The Effect of Asset Use Activities on Capital Structure, Business Risk, Financial Performance and Corporate Value (Study of Manufacturing Industry Companies in the Indonesia Stock Exchange)

Ari Data

doi:10.7176/ejbm/11-36-07

Abstract

This study aims to examine and explain the effect of the asset usage activities on the capital structure, business risk, financial performance and corporate value. Test and explain the effect of capital structure on the business risk, financial performance and corporate value. Test and explain the effect of the business risk on the financial performance and corporate value. Test and explain the effect of the financial performance on corporate value. Analysis techniques, using the generalized structured component analysis (GSCA). Data sampled 84 companies listed in Indonesia Stock Exchange in 2010 - 2015.The findings of this study is the asset usage activities has a significant negative effect on capital structure and a significant negative effect on business risk. The asset usage activities has a significant positive effect on financial performance and corporate value. The capital structure has a significant positive effect on business risk. The capital structure has a significant negative effect on financial performance, and is significantly positive to corporate value. The business risk has a significant negative effect on financial performance and corporate value. Financial performance has a significant positive effect on corporate value. The study concludes that asset usage activities can determine the capital structure, financial performance and corporate value. Therefore, the corporate's management and financial analysts can examine the asset usage activities and capital structure, busines risk and financial performance to predict the future value of the corporate. Keywords : Asset usage Activities, Capital Structure, Business Risk, Financial Performance, Corporate Values. DOI : 10.7176/EJBM/11-36-07 Publication date : December 31st 2019

Highlights

The corporate was founded to achieve the main goal of maximizing the welfare of the owners or shareholders by increasing the value of the corporate (Keown et al, 2000: 2)
1.2 Research Purposes This study aims to develop a new theoretical approach as an effort to add to the capital structure literature that discusses funding policies, asset use activities that focus on improving financial performance and corporate value
This study focuses on research problems that have been formulated and proposed for further empirical study, so the objectives of this study are detailed as follows: 1) Test and explain the effect of asset use activities on capital structure, business risk, financial performance and corporate value

Summary

Introduction

The corporate was founded to achieve the main goal of maximizing the welfare of the owners or shareholders by increasing the value of the corporate (Keown et al, 2000: 2). The management of the corporate is entrusted by the owners to manage the corporate in hopes of obtaining profits and increasing the wealth of the owners. The corporate will use its own capital and debt together, both short-term debt and long-term debt in funding various assets that will be used in the corporate's operational activities. The corporate's operational activities use assets that have been allocated for use. The financial manager is required to make decisions related to the use of assets and funding activities to ensure the smooth operation of the corporate. High profits will increase the value of the corporate

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Discussion

Conclusion