.2991/978-94-6463-008-4_18How to use a DOI?
Keywords
Market valuation; Control mechanism; Firm performance
Abstract

The market valuation offers the opportunity to examine the firm performance, especially as the firm goes public. However, management often puts their interests above the interests of investors; therefore, management movement needs to be limited by a control mechanism that will reduce agency conflict. This paper develops an approach based on Tobin’s Q using the firm’s market value. The financial performance is proxied by Return On Asset (ROA). Based on the monitoring hypothesis that debt can be the control mechanism, the research results show that Tobin’s Q has a significant positive effect on ROA, but debt has the opposite effect on ROA. Tobin’s Q has a negative but not significant effect on the control mechanism. Finally, the control mechanism debt is shown to be unable to mediate between market valuation and the firm performance of the sample firm included in the SRI-KEHATI Stock Index over 2015–2019.

Copyright
© 2023 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 19th International Symposium on Management (INSYMA 2022)
Series
Advances in Economics, Business and Management Research
Publication Date
5 December 2022
ISBN
978-94-6463-008-4
ISSN
2352-5428
DOI
10.2991/978-94-6463-008-4_18How to use a DOI?
Copyright
© 2023 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Nisrul Irawati
AU  - Lisa Marlina
PY  - 2022
DA  - 2022/12/05
TI  - Control Mechanism Analysis in Mediating Market Valuation on Firm Performance in Indonesia
BT  - Proceedings of the 19th International Symposium on Management (INSYMA 2022)
PB  - Atlantis Press
SP  - 134
EP  - 140
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-008-4_18
DO  - 10.2991/978-94-6463-008-4_18
ID  - Irawati2022
ER  -