The Financial Performance and Firm Value of Companies Analysis of Indonesia Metal Industry Sector

International Journal of Research and Scientific Innovation (IJRSI) | Volume VIII, Issue VI, June 2021 | ISSN 2321–2705

The Financial Performance and Firm Value of Companies Analysis of Indonesia Metal Industry Sector

Leni Triana, Yuliah, Rani Puspa
Management Department, Bina Bangsa University, Indonesia.

Abstract: The purpose of this research is to determine the direct influence of capital structure, corporate social responsibility, and financial performance on business value, as well as if financial performance acts as a mediating element between capital structure and CSR. This study examines metal industrial sector manufacturing firms that are publicly traded on the Indonesian Stock Exchange through the use of secondary data, data collection, and documentation (IDX). The study sampled 14 businesses using purposive sampling, and the sample comprised 56 financial reports covering four years. Capital structure variables are determined using DER, CSR variables are determined using GRI-G4 principles, financial performance is determined using ROA, and firm value is determined using PBV. To test hypotheses, Path Analysis was employed. According to the findings, capital structure had a positive but minor effect on financial performance, CSR had a significant positive effect on financial performance, and capital structure had a large positive effect on business value. Financial performance has a significant negative effect on corporate value, but CSR has a tiny but favourable effect. Financial performance acts as a buffer between CSR and business value, rather than between capital structure and company value.

Keywords: Capital structure, CSR, financial performance, firm value

I.INTRODUCTION

Companies are required to always grow and adapt to competitors outside the company in a business environment. The development of a company that is initially led directly by the owner will face difficulties in running the company’s operations. So that the owner will entrust the manager or agent with the authority to make decisions taken by the previous owner. This is of course to provide a positive signal so that the company is able to continue to grow [1]. One of the benefits of shareholders is the company value. Shareholders will not hesitate to invest their shares in the company if their welfare is fulfilled. One thing that can affect the ups and downs of company value is financial performance. The company with the maximum profit will have the ability to return the investment rate quickly so that it shows good financial performance.

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