Houses, land, and property are vital human requirements, with increasing demands year after year. This is mostly due to Indonesia’s favorable population growth and economic development, which leads the demand for land and property to be even higher. However, this industry also experienced difficulties during the COVID-19 pandemic, which affected macroeconomic conditions. Therefore, this study aims to reinvestigate the role of internal and external factors on the capital structure and firm value of property and real estate firms listed on the IDX for the 2017-2021 period. In this study, the partial least squares structural equation modeling was used for the data analysis, whereas purposive sampling was used for company selection. The results showed that internal factors had a significant effect on capital structure and firm value, whereas external factors did not significantly impact capital structure and firm value. Lastly, capital structure is also proven to have no significant effect on firm value. These findings validate the signaling theory, where internal factors managed by the firm might produce a positive signal in the form of the firm’s future prospects so that it can become essential information for stakeholders. This study contributes to helping policymakers with various considerations and sets realistic expectations about the role of internal and external factors on the capital structure and firm values.
Keywords: financial performance, macroeconomic, capital structure, firm value, signaling theory