Determinants of Firm Value in Indonesia: The Role of Financial Performance as Moderation
DOI:
https://doi.org/10.22219/jrak.v15i4.41576Keywords:
Cost of Capital, Capital Structure, Firm Value, Investment Opportunity Set, Return on AssetsAbstract
Purpose: This research has purpose to provide empirical evidence about how cost of capital, investment opportunity set, and capital structure impacting value of corporations and investigate whether financial performance can moderate that interaction.
Methodology/approach: Quantitative approach is the nature for this research. Moderated Regression Analysis utilized for analyzing research data. This research observes all of the listed corporations in Indonesia during 2019-2023. The research sample with purposive sampling obtained 1605 data.
Findings: The result exhibit that cost of capital and capital structure decrease firm value. On other hand, firm value is not impacted by investment opportunity set. Moderation role by financial performance observed in interaction among cost of capital and capital structure on firm value. Despite that, the interaction of investment opportunity set on firm value do not moderate by financial performance.
Practical implications: This research offer practical implication for company managers when managing corporation finance, determine the decision, and choose the corporate strategy that will be increasing value of firm. In addition, this research is also useful for helping potential investors and investors decide the corporation that will be their investment choice.
Originality/value: This research utilizes the role of financial performance as a moderating variable in the relationship between cost of capital and company value, which has rarely been studied in Indonesia
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