Relationship between Intellectual Capital, Firm Performance and Leverage with Firm Values: Empirical Evident from Indonesia

Abstract

The aim of this study is to investigate the relationship between the Value Added Intellectual Capital (VAIC) components, Firm Performance and leverage on Firm Value. The validity of Firm Value measurements will be tested using Tobin's Q, Price Earnings per Share (PER), and Price to Book Value (PBV) with Assets as a control variable. The research design is explanatory research through hypothesis formulation, using panel regression. The research population is 122 manufacturing industries are listed on the Indonesian capital market, with a sample N valid of 277, observation period 2018-2020. Based on the robustness test, the model fits when the firm value uses Tobins'Q and PBV. Research findings show that Capital Employee Efficiency (CEE) and Return on Equity (ROE) positively influence Tobin'sQ. On the other hand, Firm Performance (ROA) positively influences firm value (PBV), Net Profit Margin (NPM) and leverage (DAR) negatively influence PBV. The inconsistency in research results on the influence of IC, Firm Performance, and Leverage on firm value is more caused by different measurement models. Therefore, in interpreting the relationship patterns of IC, Firm Performance and Leverage on Firm Value, must carefully based on the measurement characteristics and underlying concepts. IC, Firm Performance and Leverage substantially influence firm value, supporting previous research.