Effect of Company Size, Leverage, Dividend Policy, and Company Growth on Company Value: Empirical Study of Manufacturing Companies Listed on the IDX (2012-2016)
Introduction
In the business world, company value is a crucial aspect that determines the success of a company. It is often measured using various ratios, one of which is the Price to Book Value (PBV). This article explores the effect of company size, leverage, dividend policy, and company growth on company value, with a focus on manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2012-2016 period. The study aims to provide insights into the factors that affect company value and help stakeholders make better decisions in the management of companies and investment.
Research Methodology
This study uses a panel data approach with a regression model to analyze the relationship between company size, leverage, dividend policy, and company growth on company value. The Hausman test is carried out to determine the most appropriate model, and the results show that the fixed effect model is the best choice for analyzing existing data. This model takes into account the fixed differences between the entities under study, providing more accurate results in describing the relationship between independent and dependent variables.
Main Research Findings
Company Size The results show that the company's size has no significant effect on the company's value. This may be caused by the fact that in the manufacturing industry, the value of a company is not always directly proportional to the size of the company, such as the amount of assets or income. Large companies may not always be more valuable than smaller companies , and other factors such as management quality, product innovation, and macroeconomic conditions may play a more significant role in determining company value.
Leverage Conversely, leverage has been proven to have a significant positive influence on company value. This shows that companies that use debt wisely can increase their market value. Investors tend to see debt as a tool that can be used to expand operations and increase profitability , and companies that use debt effectively can reap the benefits of increased market value.
Dividend Policy Dividend Policy, as measured by the Dividend Payout Ratio (DPR), does not show a significant negative impact on the company's value. This might indicate that shareholders do not always make dividend payments a top priority in assessing company value. Market fluctuations can affect investors' focus on short-term stability rather than long-term growth potential , and dividend policies may not be a significant factor in determining company value.
Company Growth Company growth, as measured by the growth rate of sales and profits, does not show a significant effect on company value. This may be caused by the fact that company growth is not always a reliable indicator of company value, and other factors such as management quality, product innovation, and macroeconomic conditions may play a more significant role in determining company value.
Analysis and Implications
The results of this study provide important insights for company owners, financial managers, and investors. Although the company's size does not show a significant effect, good use of leverage can be an efficient strategy to increase company value. Company leaders must pay attention to their capital structure and consider the use of debt that is not only for expansion but also to maintain a balance between risk and return .
On the other hand, dividend policies and growth that do not significantly have a significant effect indicate that there may be other variables that further influence market assessment of the company, such as product innovation, management quality, or macroeconomic conditions. Further research involving these variables can provide a deeper understanding of the factors that affect company value .
With the discovery produced, it is expected that stakeholders can make better decisions in the management of companies and investment in the future, and help understand the dynamics of the market in the manufacturing sector in Indonesia.
Conclusion
In conclusion, this study provides insights into the factors that affect company value in the manufacturing sector in Indonesia. The results show that leverage has a significant positive influence on company value, while company size, dividend policy, and company growth do not show a significant effect. The study highlights the importance of good use of leverage and capital structure in increasing company value . Further research is needed to provide a deeper understanding of the factors that affect company value and help stakeholders make better decisions in the management of companies and investment.
Recommendations
Based on the findings of this study, the following recommendations are made:
Company leaders should pay attention to their capital structure and consider the use of debt that is not only for expansion but also to maintain a balance between risk and return .Further research involving variables such as product innovation, management quality, and macroeconomic conditions can provide a deeper understanding of the factors that affect company value .Investors should consider the use of leverage as a tool to increase company value, but also be aware of the risks associated with debt .Company owners and financial managers should prioritize good governance and management practices to increase company value .
By following these recommendations, stakeholders can make better decisions in the management of companies and investment, and help understand the dynamics of the market in the manufacturing sector in Indonesia.Frequently Asked Questions (FAQs) on the Effect of Company Size, Leverage, Dividend Policy, and Company Growth on Company Value
Q: What is the main objective of this study?
A: The main objective of this study is to explore the effect of company size, leverage, dividend policy, and company growth on company value, with a focus on manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2012-2016 period.
Q: What is the significance of this study?
A: This study provides insights into the factors that affect company value in the manufacturing sector in Indonesia. The results of this study can help stakeholders make better decisions in the management of companies and investment, and help understand the dynamics of the market in the manufacturing sector in Indonesia.
Q: What is the methodology used in this study?
A: This study uses a panel data approach with a regression model to analyze the relationship between company size, leverage, dividend policy, and company growth on company value. The Hausman test is carried out to determine the most appropriate model.
Q: What are the main findings of this study?
A: The main findings of this study are:
Company size has no significant effect on company value.
Leverage has a significant positive influence on company value.
Dividend policy does not show a significant negative impact on company value.
Company growth does not show a significant effect on company value.
Q: What are the implications of this study?
A: The implications of this study are:
Company leaders should pay attention to their capital structure and consider the use of debt that is not only for expansion but also to maintain a balance between risk and return.
Further research involving variables such as product innovation, management quality, and macroeconomic conditions can provide a deeper understanding of the factors that affect company value.
Investors should consider the use of leverage as a tool to increase company value, but also be aware of the risks associated with debt.
Company owners and financial managers should prioritize good governance and management practices to increase company value.
Q: What are the limitations of this study?
A: The limitations of this study are:
The study only focuses on manufacturing companies listed on the IDX during the 2012-2016 period.
The study only considers four variables: company size, leverage, dividend policy, and company growth.
The study does not consider other variables that may affect company value, such as product innovation, management quality, and macroeconomic conditions.
Q: What are the future research directions?
A: The future research directions are:
To investigate the effect of other variables, such as product innovation, management quality, and macroeconomic conditions, on company value.
To explore the relationship between company value and other financial metrics, such as return on equity (ROE) and return on assets (ROA).
To conduct a longitudinal study to examine the changes in company value over time.
Q: What are the practical implications of this study?
A: The practical implications of this study are:
Company leaders can use the findings of this study to make informed decisions about their capital structure and leverage.
Investors can use the findings of this study to make informed decisions about their investment portfolio.
Company owners and financial managers can use the findings of this study to prioritize good governance and management practices to increase company value.
Q: What are the contributions of this study?
A: The contributions of this study are:
This study provides insights into the factors that affect company value in the manufacturing sector in Indonesia.
This study contributes to the existing literature on company value and capital structure.
This study provides practical implications for company leaders, investors, and company owners and financial managers.