Leverage Value Research Articles

Internal Factors Affecting Firm Value (Case Study of Manufacturing Companies in Indonesia)

Despite the pivotal role of the manufacturing sector in the Indonesian economy and its continuous growth, there exists a dearth of comprehensive research on the determinants of firm value within this sector. The lack of understanding regarding how financial factors such as leverage, liquidity, profitability, and firm size impact firm value among manufacturing companies listed on the IDX hinders effective decision-making for investors, creditors, stakeholders, and company management. This study aims to Investigate the effects of firm size, profitability, liquidity, and leverage on firm value is the main purpose of this study, which focuses on manufacturing companies listed on the Indonesia Stock Exchange (IDX). The population comprises manufacturing companies listed on the Indonesia Stock Exchange from 2018 to 2022. Using purposive sampling technique and going through the sampling criteria, a final sample of 82 companies was used in this research. The data analysis method used in this study was a regression analysis using SPSS software. The study revealed that higher debt levels (Leverage) and excessive cash reserves (Liquidity) were linked to decreased firm value. Additionally, the finding also shows that as companies became more profitable, their overall value tended to decrease. On a positive note, larger firms (Firm Size) exhibited higher company value. The findings have implications for investors, creditors, and stakeholders navigating the Indonesian manufacturing sector, providing nuanced insights into financial determinants of firm value. These findings emphasize the importance of a balanced financial strategy for companies and highlight the advantages of size in the economic landscape.

How Do Female Directors Moderate the Effect of Family Control on Firm Value and Leverage? Evidence from Indonesia

Corporate governance is enriched by the existence of female directors. Their presence adds value to corporate governance by incorporating different perspectives and experiences. Female directors play an important role in preventing corporate harm, daring to ask critical questions and controlling conflict among various stakeholders. This study aimed to explore the effect of family control (FC) in stimulating leverage and firm value and assess the moderating role of female directors between FC on leverage and firm value. The sample was collected from the Indonesian Stock Exchange of 1,171 data observations-years (2019–2021 period) of companies listed. This research also used a linear regression model to analyse the purpose of hypotheses. The findings of this study indicate that female directors do not moderate the relationship between FC on leverage and firm value. The results prove the opposite of the assumption that the presence of female directors can harmonise and balance the interests of majority and minority shareholders. Finally, this article also contributes to the literature by developing the moderating role of female directors.

Profitability as an Intervening Variable of the Effect of Dividend Policy and Leverage on the Value of LQ45 Companies Listed on the Indonesia Stock Exchange

This study seeks to gather empirical evidence regarding the impact of Dividend Policy and Leverage on the performance of LQ45 Companies listed on the Indonesia Stock Exchange. Purposive sampling was employed to select the research samples, resulting in 21 companies being included in the study for the period spanning from 2019 to 2022, constituting 84 units of analysis. The research methodology adopted a quantitative descriptive approach, with path analysis being the chosen analytical technique. The findings indicate that neither leverage nor Dividend Policy directly affects Profitability. However, both Leverage and Profitability significantly positively influence firm value, whereas Dividend Policy does not. Moreover, Profitability serves as a mediator in the relationship between Dividend Policy and Firm Value but does not mediate the connection between Leverage and Firm Value. This study underscores the importance for companies to carefully consider their leverage and profitability, which can significantly impact firm value and ultimately enhance overall company performance.

Market Reaction to Environmental Disasters

Despite the fact that environmental issues are coming to the fore today, the market reaction to environmental disasters is not strong enough. This article examines the impact of a number of major industrial disasters on the companies’ stock performance, depending on financial health of the companies involved in an accident. We assessed the impact of financial indicators such as: financial leverage, profitability, balance value per share, capital expenditures, market capitalization and revenue on the amplitude of cumulative average abnormal returns (CAAR). The sample consists of 32 companies fromthe oil, chemical, mining and energy industries of developed countries involved in 80 major accidents between 2000 and 2020. The majority of disasters occurred in North America (47.5%) and in Europe (26.3%). Using the event study method to assess shareholders’ reaction and regression analysis, we proved that the financial leverage, profitability and book value per share has a positive impact on the amplitude of CAAR, while the ratio of capital expenditures to revenue has a negative impact on cumulative returns. The results showed that market capitalization and revenue growth do not affect the dynamics of stock prices after industrial disasters. In general, our study shows that the impact of all financial indicators on CAARis small (<1%). That is, despite the mandatory publication of climate risk reports, investors did not actively sell shares of companies guilty of industrial disasters. The results of the study are useful in several areas. On the one hand, by forming a diversified investment portfolio, investors taking into account the type of companies that are more sensitive to disasters. On the other hand, knowing such a market reaction, the state should provide financial players with strict rules and penalties for companies responsible for accidents.

THE INFLUENCE OF LEVERAGE, PROFITABILITY, AND COMPANY SIZE WITH MODERATION OF AUDIT QUALITY ON COMPANY VALUE

Companies in the D222 sector in Indonesia have the potential to dominate the global market. This study aims to explore how the value of companies in this sector is shaped by financing policies, such as leverage, and their ability to generate profits, namely profitability. Additionally, the research investigates the influence of company size on firm value. The urgency of this research is highlighted by the crucial role of audit performance in driving strategic efforts by companies to enhance their value. Sampled from the years 2020-2022 and drawn from companies listed on the stock exchange, the population consists of 26 companies. Purposive sampling was employed to select a sample of 19 companies in the D222 sector. The data was analyzed using multiple regression in SPSS version 27. The findings suggest that financing policies, specifically leverage, do not significantly impact firm value, whereas the ability to generate profits, namely profitability, has a significant positive effect on firm value. Company size does not seem to affect the increase in firm value. However, the role of Audit Quality as a moderator yields varying results. In terms of the relationship between financing policies, namely leverage, and firm value, Audit Quality does not appear to strengthen it. Similar results are found concerning the relationship between the ability to generate profits, namely profitability, and firm value. However, Audit Quality seems to enhance the relationship between Company Size and Firm Value. These findings provide valuable insights into the interplay of these factors within the processed food industry in Indonesia, aiming for dominance in the global market.

Determinan Nilai Perusahaan LQ 45 dengan Ukuran Perusahaan sebagai Pemoderasi

This study investigates the role of firm size as a moderating of profitability, leverage on firm value. This study uses Price Book Value (PBV) as a proxy for firm value in LQ45 index companies for the 2017-2021 period which has not been used by previous research. The findings of this study indicate that Return on Assets and Return on Equity as proxies for profitability have no effect on firm value. Then, company size has a significant effect on firm value, while the Debt to Asset Ratio and Debt to Equity Ratio as leverage proxies have no effect on firm value. Firm size can weaken the effect of profitability on firm value. Firm size can also moderate the relationship between leverage and firm value. The findings of this study imply that company size plays an important role in attracting investors, but if it is not accompanied by good financial performance management, it will actually lead to negative perceptions about the company's financial performance.

Financial leverage, state ownership, and firm value: the case of non-financial firms listed in Vietnam

Numerous empirical studies have confirmed the impact of financial leverage on firm value. Nevertheless, these conclusions are inconsistent due to the influence of other factors. In the context of a transition economy such as Vietnam, the state can own a certain percentage of equity capital in companies after equitization. Accordingly, this study aims to evaluate the moderating role of state ownership on the impact of financial leverage on the value of non-financial firms listed in Vietnam. The generalized method of moments was employed to analyze a sample of 481 companies from 2015 to 2021. The findings show that financial leverage has a positive effect on firm value, but this relationship is negatively moderated by state ownership. In addition, financial leverage decreases the firm value of state-owned companies. The paper suggests that the government should focus on assessing financial performance rather than political intervention in using companies’ financial leverage. The results also have implications for accelerating the equitization and divestment of state capital in Vietnamese listed non-financial firms.

The Effect of Profitability, Financial Leverage, Firm Size, Dividend Policy, and Stock Value on Income Smoothing in Food and Beverages Companies Listed on Indonesia Stock Exchange in 2020-2022

Income smoothing is the intentional normalizing of profits to a specified level or trend. Smoothing is an attempt by the company's management to lessen anomalous variations in profitability, to the extent permitted by solid accounting and management standards. This study aims to explore the effects of many factors, including stock value, dividend policy, firm size, profitability, and financial leverage, on income smoothing approaches. The population of the study consisted of the 84 food and beverage companies that were listed on IDX between 2020 and 2022. The sampling process provides 20 companies for a three-year observation period using a purposive sample method. Logistic regression analysis is used in the data analysis process using the SPSS 26 program. The study's findings indicate that income smoothing is influenced by all variables at the same time. Variable dividend policies significantly have effect on income smoothing, partially. However, there is no effect between the factors of stock value, company size, profitability, or leverage.

Pengaruh Leverage, Profitabilitas, Ukuran Perusahaan Dan Pertumbuhan Perusahaan Terhadap Nilai Perusahaan ( Studi Emperis Pada Perusahaan Properti Dan Real Estate Yang Terdaftar Di Bei Tahun 2016-2022)

This study aims to examine and analyze the factor that influence firm value. Some of the variables used in this study are leverage, profitability, company size, and company growth. The population used in this study are companies in the real estate and property sector that are listed on the Indonesia Stock Exchange in 2016-2022. The method used to collect this data is purposive sampling method. The number of samples used is 46 companies and the number used is 322 data. When processing data, there are several company data that must be outlier. After the outlier data, the number of samples used was 143 data. The analytical method used in this study is the quantitative analysis method. The results of this study show that leverage and company growth have no effect on firm value. While the profitability and size of the company positive affect the value of the company. Keywords: Leverage, Profitability, Company Size, Company Growth, and Company Value

Companies Determinants Of Income Smoothing: Empirical Study Of Property, Real Estate, And Building Construction Sectors Before And In The Time Of Covid 19

This research aims to obtain empirical evidence regarding the effect of financial leverage, profitability, cash holding, and firm value towards income smoothing. Income smoothing is a company’s effort to make earnings less volatile significantly. Stable earnings can be used as a basis for decision-making by stakeholders, while for the company itself, it’s useful for maintaining business continuity and management performance. The object of this research is all companies in the property, real estate, and building construction sector listed on Indonesia Stock Exchange for the 2016-2021 period. Research samples were taken using a purposive sampling method. Secondary data was used in the form of financial reports and stock price information to be tested using the multiple linear regression method. The results of this research are (1) financial leverage has no effect towards income smoothing, (2) profitability has a significant negative effect towards income smoothing, (3) cash holding has no negative effect towards income smoothing, (4) firm value has a significant positive effect towards income smoothing. Financial leverage, profitability, cash holding, and firm value simultaneously have a significant effect towards income smoothing

The Effect of Intangible Assets on The Financial Performance, Financial Policy and Corporate Value of LQ 45 Companies Listed on The IDX in 2018-2022

This research was written with the aim to determine the effect of intangible assets on financial performance, financial policies, and firm value with assets size and leverage as control variables for LQ 45 companies in the period of 2018-2022. This type of research is a causal study that is based on cause and effect. The type of data used in this research is quantitative data in the form of intangible assets, assets size, leverage, financial performance, financial policies, and firm value. The data source for this research is the financial statements of companies listed on the Indonesia Stock Exchange (IDX) from 2018 to 2022, for a period of 5 years. The population in this research is LQ 45 companies listed on the IDX. The sample in this research is 18 companies multiplied. The sampling technique used in this study is non-probability sampling. The results of this research show that intangible assets have a positive effect on financial performance, financial policies, and firm value.

The role of earnings quality in the impact of earnings management and leverage on firm value

Purpose: This study examines the impact of earnings management and leverage on firm value with earnings quality as an intervening variable. Research methodology Quantitative methods were used in this study, which employed path analysis to examine the relationships between variables. Samples were taken from state-owned enterprises in Indonesia, with a particular focus on those listed on the 2017-2021 BUMN 20 Index of the Indonesia Stock Exchange. Results: The results show that earnings quality mediates the relationship between leverage and firm value. Specifically, leveraging through earnings quality was found to maximize firm value, as profitable businesses prioritized internal financing because of their high rate of return. Limitations: This study was limited to the IDX BUMN 20 index between 2017 and 2021. Contribution: The findings suggest that management should consider leveraging to optimize firm value. In addition, it provides valuable insights into firm value, particularly for firms that rely heavily on internal financing. Novelty: This research is the first study to specifically focus on the IDX BUMN 20 index, covering both the periods before and during the Covid-19 pandemic.

Relationship between Corporate Governance, Leverage and Firm Value: Empirical Evidence from Indonesia

This research investigates the relationship between corporate governance using measurements of company ownership structure in upholding the values of transparency, accountability, equality, and leverage its influence on firm value, and placing growth as a control variable. The research method uses a quantitative approach, analyzing causal relationships through the formulation of hypotheses. The research sample is 175 manufacturing companies in Indonesia which were observed during 2017-2021 with N of 875 observations. The analysis technique uses ordinary least squares with panel regression. The results of the robustness test analysis of the model, growth as a control variable, robustly show that managerial ownership and institutional ownership represent the upholding of corporate governance values with a significantly positive response by investors. Apart from that, the leverage variable positively influences company value. The novelty of the results of this research, firstly, is the enforcement of manufacturing company governance values in Indonesia, represented by managerial ownership and institutional ownership. Second, the company funding structure policy supports the optimal capital structure theory (Modigliani F. and Miller M., 1963)

Does Gender Diversity among the Board of Directors Significantly Affect a Company's Financial Performance?

In recent years, the issue of women's representation on corporate boards has gained considerable attention. The presence of women on boards is believed to enhance their effectiveness. This study aims to investigate whether the gender composition of corporate boards plays a crucial role in the financial performance of the manufacturing sector, which is a significant contributor to Indonesia's economic growth. Purposive sampling led to the selection of 85 companies that met the criteria, resulting in a total sample of 680 companies over an eight-year period. Gender diversity is assessed using the proportion of female directors, while financial performance is measured by Tobin's Q. Additionally, six control variables are included in this study, namely the board of commissioners, board size, firm size, leverage, age, and market value. The analytical data calculations were conducted using STATA 13 software to ensure more precise results. The results from the regression tests reveal a significant positive impact of gender diversity on financial performance, both with and without the control variables. Furthermore, these findings provide support for two prominent theories: agency theory and resource dependence theory.

Corporate Social Responsibility

Abstract: Corporate Social Responsibility (CSR) is recognized as a strategic and long-term investment that brings about various economic advantages for companies. Consistent implementation of CSR not only enhances consumer preference for products but also attracts interest from potential investors, making CSR an innovative and continuous marketing tool that significantly contributes to a company's success. This paper explores the impact of Corporate Social Responsibility Disclosure (CSRD) and Leverage on Firm Value, with Profitability acting as the moderating variable. Analytical tools such as Moderated Regression Analysis (MRA) and Multiple Linear Regression are employed in this study, utilizing a dataset covering 68 firm-years of information from listed companies in Indonesia, including CSR reports from 2012 to 2015.The findings reveal that leverage has a substantial influence on firm value, whereas CSRD alone does not exhibit a significant effect on firm value. Additionally, the profitability variable is identified as an effective moderator, strengthening the correlation between corporate social responsibilities and firm value, as well as reinforcing the relationship between leverage and firm value. These results have critical implications for practitioners, especially in shaping CSR disclosure strategies to effectively address firm value considerations. Keywords: corporate social responsibility, firm value, leverage, profitability.

The Moderating Role of Corporate Governance in the Relationship between Leverage and Firm Value: Evidence from the Korean Market

This study examines the moderating function of corporate governance (CG) to the relationship between leverage and firm value (FV) using Korean market data. The study employs ordinary least-squares panel data regressions and two methods to manage endogeneity problems. The findings show a meaningful negative relationship between leverage and FV. This relationship, however, disappears, when the interaction variable of leverage × CG is included in the econometric model. These results indicate that an effective CG mechanism may lessen the probability of either the entrenched management-decision-making behavior or the agency costs of debt and, therefore, the negative effect of debt to FV diminishes. Moreover, our data show that the relationship between leverage and FV becomes positive, even though insignificant, for firms with a high level of CG, whereas it stays significantly negative for firms with a low level of CG. We also find that leverage for firms with a high level of CG is lower than those firms with a low level of CG. These additional findings support our conclusion of the moderating role of CG, which also influences the firms’ risk, leverage, and FV. The authors recommend the implementation of a robust CG plan to decrease the information asymmetry and the agency leverage problem.

Artificial intelligence in healthcare institutions: A systematic literature review on influencing factors

The purpose of this review is integrating and contextualizing relevant literature on the factors influencing the adoption of AI in the healthcare industry into a comprehensive framework. Health systems are considered fundamental to creating societal value. However, global health systems are challenged by the increasing number of patients due to population aging and the growing prevalence of chronic diseases and cancer. Meanwhile, the United Nations calls for equal access to healthcare, tackling costs, and addressing resource constraints to foster the sustainable development of societies. In this context, artificial intelligence (AI) is gaining attention as it constitutes a promising technology to address these burgeoning challenges. Despite opportunities, the literature specifically on the adoption of AI in the healthcare industry is fragmented across various research fields, lacking a comprehensive overview. It lacks theoretically grounded research integrating, for example, the factors that influence the adoption of AI in healthcare institutions.Derived from a multi-disciplinary systematic literature review, building on 130 studies, we propose the Adoption of AI in the Healthcare Industry Model. This model encompasses five dimensions influencing the adoption of AI in the healthcare industry and contextualizes them. We propose that macro-economic, regulatory, and technological readiness serve as external antecedents whereas organizational and individual readiness constitute internal antecedents influencing adoption of AI in healthcare institutions.Our review has implications for research on technology acceptance related to AI in healthcare. Further, we provide hands-on guidance for AI providers, health institutions, and official bodies such as governments to foster the adoption of AI to leverage value.

An analysis of the interaction between leverage and market value: Evidence from the Ho Chi Minh City Stock Exchange in Vietnam

This paper analyzes the relationship between leverage and market value among all firms listed on the Ho Chi Minh City Stock Exchange in Vietnam. Leverage and firm value are crucial concepts in the business world, making this topic of great interest to many researchers. However, previous studies have mainly focused on the impact of leverage on individual firms, neglecting the potential influence of industry-level leverage on firm value. We analyze the impact of leverage on firm value at both the firm and industry levels. We use two econometric models: one-step linear regression and hierarchical regression. Hierarchical regression, also known as a multilevel model, allows us to examine how firm value determinants affect market value at three levels: observation, firm, and industry. If this is the case, single-level regression estimation may produce biased results. Our prediction holds: the research data show stratification. Both firm-level and industry-level leverage have significant negative effects on firm market value. Here, the multilevel model can provide more precise and unbiased results than single-level regression. We contribute to the literature on the relationship between leverage and firm value in the Vietnamese market, where managers consider not only firm-level leverage but also industry-level leverage when making capital structure decisions.

Optimizing Wildfire Prevention through the Integration of Prescribed Burning into ‘Fire-Smart’ Land-Use Policies

Integrating fire into land management is crucial in fire-prone regions. To evaluate the effectiveness and efficiency of prescribed fire (PF), we employed the REMAINS model in NW Iberia’s Transboundary Biosphere Reserve Gerês-Xurés. We tested three levels of prescribed fire treatment effort for shrubland and grassland, employing three spatial allocation strategies: random distribution, prioritization in high-wildfire-risk zones, and creating fuel breaks by utilizing the existing road network. These approaches were assessed in isolation and in combination with three land-use scenarios: Business-as-usual (representing rural abandonment trends), High Nature Value farmland (reversing farmland abandonment), and Fire-Smart forest management (promoting fire-resistant landscapes). Our results confirm that PF is effective in reducing future wildfires (reductions up to 36%), with leverage values ranging from 0.07 to 0.45. Strategic spatial allocation, targeting wildfire-risk areas and existing road networks, is essential for maximizing prescribed fire’s efficiency (leverage effort of 0.32 and 0.45; i.e., approximately 3 ha of PF decrease subsequent wildfire by 1 ha). However, the PF treatments yield the best efficiency when integrated into land-use policies promoting ‘fire-smart’ landscapes (reaching leverage values of up to 1.78 under policies promoting ‘HNVf and ‘fire-smart’ forest conversion). These recommendations strengthen wildfire prevention and enhance landscape resilience in fire-prone regions.

Application of QSAR models for acute toxicity of tetrazole compounds administrated orally and intraperitoneally in rat and mouse

Tetrazoles and their derivatives possess various biological activities, such as antibacterial, anti-fungal, and other activities. However, these compounds may induce specific cumulative and toxic effects in living organisms. Therefore, quantitative structure-activity relationship (QSAR) models were constructed to study the acute oral toxicity of tetrazoles in rats and mice. The toxicity data of 111 tetrazole compounds were collected using the ChemIDplus, ChEMBL and ECHA databases as response variables, while the PaDEL-descriptor generated the 2D descriptors as independent variables. The models were developed and validated following the OECD guidelines by the DTC-QSAR tool. Three QSAR models were successfully established for the oral routes of rat and mouse and the intraperitoneal route of mouse, respectively. The scatter plots showed high consistency between the training and test data sets. All the models successfully met the external and internal validation criteria. Most of the descriptors kept in the final models exhibited positive correlations with toxicity, whereas only 6 descriptors exhibited negative associations. Several chemicals were identified as response or structural outliers, based on the standardized residuals and leverage values. In conclusion, the findings of this investigation demonstrate that the proposed QSAR models hold promise in forecasting the acute toxicity of recently developed or synthesized tetrazole compounds, thereby mitigating potential risks to human health and the environment.