How Does Company Performance, Systematic Risk and Capital Structure Affect The Corporate Value: Empirical Study on the IndonesianCapital Market

International Journal of Economics and Management Studies

© 2021 by SSRG - IJEMS Journal

Volume 8 Issue 10

Year of Publication : 2021

Authors : Agung Wibowo

10.14445/23939125/IJEMS-V8I10P107

How to Cite?

Agung Wibowo, "How Does Company Performance, Systematic Risk and Capital Structure Affect The Corporate Value: Empirical Study on the IndonesianCapital Market," SSRG International Journal of Economics and Management Studies, vol. 8,  no. 10, pp. 44-49, 2021. Crossref, https://doi.org/10.14445/23939125/IJEMS-V8I10P107

Abstract:

A. Background: Increasing corporate value is the main goal of managers to maximize shareholder wealth. Three interrelated factors determine corporate value, namely company performance, systematic risk, and capital structure. Systematic risk is the main factor that directly affects the corporate value or indirectly through company performance and capital structure. At the same time, company performance is the second factor that influences corporate value directly or indirectly through capital structure.

B. Methods: The sample used is 33 companies that are consistently listed on the LQ45 index from 2014 to 2019, considering that these companies are the most liquid securities companies and their trading volume is relatively large so that they can reflect the actual condition of the Indonesian Capital Market. The data used are 165 observation panel data.

C. Results: Partially, Systematic Risk and Capital Structure have a significant negative effect on Corporate Value, while Company Performance has a significant positive effect on corporate Value. Systematic Risk and Company Performance partially have a significant negative effect on Capital Structure.

D. Conclusion: Company Performance is the most dominant factor affecting Corporate Value, while Capital Structure is the weakest factor affecting Corporate Value. Compared with Company Performance, Systematic Risk is the more dominant factor affecting Capital Structure.

Keywords:

Company Performance, Systematic Risk, Capital Structure, Corporate Value.

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