Moderating effect of firm performance on firm value: Evidence from Indonesia
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Received May 8, 2021;Accepted July 13, 2021;Published August 5, 2021
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Author(s)Link to ORCID Index: https://orcid.org/0000-0003-4308-7612
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Link to ORCID Index: https://orcid.org/0000-0002-6428-3615,
Link to ORCID Index: https://orcid.org/0000-0001-5076-0102,
Link to ORCID Index: https://orcid.org/0000-0001-7733-1586 -
DOIhttp://dx.doi.org/10.21511/ppm.19(3).2021.08
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Article InfoVolume 19 2021, Issue #3, pp. 85-94
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Cited by1 articlesJournal title: Investment Management and Financial InnovationsArticle title: The relationship between capital structure, firm performance and a firm’s market competitiveness: Evidence from IndonesiaDOI: 10.21511/imfi.20(1).2023.09Volume: 20 / Issue: 1 / First page: 88 / Year: 2023Contributors: Andi Kartika, Moch Irsad, Mulyobudi Setiawan, Bambang Sudiyatno
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The practice of accounting conservatism, determination of capital structure, and firm performance are important elements in influencing firm value, either directly or through moderation. Firm performance as a reflection of company`s policy plays an important role as a variable that can moderate this influence. Thus, this study aims to examine the role of firm performance in influencing firm value, particularly in moderating the effect of accounting conservatism and capital structure. To test this role, managerial ownership and institutional ownership are viewed as control variables. A total of 43 manufacturing companies from the Indonesia Stock Exchange (IDX) were sampled from 153 manufacturing companies listed from 2017 to 2019 to achieve this target. The data collection approach in this study was purposive sampling, and the data analysis method was multiple regression. The results showed a statistically significant positive effect between accounting conservatism and firm value, while the capital structure had no statistically significant effect. Firm performance acts as a moderating variable of accounting conservatism and capital structure in influencing firm value. The results of this study also confirm that managerial ownership and institutional ownership do not function as control variables in controlling the effect of accounting conservatism and capital structure on firm value. Whereas managerial and institutional ownership is expected to encourage managers to carry out policies that are oriented towards increasing the firm value.
Acknowledgment
This paper is an independent study that is not funded by any institution. We would like to thank all those who have provided immaterial support for the implementation of this study.
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JEL Classification (Paper profile tab)G32, G34, M41
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References36
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Tables3
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Figures0
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- Table 1. Variable used in the analysis
- Table 2. Descriptive statistics
- Table 3. Results of the regression analysis
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Data curation
Ida Nurhayati
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Methodology
Ida Nurhayati, Robertus Basiya
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Validation
Ida Nurhayati, Bambang Sudiyatno
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Writing – original draft
Ida Nurhayati
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Conceptualization
Bambang Sudiyatno
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Formal Analysis
Bambang Sudiyatno, Elen Puspitasari
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Investigation
Bambang Sudiyatno, Elen Puspitasari
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Supervision
Elen Puspitasari
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Software
Robertus Basiya
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Visualization
Robertus Basiya
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Writing – review & editing
Robertus Basiya
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Data curation
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Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan
Ashraf Mohammad Salem Alrjoub, Muhannad Akram Ahmad doi: http://dx.doi.org/10.21511/imfi.14(3).2017.01
Investment Management and Financial Innovations Volume 14, 2017 Issue #3 pp. 4-14 Views: 2348 Downloads: 1694 TO CITE АНОТАЦІЯSeveral studies have examined the relationship between inventory management and firm performance. However, most of these studies ignore the impact of inventory types on the relationship. Moreover, the relationship is influenced by some factors such as cost of capital which has not been considered. This study examines the moderating effect of cost of capital on the relationship between inventory types and firm performance. The data of 48 firms for the period 2010-2016 which formed 279 firm-year observations were used in this study. With the use of Pearson correlation and panel Generalized Method of Moments (GMM) estimation, the findings show that inventory management with consideration of its types influence firm performance in the long term. In addition, it is also found that cost of capital moderates the relationship between inventory management and firm performance. However, the interaction between cost of capital and inventory types has different implications. It is suggested that firms should consider cost of capital when making decision on inventory types and align their inventory control to fit in to the changes in their business environment.
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Modelling of capital structure in relation to business performance maximization
Jarmila Horvathova, Martina Mokrisova
, Lucia Dancisinova
doi: http://dx.doi.org/10.21511/imfi.15(2).2018.26
Investment Management and Financial Innovations Volume 15, 2018 Issue #2 pp. 292-304 Views: 2063 Downloads: 323 TO CITE АНОТАЦІЯThe aim of the article was to find out the optimal capital structure of the companies in relation to their maximum performance. To reach this aim, the data of the companies operating in the field of heat industry of the Slovak Republic were used. As the first method, a correlation matrix was applied. It was found out that there is statistically significant relationship between capital structure indicators and performance of the companies. Due to the lack of data in time series, the authors were not able to apply multiple regression model to assess the impact of these indicators on performance. Therefore, a method of modelling was used to analyze the impact of the change in capital structure on performance. Modelling was based on the principle of a gradual change in the capital structure in favor of debt. By the increase in debt, it was confirmed that there was a change in the values of selected indicators. In the course of analysis, it was confirmed that the value of EVA equity increased with the rising indebtedness by which the proposition I of the modified MM theory was supported. The performance expressed by EVA entity indicator is at its minimum when the capital structure is 90:10 in favor of equity. By increasing the debt, EVA entity rises. Based on these results, it can be stated that the performance of selected companies increases when the share of debt also rises, even when taking into account the rising financial risks.
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Enterprise Risk Management and firm performance: an integrated model for the banking sector
Alaa Soliman , Mukhtar Adam doi: http://dx.doi.org/10.21511/bbs.12(2).2017.12Banks and Bank Systems Volume 12, 2017 Issue #2 pp. 116-123 Views: 1913 Downloads: 726 TO CITE АНОТАЦІЯThis study investigates how the implementation of Enterprise Risk Management program affects the performance of firms using an Enterprise Risk Management model for the banking sector and an integrated model for measuring Enterprise Risk Management index used in the study by Mukhtar and Soliman (2016). Ten listed commercial banks were selected with the Enterprise Risk Management index as the main independent variable, with Return on Average Equity (ROAE), Share Price Return (SPR) and Firm Value (FV) used as three separate dependent variables. The study provides strong evidence of a positive relationship between Enterprise Risk Management implementation and performance in the Nigerian banking sector. The findings and conclusions of this study are consistent with those of other studies that used data from different industries, providing a basis from which to generalize the findings from this study to firms in other industries.