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Optimisation of Capital Structure and Firm Value

Author

Listed:
  • L. Uzliawati
  • A. Yuliana
  • Y. Januarsi
  • M.I. Santoso

Abstract

This study aims to examine the influence of capital structure towards firm value. The sample of this research consists of 101 manufacture companies listed in the Indonesian Stock Exchange during the period 2012 - 2015. The results of this study indicate that the higher the capital stucture with Debt to Equity Ratio (DER) and Long term Debt to Asset Ratio (LDAR) are indicators of a higher firm value, while lower Long term Debt to Equity Ratio is an indicator of a lower firm value. The study has found a positive correlation between Debt to Equity Ratio (DER) and Long term Debt to Asset Ratio (LDAR) to firm value, and a negative correlation of Long term Debt to Equity Ratio (LDER) to firm value. However, the capital structure with Debt to Asset Ratio (DAR) did not seem to have an influence on the firm value.

Suggested Citation

  • L. Uzliawati & A. Yuliana & Y. Januarsi & M.I. Santoso, 2018. "Optimisation of Capital Structure and Firm Value," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 705-713.
  • Handle: RePEc:ers:journl:v:xxi:y:2018:i:2:p:705-713
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    File URL: https://www.ersj.eu/dmdocuments/2018_XXI_2_54.pdf
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    References listed on IDEAS

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    Cited by:

    1. Bambang Sudiyatno & Elen Puspitasari & Ida Nurhayati & Tristiana Rijanti, 2021. "The Relationship Between Profitability and Firm Value: Evidence From Manufacturing Industry in Indonesia," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(3), pages 466-476, May.

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