Leverage, firm value and competitive strategy: evidence from Indonesia
by Bambang Hadinugroho; Tulus Haryono; Payamta; Irwan Trinugroho
International Journal of Economic Policy in Emerging Economies (IJEPEE), Vol. 11, No. 5, 2018

Abstract: We study the agency theory by re-examining the effect of financial leverage on firm value. Moreover, we introduce a contingency variable: firm competitive strategy. To do so, we study non-financial firms listed on the Indonesia Stock Exchange from 2007 through 2013, resulting in 2,438 observations. Using the panel data technique, after controlling for firm-specific characteristics and industry differences, we find that leverage has a positive effect on firm value. Going deeper, we find that this effect is stronger for firms that apply a cost leadership strategy, differentiation strategy, or focused strategy.

Online publication date: Sun, 23-Sep-2018

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