Firm size sensitivity on the correlation between financing choice and firm value

This study examines the impact of firm size on the effect of capital structure choice on the firm value in one of the emerging markets, Indonesia. The study of capital structure choice and firm value in emerging markets is captivating due to the different characteristics of its companies as compared...

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Autores principales:	Yossi Diantimala, Sofyan Syahnur, Ratna Mulyany, Faisal Faisal
Formato:	article
Lenguaje:	EN
Publicado:	Taylor & Francis Group 2021
Materias:	capital structure firm value emerging market firm profitability Business HF5001-6182 Management. Industrial management HD28-70
Acceso en línea:	https://doaj.org/article/7ca325de408442948cc7f56d355d0fb6
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spelling	oai:doaj.org-article:7ca325de408442948cc7f56d355d0fb62021-12-02T18:17:07ZFirm size sensitivity on the correlation between financing choice and firm value2331-197510.1080/23311975.2021.1926404https://doaj.org/article/7ca325de408442948cc7f56d355d0fb62021-01-01T00:00:00Zhttp://dx.doi.org/10.1080/23311975.2021.1926404https://doaj.org/toc/2331-1975This study examines the impact of firm size on the effect of capital structure choice on the firm value in one of the emerging markets, Indonesia. The study of capital structure choice and firm value in emerging markets is captivating due to the different characteristics of its companies as compared to the characteristics of companies in developed countries. To rigorously conduct the research, this study uses annual reports and market value of 1,638 listed non-financial companies as the result of a random sampling method with 7-year observation periods, 2012 until 2018. The finding supports the existing literature that optimal capital structure choice reflects an appropriate mix of debt and the company’s equity that enhances the firm value. This means that capital structure is one of the significant aspects of the decision-making of investment by investors. Similar to that in developing countries, increasing long-term debt is a funding option when the internal funds are insufficient. Reducing retained earnings affected by lower profitability level increase corporate long-term debt. Furthermore, the size of a company takes an important role to strengthen the impact of capital structure choice on the firm value.Yossi DiantimalaSofyan SyahnurRatna MulyanyFaisal FaisalTaylor & Francis Grouparticlecapital structurefirm valueemerging market firmprofitabilityBusinessHF5001-6182Management. Industrial managementHD28-70ENCogent Business & Management, Vol 8, Iss 1 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	capital structure firm value emerging market firm profitability Business HF5001-6182 Management. Industrial management HD28-70
spellingShingle	capital structure firm value emerging market firm profitability Business HF5001-6182 Management. Industrial management HD28-70 Yossi Diantimala Sofyan Syahnur Ratna Mulyany Faisal Faisal Firm size sensitivity on the correlation between financing choice and firm value
description	This study examines the impact of firm size on the effect of capital structure choice on the firm value in one of the emerging markets, Indonesia. The study of capital structure choice and firm value in emerging markets is captivating due to the different characteristics of its companies as compared to the characteristics of companies in developed countries. To rigorously conduct the research, this study uses annual reports and market value of 1,638 listed non-financial companies as the result of a random sampling method with 7-year observation periods, 2012 until 2018. The finding supports the existing literature that optimal capital structure choice reflects an appropriate mix of debt and the company’s equity that enhances the firm value. This means that capital structure is one of the significant aspects of the decision-making of investment by investors. Similar to that in developing countries, increasing long-term debt is a funding option when the internal funds are insufficient. Reducing retained earnings affected by lower profitability level increase corporate long-term debt. Furthermore, the size of a company takes an important role to strengthen the impact of capital structure choice on the firm value.
format	article
author	Yossi Diantimala Sofyan Syahnur Ratna Mulyany Faisal Faisal
author_facet	Yossi Diantimala Sofyan Syahnur Ratna Mulyany Faisal Faisal
author_sort	Yossi Diantimala
title	Firm size sensitivity on the correlation between financing choice and firm value
title_short	Firm size sensitivity on the correlation between financing choice and firm value
title_full	Firm size sensitivity on the correlation between financing choice and firm value
title_fullStr	Firm size sensitivity on the correlation between financing choice and firm value
title_full_unstemmed	Firm size sensitivity on the correlation between financing choice and firm value
title_sort	firm size sensitivity on the correlation between financing choice and firm value
publisher	Taylor & Francis Group
publishDate	2021
url	https://doaj.org/article/7ca325de408442948cc7f56d355d0fb6
work_keys_str_mv	AT yossidiantimala firmsizesensitivityonthecorrelationbetweenfinancingchoiceandfirmvalue AT sofyansyahnur firmsizesensitivityonthecorrelationbetweenfinancingchoiceandfirmvalue AT ratnamulyany firmsizesensitivityonthecorrelationbetweenfinancingchoiceandfirmvalue AT faisalfaisal firmsizesensitivityonthecorrelationbetweenfinancingchoiceandfirmvalue
_version_	1718378284132073472

Firm size sensitivity on the correlation between financing choice and firm value

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