Abstract
This study aims to determine the effect of business risk and firm size on firm value with debt policy as intervening variable. The population used in this study are property and real estate companies listed on Indonesia Stock Exchange (BEI) during 2014-2018. Sample determination was done by purposive sampling method. Methods of data analysis using multiple linear regression analysis and path analysis. The results showed that business risk negatively affect the debt policy, while firm size has a positive effect on debt policy. Business risk negatively affects firm values while firm size and debt policy have a positive effect on firm value. Debt policy is only able to mediate the impact of business risk on corporate value
Highlights
A company will always try to achieve its goals, both short-term goals such as maximizing corporate profits with resources owned and long-term goals such as being able to increase firm value and the welfare of shareholders (Suwardika & Mustanda, 2017)
Based on the above thinking, there is a research gap from some of the results of previous studies regarding the effect of business risk, company size and debt policy on company value, the authors are interested in conducting research with the aim to determine the effect of business risk and company size on firm value through debt policy as an intervening variable on property and real estate companies listed on the Indonesia Stock Exchange in 2014-2018
The results showed that the effect of the indirect path coefficient of BRISK on price book value (PBV) through debt to equity ratio (DER) was greater than the coefficient of direct influence of BRISK on PBV of -0.075> -0.361 so that debt policy was able to mediate the effect of business risk on firm value
Summary
A company will always try to achieve its goals, both short-term goals such as maximizing corporate profits with resources owned and long-term goals such as being able to increase firm value and the welfare of shareholders (Suwardika & Mustanda, 2017). Companies go public tend to always increase the value of the company to attract the attention of investors (Pramana & Mustanda, 2016). Firm value is selling price oh the company when the company is sold. Firm value of companies that go public in the capital market can be seen from the price of their shares. The welfare of shareholders can be used as a description of the value of the company, firm value of the company shows how well the company’s performance (Sari & Wirajaya, 2017)
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