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

Raden Pandu Widyantara, Siti Aisjah and Atim Djazuli
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Raden Pandu Widyantara: University of Brawijaya
Siti Aisjah: University of Brawijaya, Malang, Indonesia
Atim Djazuli: University of Brawijaya, Malang, Indonesia

International Journal of Research in Business and Social Science (2147-4478), 2024, vol. 13, issue 9, 103-112

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.

Date: 2024
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