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Leverage, firm value and competitive strategy: evidence from Indonesia

Author

Listed:
  • Bambang Hadinugroho
  • Tulus Haryono
  • Payamta
  • Irwan Trinugroho

Abstract

We study the agency theory by re-examining the effect of financial leverage on firm value. Moreover, we introduce a contingency variable: firm competitive strategy. To do so, we study non-financial firms listed on the Indonesia Stock Exchange from 2007 through 2013, resulting in 2,438 observations. Using the panel data technique, after controlling for firm-specific characteristics and industry differences, we find that leverage has a positive effect on firm value. Going deeper, we find that this effect is stronger for firms that apply a cost leadership strategy, differentiation strategy, or focused strategy.

Suggested Citation

  • Bambang Hadinugroho & Tulus Haryono & Payamta & Irwan Trinugroho, 2018. "Leverage, firm value and competitive strategy: evidence from Indonesia," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 11(5), pages 487-508.
    • Handle: RePEc:ids:ijepee:v:11:y:2018:i:5:p:487-508
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    Cited by:

    1. Tetyana Pimonenko & Yuriy Bilan & Jakub Horák & Liudmyla Starchenko & Waldemar Gajda, 2020. "Green Brand of Companies and Greenwashing under Sustainable Development Goals," Sustainability, MDPI, vol. 12(4), pages 1-15, February.

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