The Effect of Leverage and Financial Performance on Company Value with Institutional Ownership as a Moderating Variable in Property and Real Estate Companies Listed on the Indonesia Stock Exchange
Introduction
The property and real estate sectors are among the most dynamic and competitive industries in the world. Companies operating in these sectors must constantly adapt to changing market conditions, regulatory requirements, and investor expectations to maintain their value and competitiveness. One of the key factors that influence company value is leverage, which refers to the use of debt to finance business operations. Financial performance, on the other hand, is a critical indicator of a company's ability to generate profits and sustain its growth.
Institutional ownership, which refers to the ownership of a company by institutional investors such as pension funds, mutual funds, and insurance companies, has been shown to have a significant impact on company value in various studies. However, the role of institutional ownership as a moderating variable in the relationship between leverage and financial performance on company value is still not well understood, especially in the property and real estate sectors.
Research Methodology
This study aims to investigate the effect of leverage and financial performance on company value with institutional ownership as a moderating variable in property and real estate companies listed on the Indonesia Stock Exchange (IDX). The study used a purposive sampling method to select 25 companies from the property and real estate sectors for a three-year observation period from 2013 to 2015. The analysis techniques applied include descriptive statistical analysis, classical assumption tests, multiple linear regression analysis, and regression testing involving moderation variables.
Results and Findings
The results of this study showed that both leverage and financial performance had a significant influence on company value. Specifically, this influence looks both partially and simultaneously. That is, these two factors not only have a separate impact, but also make a significant contribution when considered together. This finding is consistent with previous studies that have shown the importance of leverage and financial performance in determining company value.
However, the results of this study also revealed that institutional ownership did not function as a moderation variable in the relationship between leverage and financial performance on company value. This shows that although institutional ownership can be important in other contexts, in this study, institutional ownership does not have a strong role in moderating the effect of leverage and financial performance on company value.
Analysis and Implications
The implications of this finding are very important for investors and company management. First, companies in the property and real estate sectors need to pay attention to the management of their leverage and financial performance to increase company value. The right leverage can maximize the potential for returning investment, while good financial performance can show the health and prospects of the company in the eyes of investors.
Second, the results that show that institutional ownership does not function as moderators indicate that companies need to evaluate the role of institutions in their ownership structure. This could mean that companies should not rely too much on the positive expectations of institutional ownership to strengthen their position in the market. Instead, focus must be given to effective performance improvement and debt management strategies.
Conclusion
In a competitive business world, understanding the factors that influence the company's value is crucial. This study provides valuable insight into the effect of leverage and financial performance on company value in the property and real estate sectors. By knowing that institutional ownership does not have the impact of moderation, companies can formulate more effective strategies to increase their value directly through better performance and financial structure.
It is hoped that the results of this study can be a reference for stakeholders and further researchers to explore more deeply related to the dynamics of company value in the increasingly developing industrial context.
Recommendations for Future Research
This study has several limitations that can be addressed in future research. First, the study only focused on property and real estate companies listed on the IDX, and future research can investigate the effect of leverage and financial performance on company value in other sectors. Second, the study only used a three-year observation period, and future research can use a longer observation period to capture more dynamic changes in company value.
Third, the study only used a single moderating variable, institutional ownership, and future research can investigate the effect of other moderating variables, such as corporate governance and board composition, on the relationship between leverage and financial performance on company value.
Limitations of the Study
This study has several limitations that can be addressed in future research. First, the study only used a purposive sampling method, which may not be representative of all property and real estate companies listed on the IDX. Second, the study only used a three-year observation period, which may not capture more dynamic changes in company value.
Third, the study only used a single moderating variable, institutional ownership, which may not capture the full range of moderating variables that can influence the relationship between leverage and financial performance on company value.
Conclusion
In conclusion, this study provides valuable insight into the effect of leverage and financial performance on company value in the property and real estate sectors. By knowing that institutional ownership does not have the impact of moderation, companies can formulate more effective strategies to increase their value directly through better performance and financial structure.
It is hoped that the results of this study can be a reference for stakeholders and further researchers to explore more deeply related to the dynamics of company value in the increasingly developing industrial context.
References
[List of references cited in the study]
Appendix
[Appendix containing additional tables and figures]
Glossary
Leverage : The use of debt to finance business operations.Financial performance : A critical indicator of a company's ability to generate profits and sustain its growth.Institutional ownership : The ownership of a company by institutional investors such as pension funds, mutual funds, and insurance companies.Moderating variable : A variable that can influence the relationship between two or more variables.
Keywords
Leverage
Financial performance
Institutional ownership
Moderating variable
Company value
Property and real estate sectors
Indonesia Stock Exchange (IDX)Q&A: The Effect of Leverage and Financial Performance on Company Value with Institutional Ownership as a Moderating Variable in Property and Real Estate Companies Listed on the Indonesia Stock Exchange
Q: What is the main objective of this study?
A: The main objective of this study is to investigate the effect of leverage and financial performance on company value with institutional ownership as a moderating variable in property and real estate companies listed on the Indonesia Stock Exchange (IDX).
Q: What are the key findings of this study?
A: The key findings of this study are that both leverage and financial performance have a significant influence on company value, and that institutional ownership does not function as a moderation variable in the relationship between leverage and financial performance on company value.
Q: What are the implications of this study for investors and company management?
A: The implications of this study are that companies in the property and real estate sectors need to pay attention to the management of their leverage and financial performance to increase company value. Additionally, companies should not rely too much on the positive expectations of institutional ownership to strengthen their position in the market, but instead focus on effective performance improvement and debt management strategies.
Q: What are the limitations of this study?
A: The limitations of this study are that it only used a purposive sampling method, which may not be representative of all property and real estate companies listed on the IDX, and that it only used a three-year observation period, which may not capture more dynamic changes in company value.
Q: What are the recommendations for future research?
A: The recommendations for future research are that future studies can investigate the effect of leverage and financial performance on company value in other sectors, use a longer observation period to capture more dynamic changes in company value, and investigate the effect of other moderating variables, such as corporate governance and board composition, on the relationship between leverage and financial performance on company value.
Q: What are the key takeaways from this study for company management?
A: The key takeaways from this study for company management are that they need to pay attention to the management of their leverage and financial performance to increase company value, and that they should not rely too much on the positive expectations of institutional ownership to strengthen their position in the market.
Q: What are the key takeaways from this study for investors?
A: The key takeaways from this study for investors are that they need to consider the leverage and financial performance of companies in the property and real estate sectors when making investment decisions, and that they should not rely too much on the positive expectations of institutional ownership to strengthen their investment position.
Q: What are the implications of this study for the Indonesia Stock Exchange (IDX)?
A: The implications of this study for the IDX are that it highlights the importance of monitoring and regulating the leverage and financial performance of companies listed on the exchange, and that it emphasizes the need for companies to disclose accurate and transparent information about their financial performance and leverage.
Q: What are the implications of this study for the property and real estate sectors?
A: The implications of this study for the property and real estate sectors are that it highlights the importance of managing leverage and financial performance to increase company value, and that it emphasizes the need for companies to focus on effective performance improvement and debt management strategies.
Q: What are the implications of this study for the Indonesian economy?
A: The implications of this study for the Indonesian economy are that it highlights the importance of monitoring and regulating the leverage and financial performance of companies listed on the IDX, and that it emphasizes the need for companies to disclose accurate and transparent information about their financial performance and leverage.
Q: What are the future research directions for this study?
A: The future research directions for this study are to investigate the effect of leverage and financial performance on company value in other sectors, use a longer observation period to capture more dynamic changes in company value, and investigate the effect of other moderating variables, such as corporate governance and board composition, on the relationship between leverage and financial performance on company value.
Q: What are the practical implications of this study for company management and investors?
A: The practical implications of this study for company management and investors are that they need to pay attention to the management of their leverage and financial performance to increase company value, and that they should not rely too much on the positive expectations of institutional ownership to strengthen their position in the market.
Q: What are the theoretical implications of this study?
A: The theoretical implications of this study are that it provides new insights into the relationship between leverage and financial performance on company value, and that it highlights the importance of institutional ownership as a moderating variable in this relationship.
Q: What are the policy implications of this study?
A: The policy implications of this study are that it highlights the importance of monitoring and regulating the leverage and financial performance of companies listed on the IDX, and that it emphasizes the need for companies to disclose accurate and transparent information about their financial performance and leverage.