ANALYSIS OF THE EFFECT OF CAPITAL STRUCTURE, ACTIVITY, AND ESG ON FIRM VALUE IN MANUFACTURING SECTOR COMPANIES LISTED ON THE IDX FOR THE 2021-2024 PERIOD
Keywords:
Capital Structure, Activity, ESG, Firm Value, Manufacturing CompaniesAbstract
This study aims to analyze the effect of capital structure, activity, and ESG on firm value in manufacturing sector companies listed on the IDX during the 2021-2024 period. Capital structure is measured using the Debt to Equity Ratio (DER), activity is measured by Total Assets Turnover (TATO), ESG is measured using the Sustainalytics score, while firm value is measured by Price to Book Value (PBV). This study also incorporates profitability, measured by Return on Assets (ROA), and firm size as control variables. This research employs a quantitative approach with the unit of analysis consisting of manufacturing sector companies that meet the research criteria. The sample includes 44 companies with a total of 176 panel data observations obtained through purposive sampling. The data analysis technique used is panel data regression with the selected model being the Random Effect Model (REM). The results indicate that capital structure, as measured by DER, has a positive and significant effect on firm value. This finding suggests that the optimal use of debt can enhance firm value through tax shield benefits and by providing positive signals to investors. Conversely, activity, measured by TATO, shows a negative and insignificant effect on firm value, indicating that asset utilization efficiency has not been a primary consideration for investors in assessing manufacturing companies during the research period. Meanwhile, ESG demonstrates a positive but insignificant effect on firm value, suggesting that sustainability practices and good corporate governance have received a positive response from the market, although their impact on increasing firm value is not yet statistically strong. This study is expected to serve as a reference for companies, investors, and regulators in understanding the factors influencing firm value and to provide a foundation for future research.
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