Abstract
Separation of functions between owners and management creates agency conflicts where the manager's decision is not necessarily in line with the owner. The manager no longer prioritizes the interests of the owner over his personal interests. Management as an insider effectively controls the company and knows more information than the owner as an outsider. In Asian countries, there is a tendency for majority ownership to take control in management. So that the agency conflict that occurs is no longer pure between managers and capital owners, but between majority and minority shareholders. This management system allows for expropriation by majority shareholders against minorities. The control mechanism is needed to suppress agency conflicts that exist within the company so that shareholders remain prioritized over the manager's personal interests.This study uses a sample of 123 manufacturing companies listed on the Indonesia Stock Exchange in 2013-2016. The results of the study show that debt has a significant negative effect on the utilization of assets and company value. While institutional ownership has a significant positive effect on asset utilization and company value.
Highlights
The control structure and management of the company changes along with the development of the company
H2: Institutional ownership has a positive effect on asset utilization Relationship between debt policy and company value
This shows that the increase in debt will cause a decline in the utilization ratio of the company's assets.Institutional ownership has a positive effect on asset utilization
Summary
The control structure and management of the company changes along with the development of the company. The effect of the control mechanism on reducing agency costs and increasing company value and the results of different studies spur the writer to examine the effect of debt and institutional ownership on firm value with asset utilization as an intervening variable. HYPOTHESIS Relationship between Debt Policy and Asset Utilization Debt can be an effective control mechanism where creditors as outsiders participate in overseeing the performance of managers (Friend & Lang, 1988). H2: Institutional ownership has a positive effect on asset utilization Relationship between debt policy and company value. The purpose of the study to determine the effect of agency control mechanisms through debt and institutional ownership on firm value through asset utilization as an intervening variable in public companies listed on the Indonesia Stock Exchange (IDX) in 2013-2016 can be achieved. Path analysis allows the testing of regression equations involving several exogenous / free and endogenous / bound variables so as to enable testing of intervening variables
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