Determination of Company's Value: A Study with Investment Opportunity as a Moderator Variable
1Irma Sari Permata, 2Bambang Purwoko, 3Tri Widyastuti, 4Apollo Daito
1,3Faculty of Economics and Business, Universitas Pancasila. Jalan Raya enteng Agung, South Jakarta, Indonesia
2,4Postgraduate School of Economic and Business, Universitas Pancasila & Jalan Borobudur no. 7, Central Jakarta, Indonesia
https://doi.org/10.47191/jefms/v5-i1-06ABSTRACT:
This research focuses on the state of a company's valuation, which is always changing. The utilized variables to estimate firm value include free cash flow and interest rates, both of which have a positive relationship with company's value. The second purpose is to investigate the current situation of investment opportunities in industrial companies that are similarly highly volatile. The availability of free cash flow indicates the interest rate has a positive relationship with the investment opportunity set. An explanatory research design is used in this study, which aims to examine the correlation between variables. The manufacturing companies that were listed on the Indonesia Stock Exchange between 2013 and 2018 are the focus of this study. Thus, data were collected from 612 units using a purposive sampling technique. The findings reveal that whereas free cash flow has a strong positive indirect effect on company value via mediating the investment opportunity set, interest rates have a negative and minor indirect effect on firm value via mediating the investment opportunity set.
KEYWORDS:
Firm Value, Investment Opportunity Set, Free Cash Flow, Interest Rate, Dividend Policy, Managerial Ownership
REFERENCES:
1) Basil, A. "Dividend behaviour and smoothing new evidence from Jordanian panel data", Studies in Economics and
Finance, 26(3), 182–197, 2009.
2) Jensen, M. C. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers", The American Economic Review,
76(2), 323–329, 1986.
3) Yuliarti, Atika & Diyani, Lucia. "The Effect of Firm Size, Financial Ratios and Cash Flow On Stock Return", The Indonesian
Accounting Review, 8, 229, 2018
4) Brigham Houston. 2010. Dasar-Dasar Manajemen Keuangan (11th ed.). Salemba Empat. Jakarta.
5) Lusiana, R., Mufidah, F., & Habibah, N., "Pengaruh Tingkat Free Cash Flow Terhadap Investment Opportunity Set Pada
Perusahaan Makanan Dan Minuman Yang Terdaftar Di Bursa Efek Indonesia", The Asia Pacific Journal Of Management
Studies, 3(2), 2016.
6) Hadi, S. "Analisis Faktor-Faktor Yang Mempengaruhi Investasi Swasta Di Jawa Tengah", Jurnal Ekonomi Dan Kebijakan,
1(1), 2008.
7) Rofizar, H., & Arfan, M., "Nilai Perusahaan dalam Kaitannya dengan Arus Kas Bebas dan Pertumbuhan Perusahaan (Studi
pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia)", Jurnal Telaah Dan Riset Akuntansi, 6(1), 14–30,
2013.
8) Murhadi, W. R. "Studi Kebijakan Deviden: Anteseden dan Dampaknya Terhadap Harga Saham", Jurnal Manajemen Dan
Kewirausahaan, 10(1), 1–17, 2008.
9) Arieska, M., & Gunawan, B. "Pengaruh aliran kas bebas dan keputusan pendanaan terhadap nilai pemegang saham
dengan set kesempatan investasi dan dividen sebagai variabel moderasi", Jurnal Akuntansi Dan Keuangan, 13(1), 13–
23, 2011.
10) Ni, Y., Huang, P., Chiang, P., & Liao, Y. "Cash Flow Statements and Firm Value: Evidence from Taiwan." Quarterly Review
of Economics and Finance, 71, 280–290, 2019.
11) Nguyen, D. D., & Nguyen, A. H. "The Impact of Cash Flow Statement on Lending Decision of Commercial Banks: Evidence
from Vietnam", Journal of Asian Finance, Economics and Business, 7(6), 85–93, 2020.
12) Oprea, R. "Free Cash Flow and Takeover Threats: An Experimental Study.",Southern Economic Journal, 75(2), 2008.
http://www.jstor.org/stable/27751389.
13) Yudianti, N. 2003. The effect of investment opportunity set and earnings management to the relationship between free
cash flow and shareholder value. Disertasi, Sanata Dharma University, Indonesia.
14) Sujoko dan Ugy Soebiantoro. "Pengaruh Struktur Kepemilikan Saham, Leverage, Faktor Interen dan Faktor Eksteren
Terhadap Nilai Perusahaan", Jurnal Manajemen Dan Kewirausahaan, 1(1), 2007.
15) Tandelilin, E. 2010. Portofolio dan Investasi: Teori dan aplikasi. Kanisius.
16) Sarfraz Hussain, Abdul Quddus, Pham Phat Tien, Muhammad Rafiq and Drahomíra Pavelková. "The moderating role of
firm size and interest rate in capital structure of the firms: selected sample from sugar sector of Pakistan", Investment
Management and Financial Innovations, 17(4), 341-355, 2020.
17) Setiani, R. "Pengaruh Keputusan investasi, keputusan pendanaan, dan tingkat suku bunga terhadap nilai perusahaan
pada perusahaan otomotif yang terdaftar di bursa efek indonesia", Jurnal Manajemen, 2(01), 2013.
18) Zamzamin, Zaminor & Haron, Razali & Othman, Anwar. "Hedging, managerial ownership and firm value", Journal of
Asian Business and Economic Studies, 2021
19) Permata, I. S., Nawasiah, N., & Indriati, T. (2018). Free Cash Flow, Kinerja Internal, Dan Pengaruhnya Terhadap Nilai
Perusahaan. Liquidity, 7(1), 63–69.Permata, I. S., Nawasiah, N., & Indriati, T. (2018). Free Cash Flow, Kinerja Internal,
Dan Pengaruhnya Terhadap Nilai Perusahaan. Liquidity, 7(1), 63–69.
20) Mulya Ningsih, Meidiana., et.al. (2019). Pengaruh Suku Bunga, Struktur Modal, dan Ukuran Perusahaan Terhadap Nilai
Perusahaan: Studi Empiris Pada Perusahaan Di Indonesia. Jurnal Riset Akuntansi Dan Keuangan, 7 (1), 97–110
