The Effect of Capital Structure and Firm Size on Firm Value in Pharmaceutical Sub Sector Companies in Indonesia Stock Exchange

Deva, Sagung Dinny and Karmana, I Wayan and Sudiadnyani, I Gusti Agung Oka (2022) The Effect of Capital Structure and Firm Size on Firm Value in Pharmaceutical Sub Sector Companies in Indonesia Stock Exchange. Repositori Politeknik Negeri Bali.

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Abstract

The Covid-19 pandemic has triggered changes in the value of companies in the health sector, especially the pharmaceutical sub-sector in Indonesia. This change in the value of the company made returns in the pharmaceutical sub-sector increase significantly. At the same time increases the value of the company. The increase in stock is often associated with the success of the company. The higher the company stock price, the higher value of the company. This study aims to analyze the effect of capital structure on firm value in the pharmaceutical sub-sector on the Indonesia Stock Exchange (IDX) during the 2018-2021 period. The capital structure variables used in this study are long-term debt to equity, Debt to Equity Ratio (DER) and Debt to Asset Ratio (DAR). The sample in this study was 10 pharmaceutical sub-sector companies on the IDX during the 2018-2021 period, with 40 observation periods, namely 10 samples multiplied by four years which were explained using the purposive sampling method. Firm value using Price to Book Value (PBV) acts as a proxy for firm value. Asset value is used as a proxy for company size, as a control variable. Tests in this study used multiple linear regression tests with SPSS. The results of this study indicate that the capital structure has a significant effect on firm value. The size of the company has no significant effect on the value of the company in the pharmaceutical sub-sector on the IDX during the 2018-2021 period.

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