EFFECT OF CAPITAL STRUCTURE ON FIRM VALUE

Mahirun, Mahirun and Ayuningrum, Anggrainy Putri and KUSHERMANTO, Andi and Prasetiani, Titi Rahayu and Jannati, Arih and Ardiyani, Komala (2023) EFFECT OF CAPITAL STRUCTURE ON FIRM VALUE. Project Report. Fakultas Ekonomi dan Bisnis, Pekalongan.

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Abstract

This study aims to test and analyze the effect of investment opportunity set, capital structure, dividend policy, and profitability on firm value. Another objective to be achieved is the effect of capital structure and dividend policy on firm value mediated by profitability. Our research uses path analysis to determine and analyze the influence of exogenous variables on endogenous variables. The objects in this study are companies incorporated in LQ45 for the period 2012 - 2021. The results of the study found that the price earning ratio, capital structure with indicators of debt to asset ratio and debt to equity ratio, dividend payout ratio, and return on assets all have a positive and significant direction of influence on price to book value. Debt to equity ratio has a significant positive direction of influence on return on assets, while debt to asset ratio has the opposite direction, namely negative and significant to return on assets. What is different from the results of this test is that the dividend payout ratio, although the direction of influence is positive on return on assets, is not significant. Return on assets is not able to mediate the effect of debt asset ratio, debt to equity ratio, and dividend payout ratio in its effect on price to book value. Keywords: investment opportunity set, capital structure, dividend policy, profitability, firm value, universitas pekalongan.

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