Corporate financial strategy in an emerging market: Evidence from Indonesia

This paper focuses on strategic corporate financial decisions related to capital structure to increased firm value, moderated by the COVID-19 pandemic under MM theory, trade-off theory, and pecking order theory. The analytical method used is panel data analysis, with observations of 1828 non-financi...

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Bibliographic Details
Published in:Journal of risk and financial management 2022-08, Vol.15 (8), p.1-12
Main Authors: Alghifari, Erik Syawal, Hermawan, Atang, Gunardi, Ardi, Rahayu, Agus, Wibowo, Lili Adi
Format: Article
Language:English
Subjects:
Capital structure
Coronaviruses
Corporate profits
COVID-19
Debt financing
Developing countries
Earnings per share
emerging market
Equity financing
financial strategy
firm value
Funding
Industrialized nations
LDCs
Logistics
Medical research
pandemic COVID-19
Pandemics
Stock prices
Taxes
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Summary:This paper focuses on strategic corporate financial decisions related to capital structure to increased firm value, moderated by the COVID-19 pandemic under MM theory, trade-off theory, and pecking order theory. The analytical method used is panel data analysis, with observations of 1828 non-financial companies on the Indonesia Stock Exchange from the years 2019 to 2021. The results show that there is an effect of capital structure on firm value in a positive direction, and the moderating role of the COVID-19 pandemic weakens the effect of capital structure on firm value. The findings show that capital structure only has a significant effect on firm value for the debt-dominant group, but not for the equity-dominant group. The moderating effect of the COVID-19 pandemic affects firm value for the debt-dominant group, but not for the equity-dominant group.
ISSN:1911-8074
1911-8066
1911-8074
DOI:10.3390/jrfm15080362