Optimizing firm value: insights from the Indonesian banking sector

Purpose This study aims to analyze the optimization of Enterprise Risk Management (ERM), profitability, and leverage on firm value in banking companies listed on the Indonesia Stock Exchange (IDX) for the 2020–2023 period. Design/methodology/approach The research sample consists of 43 companies, selected using a purposive sampling method, resulting in 151 data points obtained from annual reports, management reports, and corporate governance reports. Findings The findings reveal that profitability positively influences firm value, leverage negatively influences it, while ERM shows no significant effect. This non-significance, despite strong regulatory mandates for ERM in the banking sector, contrasts with previous studies and signals that investor valuation may prioritize financial performance over mandated risk disclosures. Practical implications These findings carry important implications for investors, regulators, and corporate strategists aiming to optimize firm value beyond regulatory frameworks. Originality/value The study contributes novel insights by examining this anomaly in a highly regulated emerging market context, suggesting that regulatory compliance alone may not enhance perceived firm value.