The effect of corporate governance on value relevance moderated by CEO’s reputation

Abstract

Purpose: This study was conducted to examine the impact of corporate governance and CEO’s reputation toward value relevance. This study also examines how CEO’s reputation moderates the impact of corporate governance toward value relevance. The object of this research are banks that listed in Bursa Efek Indonesia (BEI) from 2016 and 2019.

Design/methodology/approach: The purposive sampling method is used to select the research sample. The study use SmartPLS program to analyze data. The measurement of value relevance are share price, earning per share and net asset value per share. This study used board size, board independence, board activity, board gender diversity and staggered board to measure corporate governance. CEO’s reputation index is used to measure CEO’s reputation.

Findings: The results of this study show that by maximizing the board size can improve the value relevance of banks at Indonesia.

Practical implications: These findings will be very helpful to management to increase the company's value relevance by managing board of directors.

Originality/value: This article provides a new insight of value relevance research as to how CEO’s reputation moderates the impact of corporate governance to value relevance.