Abstract
The practice of accounting conservatism, determination of capital structure, and firm performance are important elements in influencing firm value, either directly or through moderation. Firm performance as a reflection of company`s policy plays an important role as a variable that can moderate this influence. Thus, this study aims to examine the role of firm performance in influencing firm value, particularly in moderating the effect of accounting conservatism and capital structure. To test this role, managerial ownership and institutional ownership are viewed as control variables. A total of 43 manufacturing companies from the Indonesia Stock Exchange (IDX) were sampled from 153 manufacturing companies listed from 2017 to 2019 to achieve this target. The data collection approach in this study was purposive sampling, and the data analysis method was multiple regression. The results showed a statistically significant positive effect between accounting conservatism and firm value, while the capital structure had no statistically significant effect. Firm performance acts as a moderating variable of accounting conservatism and capital structure in influencing firm value. The results of this study also confirm that managerial ownership and institutional ownership do not function as control variables in controlling the effect of accounting conservatism and capital structure on firm value. Whereas managerial and institutional ownership is expected to encourage managers to carry out policies that are oriented towards increasing the firm value. AcknowledgmentThis paper is an independent study that is not funded by any institution. We would like to thank all those who have provided immaterial support for the implementation of this study.
Highlights
The firm value is the main key to the welfare of shareholders or company owners
The practice of accounting conservatism in financial reporting and capital structure policies is an important part of management policy in manufacturing companies in Indonesia, especially during times of economic uncertainty
This study aims to examine the role of firm performance in moderating the effect of accounting conservatism and capital structure on firm value
Summary
By increasing the firm value, the welfare of the shareholders will increase. This task is assigned to the manager as an agent entrusted with the trust of the shareholders to carry out the company operations. In carrying out the mandate, a manager seeks to take policies that can have an impact on increasing the firm value. These policies include policies on the application of accounting conservatism practices in financial reporting and capital structure policies.
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