The Effect of Company-s External and Internal Factors to Firm-s Value with Capital Structure as Intervening Variable in Listed Construction-s Company in Indonesia
Arif Fajar Nugroho, Yanuar Andrianto
PPM School Of Management, Jakarta, Indonesia, ariffajar2[at]gmail.com.
PPM School Of Management, Jakarta, Indonesia, andrianto77[at]gmail.com.
Abstract
This study focused on the effect of external company-s factor (inflation) and internal company-s factor (profitability, size of company, growth, tax shield, and company-s assets) to firm-s value with capital structure act as an intervening variable in listed construction-s company in Indonesia. Hypothesis which tested in this research contain two major hypothesis which are direct effects of company-s factor to firm-s value and indirect effects of company-s factor to firm-s value through capital structure. In order to support this research, research problems was constructed which are: • Are company-s internal factor s can effect company-s capital structure decision? • Is company-s external factor can effect company-s capital structure decision? • Is company-s capital structure decision effect company-s value? • Are company-s internal factors effect company-s value? This study use data from construction company which is listed in Indonesia Stock Exchange (IDX) starting from 2014 until 2017. This study use a quantitative and causality research as the design of this study. Listed construction-s company act as the population of data used in this study. This study use Structural Equation Modelling with Partial Least Square approach as a method for conducting analysis in this study. The result of this study found out that company-s growth act as a factor that effect company-s capital structure decision in listed construction company in Indonesia. Other factor like inflation, profitability, company-s size, company-s assets and tax shield show no significant effect to capital structure decision. This study also found out that variable which is used like profitability, company-s size and company-s growth show no significant effect to firm-s value, capital structure decision also show the same effect to firm-s value. This study conclude that only company-s growth able to effect the company-s capital structure decision in listed construction companies in Indonesia. Further research regarding another factor should be consider. The result of this study is corresponding to related study conducted by another researcher as Moyo (2013), Komera (2015), Gill (2009), Shanmugasundaram (2008).
Keywords: Capital Structure
Topic: Finance and Risk Management