Investigating the impact of corporate governance and investment decisions on financial performance and firm value in insurance and banking sectors

Abstract

This study examines the impact of corporate governance and investment decisions on financial performance and firm value in the insurance and banking sectors. Additionally, the moderating effect of financial technology innovation is integrated into the model. Using a purposive sampling technique, 40 insurance and banking companies were selected as the analytical units, with secondary data extracted directly from the Indonesian Stock Exchange (IDX) database from 2018 to 2022. The results from Partial Least Squares-Structural Equation Modeling (PLS-SEM) indicate that corporate governance and investment decisions significantly impact financial performance and firm value in the insurance and banking sectors in Indonesia. Moreover, fintech technology innovation significantly moderates the relationships between corporate governance and financial performance, as well as corporate governance and firm value, but does not significantly moderate the relationship between investment decisions and firm value. Lastly, the effects of these relationships are found to be more profound in the banking sector compared to the insurance sector.

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