The Effect of Debt Financing on Firm Value in Manufacturing Companies Listed in Indonesia Stock Exchange

Anita Roosmalina Matusin (), Catur Rahayu Martiningtiyas, Ina Oktaviana Matusin, Ramadini Safitri and Cyntia Monalisa Hutauruk
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Anita Roosmalina Matusin: Universitas Trisakti, Management Study Program
Catur Rahayu Martiningtiyas: Universitas Trisakti, Management Study Program
Ina Oktaviana Matusin: Universitas Trisakti, Management Study Program
Ramadini Safitri: Universitas Trisakti, Management Study Program
Cyntia Monalisa Hutauruk: Universitas Trisakti, Management Study Program

A chapter in Proceedings of the International Conference on Entrepreneurship, Leadership and Business Innovation (ICELBI 2022), 2023, pp 47-55 from Springer

Abstract: Abstract This study aims to examine the effect of debt financing on firm value. The dependent variable used in this study is firm value, with the independent variable debt financing (STDA, LTDA, TDTE), firm size, firm growth, inflation, and interest rate control variables. The research sample used in this study is manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2015–2020 period. By using a purposive sampling technique, the number of samples studied was 60 manufacturing companies. The study's results found that debt financing (STDA) and interest rates had a significant negative effect on firm value. Meanwhile, debt financing (LTDA and TDTE), firm value, firm growth, and inflation have no impact on firm value. Managerial implications: to increase firm value, companies must reduce the use of short-term debt to finance assets and anticipate borrowing rates.

Keywords: debt financing; firm growth; firm size; firm value; inflation; interest rate (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-350-4_6

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DOI: 10.2991/978-94-6463-350-4_6

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