Cost of capital and firm value: Evidence from Indonesia
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DOIhttp://dx.doi.org/10.21511/imfi.19(4).2022.02
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Article InfoVolume 19 2022, Issue #4, pp. 14-22
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Cost 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.
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JEL Classification (Paper profile tab)G30, G32, L64
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References51
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Tables2
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Figures0
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- Table 1. Descriptive statistics
- Table 2. Effect of COD, COE, COC on PBV of Pulp & Paper companies, moderated CS and controlled firm size (Fixed effect model)
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