The effect of supervision quality and risk management on company value mediated by operational efficiency study on financial conglomerate companies in the banking sector in Indonesia

Abstract

This study examines the effect of supervision quality and risk management implementation on company value, with operational efficiency as a mediating variable, in financial conglomerate banks in Indonesia during 2015–2023. Using a quantitative, causal-comparative design and path analysis, the study reveals that supervision quality significantly enhances both operational efficiency and company value, directly and indirectly. Operational efficiency also serves as a strong mediating factor in this relationship. Conversely, risk management implementation has a negative and insignificant effect on both efficiency and firm value. This suggests that overly rigid or misaligned risk management practices may hinder performance in conglomerate structures. The novelty of this research lies in its integrated analytical model combining governance and risk practices to assess firm value within a conglomerate framework, an underexplored area in the Indonesian context. Findings offer strategic insights for regulators and financial institutions in optimizing supervisory frameworks to enhance corporate performance and mitigate systemic risks.