THE EFFECT OF CAPITAL STRUCTURE ON FIRM VALUE WITH THE MEDIATION OF R&D AS THE INTERVENING VARIABLE

Latifudin, Mahirun and Wahyudi, Sugeng and Muharam, Harjum (2017) THE EFFECT OF CAPITAL STRUCTURE ON FIRM VALUE WITH THE MEDIATION OF R&D AS THE INTERVENING VARIABLE. International Journal of Economic Research, 14 (15). pp. 481-496. ISSN 0972-9380

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Abstract

Conceptually, this research aimed to develop a theoretical approach as a mean to improve company value. The effort done were involving capital structure, investment opportunity set, sales growth, company size, and business risk, also proposing a research and development as an intervening variable so that to build a grand theoretical model. The population of this research was manufacture companies, and non-finance companies registered in Indonesia Stock Exchange during observation period from 2017 to 2013. Path analysis was used as a mean of analysis helped by AMOS program. The main finding was R&D intensity which is the mediation between the effect of debt to equity ratio and capital expenditure to book value of assets to tobins’q value. Debt to equity ratio and capital expenditure to book value of assets were the sample of this study which influenced indirectly the improvement of tobins’q valye through R&D intensity. The result showed R&D intensity and size of the firm gave positive and significant effect on tobins’q value while debt to equity ratio, capital expenditure to book value of assets, and earning volatility did not give significant effect to tobins’q value. Meanwhile, debt to equity ratio and capital expenditure to book value of assets gave positive and significant effect on R&D intensity, and sales growth and size of the firm did not influence the R&D intensity.

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