The Effect of Financial Policy, Managerial Ownership, Profitability, and Company Size on Company Value in Automotive and Component Sub-Sector Companies Registered in Indonesia Stock Exchange Period 2014-2018

Abstract

The aim of each company is to increase company value which can maximize shareholders’ wealth. The factors that can affect the company value are financial policies consisting of investment decisions, financial leverage and dividend policies. In addition to financial policy, there are other factors that can affect a company's value, namely managerial ownership, profitability, and company size. Therefore, this study aimed to examine the effect of financial policy, managerial ownership, profitability, and company size on company value in the automotive and component sub-sector companies registered in Indonesia Stock Exchange in 2014-2018. The data analysis techniques used in this study were multiple linear regression analysis and hypothesis testing using t test, F test, and coefficient of determination. The result shows that partially investment decisions, dividend policy, managerial ownership, and company size had no effect on company value, while financial leverage and profitability had effect on company value. Simultaneously investment decisions, financial leverage, dividend policy, managerial ownership, profitability, and company size had effect on company value.
 
 Keywords— Financial Policy; Managerial Ownership; Profitability; Company Size; Company Value.

Impact of Managerial Ownership, Company Size and Capital Structure on Company Value Through Profitability in Company Sectors Property, Real Estate and Building Construction Listed on Indonesia Stock Exchange Period 2019–2021

“…Increased capital structure indicates an increase in the amount of company debt, which will also reduce the profitability of a company. This is in line with research that shows that the Capital Structure has a negative impact on profitability [32] Management ownership is the ratio of shareholders owned by the management of the company involved in decision-making in the company [13].…”

“…The higher the price of the stock, the higher the wealth of the shareholders and the value of the corporation that indicates the future prospects of the firm and reflects assets that the Company owns [39]. Previous research by Kresno [19] showed that the size of a company has a positive effect on the value of the company, while Gustyana [13] showed a different result, in which the company size has no influence on the company's value.…”

“…the inconsistency between the variables of managerial ownership, corporate size and capital structure. This is because the company will be more effectively demonstrated than the large number of managerial ownership in a company because it has an important role in decision-making and also the management of the company to oversee the company's activities [13]. As a company…”

“…The existence of corporate ownership will enhance the supervision of the entire performance of the company [14]. Managing ownership is the ratio of shareholders purchased by the management of a company involved in decision-making in a company [13]. Managers who are part of the management ownership structure act as managers and shareholders of the company [39].…”

“…Big companies always keep the stability and condition of the company [10]. Determining large or small a company can also be by total assets, sales volume, average total sales and average total asset [13].…”