The Role of Profitability in Mediating the Effect of Capital Structure and Liquidity on Firm Value in Food and Beverage Sub-Sector in Indonesian Stock Exchange

This study aims to analyze the significance of the capital structure and liquidity effect on the profitability value, to analyze the significance of the capital structure, liquidity and profitability effect on firm value, and to analyze the role of profitability in mediating the capital structure and liquidity effect on firm value. The population in this study is food and beverage companies in Indonesia Stock Exchange. The sample was conducted by purposive sampling method and then the number of samples is 12 companies. The research data is secondary data obtained from the website of the Indonesia Stock Exchange and the Indonesia Capital Market Directory from 2013 until 2016. Data analysis is by path analysis technique with IBM SPSS Statistic Version 22. The results of this study showed that: (1) the capital structure negative, not significant impact on profitability. (2) the liquidity had negative significant impact on profitability. (3) the capital structure had negative significant impact on firm value. (4) the liquidity had a negative not significant impact on firm value. (5) the profitability had a positive and significant impact on firm value. (6) profitability is able to mediate the effect of capital structure on firm value significantly. (7) profitability is able to mediate the effect of liquidity on firm value significantly.

FACTORS AFFECTING REAL EARNINGS MANAGEMENT

The purpose of this research is to identify the influence of earnings change, debt/equity ratio, liquidity effect, growth effect, size effect, asset sale level, return on asset, market to book ratio, and board size to real earnings management. The other purpose of this research was to compare with the results of the previous research. This research used non-financial companies listed in Indonesia Stock Exchange (IDX) during the research period 2014 until 2017. Samples were collected using purposive sampling method, where 93 companies fulfill the criteria. Multiple linear regressions and hypothesis testing are used as the data analysis method in this research. The results of this research show that four variables: earnings change, debt/equity ratio, return on asset and market to book ratio statistically have effect on real earnings management, while the other five variables: liquidity effect, growth effect, size effect, asset sale level and board size statistically do not have effect on real earnings management of listed non-financial firms in Indonesia.

MONETARY DISCRETION BY FISCAL MEANS: THE CASE OF BULGARIA

The specific design of the Bulgarian currency board arrangement (CBA), which provides an opportunity for the Bulgarian government to conduct discretionary monetary policy by changes in the fiscal reserve, was analyzed. The impact of government deposit fluctuations on the dynamics of reserve money and interbank interest rates was investigated. The hypotheses of an automatic adjustment mechanism and a liquidity effect under the Bulgarian currency board arrangement were tested. The methodology employed was a vector autoregression, which included the following variables: MB – monetary base; BP – the balance of payments; GD – government deposit on the balance sheet of the Issue Department of the Bulgarian National Bank; MRR – minimum required reserve ratio of commercial banks. The target variable was MB. Monthly data for the period of January 1998 - December 2018 were used. The study results did not provide evidence of a statistically significant impact of changes in government deposit on reserve money and interbank interest rates. The hypotheses for the existence of an automatic adjustment mechanism and a liquidity effect did not find an empirical confirmation.

Index Revisions, Stock Liquidity and the Cost of Equity Capital

This study examines the stock liquidity and cost of equity capital (COEC) effects around the CNX Nifty index revisions during the period 1998–2011. To examine these effects, the inclusion (exclusion) firms are compared with their matching peers. The stock liquidity effect has been examined by using distinct liquidity measures, such as trading volume, turnover rate and illiquidity ratio. The COEC effect has been examined with the help of cost of equity, stock liquidity, firm size, leverage and inclusion (exclusion) dummies. It was found that the stocks included to the CNX NIFTY were less liquid than their matching peers were, whereas the stocks excluded were experiencing more liquidity than their matching peers. Further, the study finds an increase in the COEC for the included firms and a decrease in the COEC for the excluded firms.