FIRM VALUE DETERMINATION WITH INFLATION AND EXCHANGE RATE AS A MODERATING VARIABLE (Study on the Manufacturing Industry Recorded in Indonesian Sharia Stock Index)

Abstract

Purpose - Aims of this study is to determine the factors that influence the firm value of the manufacturing industry listed on the Indonesia Sharia Stock Index. Design/methodology/approach - Used panel data regression method from 2013-2018, then obtained 30 manufacturing industry companies after purposive sampling. Syariah stock investors who rationally and religiously behave are accommodated in the variables used. The dependent variable is firm value and the independent variable are return on equity, current ratio, debt to equity ratio, total assets turn over, Islamic social reporting, with the exchange rate and inflation as the moderating variable. Finding - Results show that return on equity with inflation as a moderating variable has a positive effect on firm value. Islamic social reporting has a positive effect on firm value. Debt to equity ratio with the exchange rate as a moderating variable has a negative effect on firm value. The current ratio and total assets turnover are not significant to firm value. Practical Implication - To increase the firm value, it is necessary to improve human resources and the application of environmentally friendly technology, planning in production and expansion, transparency and application of sharia principles, professional and fair managers. Originality/value - This study combines the company’s financial ratios, Islamic social reporting and macroeconomic conditions that are beyond management control. Tobins’ Q is used to the corporate values approach. All of these, reflect that firm value is influenced by company performance, society, and government. Keywords - Firm Value, Financial Ratio, Islamic Social Reporting, Sharia Enterprise Theory, Macroeconomics, Indonesia Sharia Stock Index