Jurnal Keuangan dan Perbankan
Vol 26, No 2 (2022): APRIL 2022

Corporate Governance and Profitability: The Role of Cost of Capital as Mediation

Eka Febiyanti (Manajemen, Fakultas Ekonomika dan Bisnis, Universitas Diponegoro, Indonesia)
Hersugondo Hersugondo (Manajemen, Fakultas Ekonomika dan Bisnis, Universitas Diponegoro, Indonesia)



Article Info

Publish Date
20 Jul 2022

Abstract

This study aims to analyze the effect of internal corporate governance mechanisms with the cost of capital as mediating variable and profitability as a dependent variable in companies listed on the Indonesia Stock Exchange during period 2015 to 2020. This study uses secondary data collected from Bloomberg's financial data and the company's annual report. A total of 807 companies as a population by sampling with purposive sampling method in order to obtain 300 companies from various sectors. The analysis method employs a structural equation model Structural Equation Modeling (SEM) based on the Partial Least Square (PLS). Based on hypothesis testing through the t-statistical test with a bootstrapping method, the results show that corporate governance has a positive relationship with profitability, and the cost of capital has a fully mediating role in the relationship between corporate governance and profitability.

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