Abstract
Information and communication technology (ICT) companies strive for ceaseless innovation to remain competitive while facing the challenge of maximizing firm value (FV) with limited resources, and increasing the interests of shareholders. However, capital structures have a considerable effect on FV, and the literature still disagrees with the optimum structure in specific industries and countries. Therefore, this study evaluates the FV of ICT companies in terms of profitability efficiency using data envelopment analysis. In addition, this study applies a Tobit regression and Kruskal-Wallis one-way ANOVA to identify the impact of leverage, liquidity, and firm size, which are major capital structure factors influencing FV. The analysis yields three main results. First, in the ICT industry, small and medium companies tend to have better profitability efficiency than companies of other sizes. Second, only small and medium ICT manufacturing companies’ profitability efficiency is positively impacted by the current ratio. Third, only mid-sized service companies’ profitability efficiency is positively impacted by the debt-equity ratio. The results have policy and practical implications for improving the FV of ICT companies.
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