THE EFFECT OF COST LEADERSHIP STRATEGY AND EXECUTIVE COMPENSATION ON COMPANY VALUE, WITH ENTERPRISE RISK MANAGEMENT AS A MODERATING VARIABLE

Regista Ayu Dima Putri1, Moh. Ubaidillah, Richo Diana Aviyanti

Abstract


This study aims to analyze the impact of Cost Leadership Strategy and Executive Compensation on firm value, with Enterprise Risk Management (ERM) serving as a moderating variable, focusing on infrastructure sector companies listed on the Indonesia Stock Exchange (IDX) during the 2021–2025 period. A quantitative approach was employed using secondary data derived from annual reports and financial statements. The sample was selected via purposive sampling, resulting in 42 companies and 210 observations over the five-year period. Analysis was conducted using multiple linear regression and Moderated Regression Analysis (MRA). The results indicate that Cost Leadership Strategy does not have a significant effect on firm value, whereas Executive Compensation has a positive and significant effect. Enterprise Risk Management does not have a significant direct effect on firm value and fails to moderate the relationship between Cost Leadership Strategy and firm value. Conversely, ERM moderates the relationship between Executive Compensation and firm value in a negative direction; thus, increased ERM implementation tends to weaken the positive impact of executive compensation on firm value. These findings suggest that value creation in infrastructure companies is more closely linked to the effectiveness of executive compensation than to cost efficiency alone, and that risk management needs to be appropriately integrated with incentive systems and strategic decision-making.

Keywords: Cost Leadership Strategy, Executive Compensation, Enterprise Risk Management, Firm Value.


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