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Cost of capital and firm value: Evidence from Indonesia
Augustina Kurniasih , Muhamad Rustam , Heliantono , Endri Endri doi: http://dx.doi.org/10.21511/imfi.19(4).2022.02Investment Management and Financial Innovations Volume 19, 2022 Issue #4 pp. 14-22
Views: 1063 Downloads: 658 TO CITE АНОТАЦІЯCost and capital structure are needed to evaluate the feasibility of the investments made by a company. This study aims to estimate and analyze the effect of the component of cost of capital (COC) and capital structure (CS) on firm value. Pulp & Paper companies listed on the Indonesia Stock Exchange (IDX) became the research sample for the 2013–2020 period. The research method applied is a moderation regression analysis approach. The empirical findings of the study prove that firm value is not influenced by the cost of debt (COD), while the cost of equity (COE) has a negative effect, and COC is positive. COC is a combination of the use of debt and equity, modeling by adding a CS variable as a moderating variable; this leads to the conclusion that COD and COE have a negative effect on firm value, whereas COC and CS have a positive effect. The finding of the role of CS as a moderating variable reveals that CS is a quasi-moderator variable and plays a role in increasing.