Title: Effect of capital structure toward firm value at different levels of managerial ownership

Authors: Leni Susanti; Yuyus Suryana Sudarma; Sulaeman Rahman Nidar; Asep Mulyana

Addresses: Doctoral Program in Management (DIM), Department of Management and Business, Faculty of Economics and Business, Padjadjaran University, Indonesia ' Doctoral Program in Management (DIM), Department of Management and Business, Faculty of Economics and Business, Padjadjaran University, Indonesia ' Doctoral Program in Management (DIM), Department of Management and Business, Faculty of Economics and Business, Padjadjaran University, Indonesia ' Doctoral Program in Management (DIM), Department of Management and Business, Faculty of Economics and Business, Padjadjaran University, Indonesia

Abstract: This study aimed to investigate whether the managerial ownership become moderator variable for the capital structure in affecting the firm value, and test the difference of influence in capital structure toward the firm value on the condition of low and high managerial ownership in manufacturing companies listed in IDX. Secondary data is collected from 90 public companies. This study uses data panel regression with GLS. Chow and Hausman test shows that the model used as a fixed effect estimation techniques. The results showed that a debt to equity ratio is significant positive effect toward firm value. Managerial ownership has significant negative effect toward firm value. Managerial ownership is a quasi moderating variable of capital structure and firm value, there is a positive interaction between capital structure and managerial ownership in influencing the firm value. The higher managerial ownership, then getting higher the effect of capital structure toward firm value.

Keywords: capital structure; debt to equity ratio; managerial ownership; firm value; Tobin's Q; manufacturing industry.

DOI: 10.1504/IJBG.2017.081978

International Journal of Business and Globalisation, 2017 Vol.18 No.2, pp.276 - 289

Received: 19 Nov 2015
Accepted: 23 Jun 2016

Published online: 11 Jan 2017 *

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