The Influence of Capital Structure on Firm Value with Financial Performance as a Mediating Variable in the Non-Financial Sector Listed on IDX80 for the 2022–2024 Period
Keywords:
capital structure, firm value, financial performance, mediation, IDX80, Modigliani-Miller, agency theory, signaling theory, Debt to Equity Ratio (DER), Return on Assets (ROA), Price to Book Value (PBV), Non-Financial SectorAbstract
This study is motivated by inconsistent empirical findings and a theoretical gap in the relationship between capital structure and firm value, as well as varying patterns among non-financial companies in the IDX80 during performance by integrating Modigliani-Miller theory with taxes, Agency Theory, and Signaling Theory. Using a quantitative causal approach with panel data from 38 purposively selected companies (114 observations), capital structure (DER), financial performance (ROA), and firm value (PBV) were analyzed using SEM-PLS (SmartPLS 4.0). The results show that capital structure has a positive and significant effect on firm value but a negative and significant effect on financial performance, while financial performance positively and significantly affects firm value and mediates the relationship with a negative indirect effect. These findings indicate that capital structure has a dual impact on firm value, implying that companies must balance debt usage to maintain profitability, as market valuation is sensitive to financial performance.
