Impact of Structural Capital and Company Size on the Growth of Firm Value through Financial Performance with Good Corporate Governance as a Moderating Variable: Property and Real Estate Business in Indonesia

Abstract

Purpose: This study aims to examine the role of good corporate governance in moderating the effect of capital structure and firm size on financial performance and its impact on the value of property and real estate companies in Indonesia. Approach/Methodology/Design: The study population is a company incorporated in Indonesia's property and real estate industry and was listed on the Indonesia Stock Exchange (IDX) in 2013-2018. Data collection is done by distributing questionnaires offline and online using Google forms that have been tested with validity and reliability testing. The data analysis technique used is the SEM-PLS Analysis technique. Findings: The results showed that the mechanism of good corporate governance in the form of board affiliation, the size of the board of directors, and the presence of an audit committee moderated the decision of capital structure and firm size that influenced financial performance and firm value. This study also proves the direct and indirect effect of capital structure decisions on financial performance and firm value. Another finding is the indirect effect of company size on firm value through financial performance. Practical Implications: Board affiliation can reduce asymmetric information so that management will make decisions and act on shareholders' interests. Originality/Value: Mechanism through good corporate governance and the use of debt as control over the manager's performance will reduce the occurrence of agency problems.

The Influence of Company Growth, Capital Structure, and Business Risk on Company Value with Company Size as a Moderating Variable in Property and Real Estate Sector Companies on the Indonesia Stock Exchange

“…It can also increase stakeholder trust and have an impact on increasing company value. This is in line with and supports the results of previous research conducted by (Alghifari et al, 2022;Gunadi et al, 2020;Hirdinis, 2019) which shows that capital structure has a positive influence on the value of property and real estate companies on the Indonesia Stock Exchange because Companies that have a high capital structure make investors believe that the company is growing and has the potential to earn greater profits in the future. Therefore, it is possible that investors will be interested in investing their capital in companies that have a high capital structure.…”

“…Therefore, management's goal in managing the capital structure is to properly manage all sources of permanent funds used by the company, so that it can optimize company value (Pahlevi & Anwar, 2022). This is supported by findings in previous research (Alghifari et al, 2022;Gunadi et al, 2020;Hirdinis, 2019) which prove that capital structure has a positive effect on company value. Therefore, researchers propose the following hypothesis: H2: Capital Structure has a positive effect on Company Value…”

“…This encourages managers to try to maximize the use of resources to increase cash flow (Linawati et al, 2022). When the debt ratio is high, the company has the opportunity to create and run profitable investment opportunities for investors by offering a higher rate of return than other companies (Gunadi et al, 2020).…”

“…The optimal capital structure is in a situation where a company can achieve an ideal balance between the use of debt and equity, and is balanced with the value of the company (Bambu et al, 2022). Previous research such as (Alghifari et al, 2022;Gunadi et al, 2020;Hirdinis, 2019) shows that capital structure has a positive effect on company value. However, there are differences in research results from (Faradila & Effendi, 2023;Millenia et al, 2023;Nurhayati et al, 2021) which show that capital structure has a negative effect on company value.…”

Determinan Nilai Perusahaan LQ 45 dengan Ukuran Perusahaan sebagai Pemoderasi

“…Maka diperlukan GCG yang menjadi sistem pengawas kinerja manajemen untuk memastikan operasional perusahaan tetap berjalan sesuai dengan keinginan pemegang saham (Syura et al, 2020). Semakin besar ukuran dan skala bisnisnya, diperlukan pengawasan yang lebih optimal untuk menjaga kepentingan pemegang saham (Gunadi et al, 2020). Besarnya ukuran perusahaan dapat menandakan besar pula investasi yang ditanamkan investor.…”