THE INFLUENCE OF PROFITABILITY AND CAPITAL STRUCTURE ON FIRM VALUE (STUDY ON MANUFACTURING INDUSTRIES LISTED AT INDONESIA STOCK EXCHANGE FOR PERIODS 2008-2012)

ULUM, ACHMAD SAIFUL (2015) THE INFLUENCE OF PROFITABILITY AND CAPITAL STRUCTURE ON FIRM VALUE (STUDY ON MANUFACTURING INDUSTRIES LISTED AT INDONESIA STOCK EXCHANGE FOR PERIODS 2008-2012). MEDIA MAHARDHIKA, 14 (1). pp. 79-97.

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Abstract

This study seeks to provide the influence on firm v alue with used profitability and capital structure as variable. The analysis was imp lented on all the 505 manufacturing industries listed at Indonesia Stock Excange for pe riod 2008-2012. The GeSCA method was carrying out this analysis. The result of the s tudy reveals that profitability and capital structure has a significant impact on firm value. The profitability ratio that most affects both profitability and firm value is Return on Assets (ROA), meanwhile the capital structure ratio that the most built influences capi tal structure and firm value is Debt Equity Ratio (DER). Eventhough the profitability an d capital structure has significant influence on firm value, and profitability had no r eciprocally influence on capital structure in simultaneously, which means both of it has no significant impact on each other. This empirical study shows that DR is ratio which has negative impact on profitability ratio. When discuss about relationshi p between capital structure and profitability, according to MM theory which state a perfect capital market is supposing exists, with investors who can lend and borrow at t he prevailing interest rate, two companies that generate the same cash flows should have the same market value. If, for example, an indebted company has a higher market va lue than a firm without debt, investors of the debt-free can gain by taking on de bt themselves to acquire the indebted company until replicating by means of home-made lev erage the financial structure of the first, and making a risk-free profit. Keywords: GeSCA, profitability, ROA, capital struct ure, firm value

Item Type: Article
Subjects: 600 - TECHNOLOGY > 657 - ACCOUNTING > 657.042 - FINANCIAL ACCOUNTING
Divisions: Lecturer
Depositing User: Perpustakaan STIE Perbanas Surabaya
Date Deposited: 05 Jul 2017 07:13
Last Modified: 11 Jul 2017 08:16
URI: http://eprints.perbanas.ac.id/id/eprint/1854

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