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Optimisation of Capital Structure and Firm Value

Author

Listed:
  • L. Uzliawati
  • A. Yuliana
  • Y. Januarsi
  • M.I. Santoso

Abstract

This study aims to examine the influence of capital structure towards firm value. The sample of this research consists of 101 manufacture companies listed in the Indonesian Stock Exchange during the period 2012 - 2015. The results of this study indicate that the higher the capital stucture with Debt to Equity Ratio (DER) and Long term Debt to Asset Ratio (LDAR) are indicators of a higher firm value, while lower Long term Debt to Equity Ratio is an indicator of a lower firm value. The study has found a positive correlation between Debt to Equity Ratio (DER) and Long term Debt to Asset Ratio (LDAR) to firm value, and a negative correlation of Long term Debt to Equity Ratio (LDER) to firm value. However, the capital structure with Debt to Asset Ratio (DAR) did not seem to have an influence on the firm value.

Suggested Citation

  • L. Uzliawati & A. Yuliana & Y. Januarsi & M.I. Santoso, 2018. "Optimisation of Capital Structure and Firm Value," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 705-713.
    • Handle: RePEc:ers:journl:v:xxi:y:2018:i:2:p:705-713
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    File URL: https://www.ersj.eu/dmdocuments/2018_XXI_2_54.pdf
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    References listed on IDEAS

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    1. Rudi Bratamanggala, 2017. "Implications of Tax Receivables and Retribution for the Economic Growth of Indonesia," European Research Studies Journal, European Research Studies Journal, vol. 0(3A), pages 570-579.
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    4. Myers, Stewart C, 1984. "The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-592, July.
    5. Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
    6. Kharisya Ayu Effendi & Disman Disman, 2017. "Liquidity Risk: Comparison between Islamic and Conventional Banking," European Research Studies Journal, European Research Studies Journal, vol. 0(2A), pages 308-318.
    7. Tulus Suryanto, 2014. "Determinants of Audit Fee Based on Client Attribute, Auditor Attribute, and Engagement Attribute to Control Risks and Prevent Fraud: A Study on Public Accounting Firms in Sumatra-Indonesia," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 27-39.
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    Cited by:

    1. Erik Syawal Alghifari & Ardi Gunardi & Jaja Suteja & Indah Khoerun Nisa & Zalfa Amarananda, 2022. "Investment Decisions of Energy Sector Companies on the Indonesia Stock Exchange: Theory and Evidence," International Journal of Energy Economics and Policy, Econjournals, vol. 12(6), pages 73-79, November.
    2. Bambang Sudiyatno & Elen Puspitasari & Ida Nurhayati & Tristiana Rijanti, 2021. "The Relationship Between Profitability and Firm Value: Evidence From Manufacturing Industry in Indonesia," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(3), pages 466-476, May.

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