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The Influence of Financial Performance, Capital Structure and Macroeconomic Factors on Firm¡¯s Value ¨C Evidence from Textile Companies at Indonesia Stock Exchange

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Listed:
  • Jubaedah
  • Ivan Yulivan
  • Abdul Razak Abdul Hadi

Abstract

This study aims to investigate how financial performance, capital structure and macroeconomic factors may influence a firm¡¯s value in Indonesia textile industry. This research is exploratory in nature involving 20 textile companies listed in Indonesia Stock Exchange (IDX). Using panel data regression, the results show that financial performance, capital structure, inflation and exchange rate are contributory factors that influence firm¡¯s value. The better the financial performance of a company, the higher its value will be. The study also reveals that ratio of short term debt to total assets has no significant impact on firm¡¯s value, while there is a positive significant relationship between the ratio of long term debt to total assets and firm¡¯s value. Interestingly, depreciation in Indonesia Rupiah and increase in inflation rate would also enhance the firm¡¯s value. As far as Indonesian textile industry is concerned, the findings suggest that capital structure, increased financial performance, higher inflation rate and depreciating Rupiah do influence the textile company¡¯s value.

Suggested Citation

  • Jubaedah & Ivan Yulivan & Abdul Razak Abdul Hadi, 2016. "The Influence of Financial Performance, Capital Structure and Macroeconomic Factors on Firm¡¯s Value ¨C Evidence from Textile Companies at Indonesia Stock Exchange," Applied Finance and Accounting, Redfame publishing, vol. 2(2), pages 18-29, August.
  • Handle: RePEc:rfa:afajnl:v:2:y:2016:i:2:p:18-29
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    References listed on IDEAS

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    Cited by:

    1. Missaoui, Ibtissem & Ben Rejeb, Jaleleddine & Elkhaldi, Abderrazek, 2016. "Les déterminants institutionnels et macroéconomiques du développement du marché boursier dans les pays de la région MENA [Institutional and macroeconomic determinants of stock market development in," MPRA Paper 83619, University Library of Munich, Germany.

    More about this item

    Keywords

    Capital Structure; Financial Performance; Macroeconomic Factors; Firm¡¯s Value;

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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