The Moderating Role of Firm Size on Financial Characteristics and Islamic Firm Value at Indonesian Equity Market

Abstract

This study aims to understand the moderating role of firm size on financial characteristics and Islamic firm value. Then study how the influence of firm size moderation on the relationship of financial characteristics and corporate governance with firm value. This study uses secondary data from financial statements and analyzed by the panel data method for six years. The sample selection is arranged by the purposive sampling method with Islamic index constituent population. Conclusion: leverage, profitability, and efficiency have a significant positive effect on Islamic firm value, but the liquidity and audit committee do not affect. Firm size moderators provide a reinforcing effect for all independent variables so that liquidity and audit committees have a positive effect on firm value. Implications: Islamic firm investors in the equity market should consider the crucial variable, namely firm size, in addition to firm and corporate governance characteristics. These conclusions provide important implications for managers and relevant authorities to enhance financial market information related to firm value and further attention to corporate governance mechanisms.

The Intervening Effect of the Dividend Policy on Financial Performance and Firm Value in Large Indonesian Firms

“…Some theoretical kinds of literature related to financial performance and the firm value that listed on the capital market show consistent results, which are generally positively correlated between the two. In this context, financial performance influences firm value positively, theoretically (Brigham and Houston, 2016;Santosa, 2020). In this case, management must improve the company's financial performance, especially the four most essential ratios, such as liquidity, solvency, activity, and profitability, so that corporate achieves the objectives.…”

“…11, No. 4;2020 Published by Sciedu Press 410 ISSN 1923-4023 E-ISSN 1923-4031 Furthermore, Sugiastuti et al (2018 stated that profitability proved to have a positive effect; investment decisions proved to have a positive effect; company growth was proven not to affect firm value. Other findings show that profitability has a positive effect, investment decisions have no effect, company growth has no effect on dividend policy, and dividend policy has no significant effect on firm value.…”

“…Financial performance, corporate dividend policy, and firm value have remained essential but also an ambiguous issue in corporate finance literature. Some studies in corporate finance have tried to determine the effect of inter-relationship financial performance, dividend policy on the value of the firm, but results are still conflicting (Santosa, 2020). The influence of financial performance on firm value and dividend policy directly and the impact of dividend policy on the value of a firm became a critical view.…”

The Controlling of Ownership on the relationship between Financial Performance and Capital Structure in Indonesia

“…Managerial ownership affects the company's capital decisions. Managers will try to issue policies that encourage companies to achieve optimal profits to develop company value (Mokhova et al, 2018;Santosa, 2020). The development of companies requires new capital and new debt issue options carried out with consideration of financial risks.…”

“…This equity capital is used to support a business expansion strategy and massive capital expenditure of corporation (Artikis & Nifora, 2012;Prieto & Lee, 2019). Furthermore, Buvanendra, Sridharan, and Thiyagarajan (2017) and Santosa (2020) argue that an increase in equity demand shows an improved company performance that has been responded positively by investors.…”