A Mediated Analysis of Capital Structure: The Effects of Size, Profitability, and Asset Growth on Firm Value in Indonesia’s Food and Beverage Sector

Aims: This study examines the influence of company size, profitability (ROE), and asset growth on firm value (Tobin's Q) through company capital structure (DER). Study design: This research design is quantitative research with a balanced panel data regression approach and Sobel test to test the relationship between company size, profitability and asset growth variables on firm value and the mediating role of capital structure in the relationship. Place and Duration of Study: Food and beverage companies listed on the Indonesia Stock Exchange for 2020-2023. Methodology: The method used is linear regression and uses the Sobel test to analyse the mediating role of capital structure in the relationship between independent variables and dependent variables. In addition, this study uses a quantitative approach to analyse data using multiple linear regression, which tests the effect of independent variables (Company Size, Profitability, and Asset Growth) on the dependent variable (Company Value) and the mediating variable (Capital Structure). The population used is food and beverage companies listed on the Indonesia Stock Exchange for the period 2020-2023, and took a sample of 34 companies that met the sample criteria. Results: Regression analysis demonstrates that company size and profitability have a significant positive effect on firm value, while company size has a significant negative effect on firm value and in contrast to profitability which has a significant positive effect on firm value. Conclusion: As companies grow in size and profitability, they tend to rely more heavily on debt financing to support their expansion. In developing countries, firms often prioritize debt financing to drive growth and enhance firm value. By increasing profitability, firms can maximize their value.

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Publication Details

Journal
South Asian Journal of Social Studies and Economics
Published
2024-12-12
DOI
https://doi.org/10.9734/sajsse/2024/v21i12929
Primary Topic
Financial Analysis and Corporate Governance
Type
article
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article

A Mediated Analysis of Capital Structure: The Effects of Size, Profitability, and Asset Growth on Firm Value in Indonesia’s Food and Beverage Sector

Restu Frida Utami, Maulida Nurul Innayah, Wida Purwidianti, Karin Sukma Dhiana
South Asian Journal of Social Studies and Economics
Financial Analysis and Corporate Governance
article

A Mediated Analysis of Capital Structure: The Effects of Size, Profitability, and Asset Growth on Firm Value in Indonesia’s Food and Beverage Sector

Restu Frida Utami, Maulida Nurul Innayah, Wida Purwidianti, Karin Sukma Dhiana
article en

Abstract

Aims: This study examines the influence of company size, profitability (ROE), and asset growth on firm value (Tobin's Q) through company capital structure (DER). Study design: This research design is quantitative research with a balanced panel data regression approach and Sobel test to test the relationship between company size, profitability and asset growth variables on firm value and the mediating role of capital structure in the relationship. Place and Duration of Study: Food and beverage companies listed on the Indonesia Stock Exchange for 2020-2023. Methodology: The method used is linear regression and uses the Sobel test to analyse the mediating role of capital structure in the relationship between independent variables and dependent variables. In addition, this study uses a quantitative approach to analyse data using multiple linear regression, which tests the effect of independent variables (Company Size, Profitability, and Asset Growth) on the dependent variable (Company Value) and the mediating variable (Capital Structure). The population used is food and beverage companies listed on the Indonesia Stock Exchange for the period 2020-2023, and took a sample of 34 companies that met the sample criteria. Results: Regression analysis demonstrates that company size and profitability have a significant positive effect on firm value, while company size has a significant negative effect on firm value and in contrast to profitability which has a significant positive effect on firm value. Conclusion: As companies grow in size and profitability, they tend to rely more heavily on debt financing to support their expansion. In developing countries, firms often prioritize debt financing to drive growth and enhance firm value. By increasing profitability, firms can maximize their value.

South Asian Journal of Social Studies and EconomicsVol. 21(12)
Muhammadiyah University Purwokerto (ID)
Partnerships for the goals
Openalex Percentile: Top 62%
Financial Analysis and Corporate Governance
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