Financial Performance as Mediator on the Impact of Capital Structure, Wealth Structure, Financial Structure on Stock Price: The Case of The Indonesian Banking Sector

Abstract

This research examines the financial performance as a mediating variable in analyzing the capital structure, wealth structure, and financial structure of stock prices by using trade-off theory and signaling theory. This study uses 145 secondary data in the form of bank financial reports listed on the Indonesia Stock Exchange (IDX). Model testing uses structural equation (SEM) through the SmartPLS version 3.0 programs. The results of model testing show that capital structure and financial structure can reduce financial performance, wealth structure can improve financial performance. High financial performance cannot increase stock prices. The capital structure does not lower the stock price, the wealth structure raises the stock price, and the financial structure lowers the stock price. Financial performance does not mediate the effect of capital structure, wealth structure, and financial structure on stock prices.

Light in the tunnel or just a train; impact of supply chain finance solutions on financial service providers’ financial performance by mitigating financial risk

“…Wernerfelt [ 27 ], used Tobin’s Q ratio to explain cross-sectional returns implying a proxy for risk. Mansyur [ 28 ], used Tobin’s q to measure firm performance with the relative importance to measure share effect. In literature, the Tobins q ratio is not limited and is used to measure firm performance.…”

Capital Structure and Corporate Governance of Consumer Non-Cylicals Companies : Mediating Corporate Performance

“…This shows that the capital structure measured by the debt-to-equity ratio gives signals to investors about influencing the formation of stock prices in the company. Meanwhile, (Mansyur et al, 2020) stated that capital structure does not negatively affect stock prices. Another study by (SUKESTI et al, 2021) explained that there is a positive and significant influence between capital structure and stock prices.…”

“…The role of company performance as a mediator between capital structure and stock price is shown in research by (Mansyur et al, 2020) who state that the negative relationship between capital structure and stock price mediated by financial performance is only 2%. The results of this study show that the direct influence of capital structure on stock prices is stronger than the mediation of financial performance.…”

“…The determination of the company's capital structure is the composition of funding that will be used by looking at how much debt is used to help invest equity in assets. Some indicators that can be used in measuring capital structure are debt-to-total-asset ratio (DAR), equity-to-asset ratio (EAR), and debt-toequity ratio (DER) (Mansyur et al, 2020). In Syofyan et al's research capital structure as measured by the debt-to-equity ratio has a significant negative effect on stock prices.…”

“…This study uses capital structure and corporate governance variables as independent variables and company performance as mediating variables on stock prices. Using the variables above, researchers found a research gap where the study of (SUKESTI et al, 2021) stated that the capital structure measured by the debt-to-equity ratio had a positive effect on stock prices, while (Mansyur et al, 2020) used the debt-to-equity ratio as a measure of capital structure and stated that it did to have a negative effect on stock prices. Differences in research results were also found in (Spitsin et al, 2021), who stated that capital structure affects company performance as measured by profitability ratios, even though (Simu & Pangaribuan, 2020) show that capital structure has no effect on company performance.…”