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The Financial Performance and Firm Value of Companies Analysis of Indonesia Metal Industry Sector

Author

Listed:
  • Leni Triana

    (Management Department, Bina Bangsa University, Indonesia)

  • Yuliah

    (Management Department, Bina Bangsa University, Indonesia)

  • Rani Puspa

    (Management Department, Bina Bangsa University, Indonesia)

Abstract

The purpose of this research is to determine the direct influence of capital structure, corporate social responsibility, and financial performance on business value, as well as if financial performance acts as a mediating element between capital structure and CSR. This study examines metal industrial sector manufacturing firms that are publicly traded on the Indonesian Stock Exchange through the use of secondary data, data collection, and documentation (IDX). The study sampled 14 businesses using purposive sampling, and the sample comprised 56 financial reports covering four years. Capital structure variables are determined using DER, CSR variables are determined using GRI-G4 principles, financial performance is determined using ROA, and firm value is determined using PBV. To test hypotheses, Path Analysis was employed. According to the findings, capital structure had a positive but minor effect on financial performance, CSR had a significant positive effect on financial performance, and capital structure had a large positive effect on business value. Financial performance has a significant negative effect on corporate value, but CSR has a tiny but favourable effect. Financial performance acts as a buffer between CSR and business value, rather than between capital structure and company value.

Suggested Citation

  • Leni Triana & Yuliah & Rani Puspa, 2021. "The Financial Performance and Firm Value of Companies Analysis of Indonesia Metal Industry Sector," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 8(6), pages 119-124, June.
    • Handle: RePEc:bjc:journl:v:8:y:2022:i:6:p:119-124
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    References listed on IDEAS

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    1. Vicente Lima Crisóstomo & Fátima de Souza Freire & Felipe Cortes de Vasconcellos, 2011. "Corporate social responsibility, firm value and financial performance in Brazil," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 7(2), pages 295-309, June.
    2. Geoffrey Heal, 2005. "Corporate Social Responsibility: An Economic and Financial Framework," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 30(3), pages 387-409, July.
    3. Becchetti, Leonardo & Ciciretti, Rocco & Hasan, Iftekhar, 2009. "Corporate social responsibility and shareholder's value: an empirical analysis," Bank of Finland Research Discussion Papers 1/2009, Bank of Finland.
    4. Katiya Nahda & D Agus Harjito, 2011. "Pengaruh Corporate Social Responsibility terhadap Nilai Perusahaan dengan Corporate Governance sebagai Variabel Moderasi," Jurnal Siasat Bisnis, Management Development Centre (MDC) Department of Management, Faculty of Business and Economics Universitas Islam Indonesia, vol. 15(1).
    5. repec:zbw:bofrdp:2009_001 is not listed on IDEAS
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