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The Role of EVA in Determining Company’s Value through the Ownership Structure and Internal Factors

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  • Sri Murni

Abstract

Purpose: This study aims to determine the influence of liquidity, leverage, asset-size on company’s value through the ownership structure of manufacturing companies in Indonesia. Design/Methodology/Approach: The study uses an explanatory design using secondary data in the form of financial statement data obtained from manufacturing companirs in the Indonesia Stock Exchange for seven years, the period 2010 - 2016 which was published in Indonesian Capital Market Directory. Samples were taken by purposive sampling, 46 companies for seven years using the path analysis method. Findings: The results showed that leverage did not influence the ownership structure, while the asset size had a positive influence on the ownership structure. Liquidity does not influence the value of the company, asset size has a positive and significant influence on company value while leverage a significant negative influence, on company value. Practical/Implication: Various ways can be taken to increase the value of the company, among others, by maintaining and paying attention to the liquidity variables. Asset size can be increased while the company's leverage can be pressed. For future research external factors need to be considered for inclusion in the model, in order to produce a better model. The existence of several findings that are not in accordance with previous researches may be due to the characteristics, behavior and culture of capital market actors in Indonesia that are different from the characteristics and culture of the capital market actors in developed countries. Originality/Value: The study implies a recommendation for manufacturing companies to considered to include behavioral and cultural aspects in the model in a way to perform better.

Suggested Citation

  • Sri Murni, 2019. "The Role of EVA in Determining Company’s Value through the Ownership Structure and Internal Factors," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 231-245.
    • Handle: RePEc:ers:journl:v:xxii:y:2019:i:3:p:231-245
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    References listed on IDEAS

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    1. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
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    Cited by:

    1. Joanna Zukowska & Katarzyna Wardzinska, 2020. "Corporate Values of Companies Listed in Warsaw Stock Exchange," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 1118-1135.

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    More about this item

    Keywords

    Liquidity; leverage; asset size; ownership structure; company value.;
    All these keywords.

    JEL classification:

    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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