The role of internal factors in determining the firm value in Indonesia

Lestari, Etty Puji; Astuti, Diana Dwi; Basir, Mochamad Abdul

doi:10.5267/j.ac.2020.6.018

Cited by 11 publications

(16 citation statements)

References 1 publication

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“…That way, increasing the value of profitability will also affect increase in firm value. Results of this study are in accordance with research (Endri & Fathony, 2020;Lestari et al, 2020;Nurrohmah, 2020;Raningsih & Artini, 2018).…”

Section: Discussionsupporting

confidence: 91%

“…A good company is characterized by good company financial performance and able to prosper all company stakeholders. The higher profit earned by company, it will be considered able to perform well so that firm value can increase (Ararat et al, 2017;Endri & Fathony, 2020; C. C. Lee et al, 2018;Lestari et al, 2020;Nurrohmah, 2020;Raningsih & Artini, 2018b;Subramaniam & Wasiuzzaman, 2019). This means that better level of firm profitability will also increase firm value.…”

Section: Profitability and Firm Valuementioning

confidence: 99%

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The effect of social responsibility and managerial ability on firm value-mediated profitability

Wiranudirja¹,

Salim²,

Indrawati³

2022

IJRBS

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The mining industry in Indonesia has a high enough capitalization value to attract investment. The more investors that invest, the higher the stock price and the value of the firm, yet the mining sector's share price has changed throughout time. The mining industry in Indonesia must likewise be mindful and worried about the environment. Previous research has not explored the correlation between profitability and firm value, which contributes as a mediator. This resulted in a clear gap in the literature. This study contributes to filling a gap in the literature. The mining sector businesses listed on the Indonesia Stock Exchange (IDX) from 2018 to 2020 were chosen as the population, with a total sample of 11 companies selected using the purposive selection approach. The data analysis process has been carried out using SPSS version 28 software. The study's findings revealed that corporate social responsibility and corporate management skills had little influence on business value. Furthermore, the findings of this research show that profitability, as a moderating variable in this study, is a complete mediator of social responsibility and managerial ability to firm value. The presence of profitability mediation in this research yields substantial findings, serving as a warning to investors.

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Section: Discussionsupporting

confidence: 91%

Section: Profitability and Firm Valuementioning

confidence: 99%

The effect of social responsibility and managerial ability on firm value-mediated profitability

Wiranudirja¹,

Salim²,

Indrawati³

2022

IJRBS

View full text Add to dashboard Cite

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“…the level of leverage in relation to the optimal capital structure; Hatfield et al [1994] and Hodgson and Stevenson-Clarke [2000] indicated this as an important premise, suggesting that the impact of leverage on a company's valuation may not be stableit can change (e.g., from positive to negative) with the increase of the level of leverage; surprisingly, other authors did not consider this aspect, while it may be the main reason for the inconsistency of the research results; only two studies indirectly referred to this problem, mentioning that in the entire sample the average debt level was relatively high [Lestari et al 2020] or relatively low [Łukasik and Naczyński 2015], which may suggest that in those particular studies the influence of one of the two mechanisms of impact (positive or negative) strongly outweighs the other one for the entire sample;…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Financial Leverage on a Company’s Market Valuation

Zimny

2021

FiPF

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The purpose of the article is to examine the impact of leverage on the market valuation of companies. The article verifies two hypotheses: 1. the degree of leverage is an important factor that impacts the market valuation of companies; 2. for companies with a high level of leverage, the impact of this leverage on their valuation is negative, and for companies with a low level of leverage, the impact is positive. The methodology of the study includes a critical literature review and empirical research based on correlation and regression analysis, including univariate and multivariate regression. The analysis covered quarterly data of ten energy companies listed on the Warsaw Stock Exchange. An important component of the research was classifying those companies into several groups, depending on their level of debt ratio in relation to the industry median debt ratio. The results of the research: The literature review did not provide an unequivocal conclusion to the problem. The empirical analysis did not give grounds to reject the first hypothesis; however, the second one was rejected. The research showed positive correlation and regression coefficients between the debt ratio and the price to book value ratio for highly leveraged companies and negative ones for companies with a low level of debt. The results are surprisingly contrary to the expectations based on theoretical premises.

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“…Another research [Lestari et al 2020] covered all companies listed on the Indonesia Stock Exchange. The subject of the study was the impact of a firm size, leverage (proxy: debt-equity ratio) and profitability on the firm's value (reflected through P/BV ratio).…”

Section: Literature Reviewmentioning

confidence: 99%

“…The Impact of Financial Leverage on the Company's Market Valuation this aspect, while it may be the main reason for the inconsistency of the research results; only two studies indirectly referred to this problem, mentioning that in the entire sample the average debt level was relatively high [Lestari et al 2020] or relatively low [Łukasik and Naczyński 2015], which may suggest that in those particular studies the influence of one of the two mechanisms of impact (positive or negative) strongly outweighs the other one for the entire sample;…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Financial Leverage on A Company’s Market Valuation

Zimny

2020

FiPF

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The purpose of the article is to examine the impact of leverage on the market valuation of companies. The article verifies two hypotheses: 1. the degree of leverage is an important factor that impacts the market valuation of companies; 2. for companies with a high level of leverage, the impact of this leverage on their valuation is negative, and for companies with a low level of leverage, the impact is positive.The methodology of the study includes a critical literature review and empirical research based on correlation and regression analysis, including univariate and multivariate regression. The analysis covered quarterly data of ten energy companies listed on the Warsaw Stock Exchange. An important component of the research was classifying those companies into several groups, depending on their level of debt ratio in relation to the industry median debt ratio.The results of the research: The literature review did not provide an unequivocal conclusion to the problem. The empirical analysis did not give grounds to reject the first hypothesis; however, the second one was rejected. The research showed positive correlation and regression coefficients between the debt ratio and the price to book value ratio for highly leveraged companies and negative ones for companies with a low level of debt. The results are surprisingly contrary to the expectations based on theoretical premises.

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The role of internal factors in determining the firm value in Indonesia

Cited by 11 publications

References 1 publication

The effect of social responsibility and managerial ability on firm value-mediated profitability

The effect of social responsibility and managerial ability on firm value-mediated profitability

The Impact of Financial Leverage on a Company’s Market Valuation

The Impact of Financial Leverage on A Company’s Market Valuation

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