Consequences of Implementing Risk Management and Good Corporate Governance on Digital Transformation and Corporate Value of Public Companies in Indonesia

^1,2,5,6,7 Faculty Economic and Business, Universitas Jember, Jember, Indonesia
³ Faculty of Economic, Univ.Moch.Sroedji Jember, Jember, Indonesia
⁴ Faculty of Agriculture, Universitas Jember, Jember, Indonesia

^* Corresponding author: This email address is being protected from spambots. You need JavaScript enabled to view it.

Abstract

The aim of this research is to analyze the application of risk management and good corporate governance (GCG) to digital transformation and corporate value in companies listed on the Indonesia Stock Exchange in the banking sector. The study uses secondary data from banking companies over a five-year period (2019–2023) with a total of 215 observations. The analysis technique employed is a partial structural model using SEM-PLS. Research results during the 2019–2023 period indicate that banking companies’ risk levels experienced fluctuations. The average Business Risk (BR) reached Rp 2.517.025.905, showing an upward trend, while the average Financial Risk (FR) was 12.22, meaning that a Rp 1 change in profit before tax would trigger a Rp 12.22 change in operating profit. These fluctuations reflect business and financial conditions marked by uncertainty amid rapid technological shifts. The assessment of good corporate governance shows that banking companies have met regulatory standards, as the sector is strictly supervised by the Financial Services Authority (OJK) and Bank Indonesia. Meanwhile, the use of digital banking indicators reached an average of ±95%, measured through 21 Cisco Consulting indicators, indicating that nearly all banking companies have implemented digital transformation. Furthermore, digital transformation carried out by banking companies provides positive signals to investors. The results confirm that risk management and GCG significantly influence digital transformation, and digital transformation subsequently has a significant effect on corporate value in banking companies listed on the Indonesia Stock Exchange. Consequently, the primary challenge for these institutions lies in translating digital adoption into measurable operational efficiency to ensure that technology investments yield tangible returns rather than merely increasing capital expenditure.