The Effect of Financial Performance and Capital Structure on Firm Value, Moderated by Firm Size

Abstract

The purpose of this research is to find empirical evidence about the effect of financial performance and capital structure on firm value and to examine whether company size can moderate the influence of financial performance and capital structure on firm value. The sample in this research consists of trading, service, and investment companies listed on the Indonesia Stock Exchange (IDX) during the 2016–2018 period. The research sample includes 33 companies selected using a purposive sampling technique. The analysis methods used in this study are multiple linear regression analysis and Moderated Regression Analysis (MRA) to test the moderating variables. The results show that financial performance and firm size have a positive effect on firm value, while capital structure has a negative effect on firm value. In addition, firm size is not able to moderate the influence of financial performance and capital structure on firm value.