Corporate Financial Strategy in an Emerging Market: Evidence from Indonesia

Erik Syawal Alghifari, Atang Hermawan, Ardi Gunardi (), Agus Rahayu and Lili Adi Wibowo
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Erik Syawal Alghifari: Department of Management, Universitas Pendidikan Indonesia, Bandung 40154, Indonesia
Atang Hermawan: Faculty of Economics and Business, Universitas Pasundan, Bandung 40116, Indonesia
Ardi Gunardi: Faculty of Economics and Business, Universitas Pasundan, Bandung 40116, Indonesia
Agus Rahayu: Department of Management, Universitas Pendidikan Indonesia, Bandung 40154, Indonesia
Lili Adi Wibowo: Department of Management, Universitas Pendidikan Indonesia, Bandung 40154, Indonesia

JRFM, 2022, vol. 15, issue 8, 1-12

Abstract: This paper focuses on strategic corporate financial decisions related to capital structure to increased firm value, moderated by the COVID-19 pandemic under MM theory, trade-off theory, and pecking order theory. The analytical method used is panel data analysis, with observations of 1828 non-financial companies on the Indonesia Stock Exchange from the years 2019 to 2021. The results show that there is an effect of capital structure on firm value in a positive direction, and the moderating role of the COVID-19 pandemic weakens the effect of capital structure on firm value. The findings show that capital structure only has a significant effect on firm value for the debt-dominant group, but not for the equity-dominant group. The moderating effect of the COVID-19 pandemic affects firm value for the debt-dominant group, but not for the equity-dominant group.

Keywords: financial strategy; capital structure; firm value; pandemic COVID-19; emerging market (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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