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The effect of transaction exposure, firm size, and liquidity on the firm value with leverage as mediating variable Study on consumer non-cyclicals sector companies listed on the Indonesia Stock Exchange

Author

Listed:
  • Raden Pandu Widyantara

    (University of Brawijaya)

  • Siti Aisjah

    (University of Brawijaya, Malang, Indonesia)

  • Atim Djazuli

    (University of Brawijaya, Malang, Indonesia)

Abstract

This study analyses the impact of transaction exposure, firm size, and liquidity on firm value with leverage as a mediating variable in on Consumer Non-Cylicals Sector Companies Listed on the Indonesia Stock Exchange from 2018 to 2023. Using Signalling Theory and Trade-off Theory as theoretical frameworks, the research employs path analysis to evaluate the relationships between variables. The findings reveal that transaction exposure, firm size, and liquidity have a positive significant effect on firm value. Conversely, leverage shows a negative significant impact on firm value, suggesting that excessive debt increases financial risk, thereby reducing firm value. Moreover, the study indicates that leverage does not mediate the effects of transaction exposure, firm size, or liquidity on firm value. These results highlight the importance for companies to prioritize managing liquidity and capital structure effectively to optimize firm value. Excessive use of debt should be minimized to avoid diminishing profitability and reducing market value, especially for firms with high exposure to international transactions. Key Words:Transaction Exposure, Firm Size, Liquidity, Leverage, Firm Value, Indonesia Stock Exchange, Signaling Theory, Trade-off Theory.

Suggested Citation

  • Raden Pandu Widyantara & Siti Aisjah & Atim Djazuli, 2024. "The effect of transaction exposure, firm size, and liquidity on the firm value with leverage as mediating variable Study on consumer non-cyclicals sector companies listed on the Indonesia Stock Exchange," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 13(9), pages 103-112, December.
    • Handle: RePEc:rbs:ijbrss:v:13:y:2024:i:9:p:103-112
    DOI: 10.20525/ijrbs.v13i9.3880
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    References listed on IDEAS

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    1. Yusuf Ayturk & Ali Osman Gurbuz & Serhat Yanik, 2016. "Corporate derivatives use and firm value: Evidence from Turkey," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 16(2), pages 108-120, June.
    2. He, Qing & Liu, Junyi & Zhang, Ce, 2021. "Exchange rate exposure and its determinants in China," China Economic Review, Elsevier, vol. 65(C).
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