Determination of Company's Value: A Study with Investment Opportunity as a Moderator Variable

This research focuses on the state of a company's valuation, which is always changing. The utilized variables to estimate firm value include free cash flow and interest rates, both of which have a positive relationship with company's value. The second purpose is to investigate the current situation of investment opportunities in industrial companies that are similarly highly volatile. The availability of free cash flow indicates the interest rate has a positive relationship with the investment opportunity set. An explanatory research design is used in this study, which aims to examine the correlation between variables. The manufacturing companies that were listed on the Indonesia Stock Exchange between 2013 and 2018 are the focus of this study. Thus, data were collected from 612 units using a purposive sampling technique. The findings reveal that whereas free cash flow has a strong positive indirect effect on company value via mediating the investment opportunity set, interest rates have a negative and minor indirect effect on firm value via mediating the investment opportunity set.

Sustainability Performance Determinants With Investment Opportunity As Moderation

This study aims to determine the effect of public ownership and public ownership on sustainability performance with the Investment Opportunity Set (IOS) as a moderating variable. This type of research is quantitative associative using secondary data taken from the IDX website. The population in this study were manufacturing companies listed on the Indonesia Stock Exchange from 2015 to the end of 2019. The sample selection procedure in this study used the purposive sampling method; only 87 company data met the criteria. The results of this study Public Ownership have a significant effect on sustainability performance; there is an effect of public ownership on sustainability performance. The IOS can moderate the influence of Public Ownership on Sustainability performance.

INFLUENCE INVESTMENT OPPORTUNITY SET, OPERATING PROFIT MARGIN, CASH FLOW FROM OPERATING ACTIVITIES AND CASH FLOW TO EQUITY ON POLICY DIVIDEND ON A METAL COMPANY THAT LISTED ON INDONESIA STOCK EXCHANGE

The research objectives in this study are to find out and analyze the effect Investment Opportunity Set, To find out and analyze the effect Operating Profit Margin, To find out and analyze the effect of Cash flow from operating activities, to find out and analyze the effect Cash flow to Equity to the dividend payout ratio, to determine and analyze the effect of the Investment Opportunity Set, Operating Profit Margin, Cash Flow from Operating Activities and Cash Flow to Equity simultaneously on the Dividend Payout Ratio in metal companies listed on the Indonesia Stock Exchange for the 2016-2020 period. This study uses a quantitative approach, the regression analysis technique used in this study is a multiple linear regression analysis technique. The results of this study indicate that there is an influence between the Investment Opportunity Set on Dividend Policy. There is an effect of Operating Profit Margin on Dividend Policy. There is no influence of Cash Flow From Operating Activities on the Dividend Policy in. There is an effect of Cash Flow to Equity on Dividend Policy and the Fcount Value is 12, 130 with a significant level of 0.000, while Ftable is known to be 2.68. Based on these results, it can be seen that Fcount > Ftable (12,130 > 2,68) so that H0 is rejected and Ha is accepted so it can be concluded that the variables of Investment Opportunity Set, Operating Profit Margin, Cash Flow From Operating Activities, Cash Flow to Equity together have significant influence on the Dividend Policy of Metal Companies Listed on the Indonesia Stock Exchange for the 2016-2020 period.

Kesempatan Investasi, Kebijakan Dividen dengan Firm Size sebagai Variabel Moderasi

Dividend policy is one of the most important financial functions of a company. This is because the dividend policy has an influence on the company's stakeholders, both managers and investors. This study aims to determine the effect of investment opportunities on dividend policy with Firm Size as a moderating variable. This research was conducted on manufacturing companies on the Indonesia Stock Exchange for the 2015-2019 period. The population is 142 companies. Based on the purposive sampling method and the expenditure of outlier data, a sample of 34 companies was obtained. The data analysis technique used is Moderated Regression Analysis. The results of the analysis show that Firm Size does not weaken the effect of investment opportunities on dividend policy. The results of this study support the residual theory of dividend and agency theory. In addition, the results of this study can also be considered by companies in determining dividend policy and assisting investors in making investment decisions. Keywords : Investment Opportunity Set; Dividend Policy; Firm Size.

KEBIJAKAN PEMBAGIAN DIVIDEN KAS DI PERUSAHAAN SUB SEKTOR PERDAGANGAN ECERAN

ABSTRAKTujuan dari penelitian ini adalah untuk menganalisis pengaruh laba bersih, arus kas operasi, investment opportunity set, dan firm size terhadap dividen kas. Penelitian ini dilakukan pada perusahaan sub perdagangan eceran yang terdaftar di Bursa Efek Indonesia periode 2015–2019. Sampel terdiri dari lima perusahaan yang dipilih dengan menggunakan metode purposive sampling. Penelitian ini menggunakan uji regresi linear berganda untuk menguji hipotesis. Hasil pengujian menunjukkan bahwa laba bersih berpengaruh positif terhadap dividen kas, sedangkan arus kas operasi, investment opportunity set, dan firm size tidak berpengaruh. Hal ini dapat menjadi perhatian bagi perusahaan untuk terus meningkatkan kinerja perusahaan dalam menghasilkan laba bersih. Dengan laba yang tinggi, para investor akan lebih tertarik untuk menginvestasikan dananya. ABSTRACTThe purpose of this study is to analyze the effect of net income, operating cash flow, investment opportunity set, and firm size on cash dividends. This research was conducted on sub-retail trading companies listed on the Indonesia Stock Exchange for the 2015–2019 period. The sample consists of five companies, selected using the purposive sampling method. It uses multiple linear regression to test the hypotheses. Results show that net income affects positively cash dividends. While cash flow, investment opportunity set, and firm size does not affect cash dividends. This can be a concern for the company to continue to improve the company's performance in generating net income. With high profits, investors will be more interested in investing their funds.

FAKTOR YANG MEMPENGARUHI RETURN SAHAM DENGAN KEBIJAKAN DIVIDEN SEBAGAI MODERASI PADA PERUSAHAAN MANUFAKTUR

This research aims to see how the influence of firm size, leverage, and investment opportunity settings on stock returns with dividend policy as a moderating variable in manufacturing companies listed on the Indonesia Stock Exchange during 2017-2019. The sample was selected by purposive sampling method and the valid data were 52 companies. The data processing technique uses multiple regression analysis assisted by the EViews 10 and Microsoft Excel 2010 programs. The results of this study indicate that the influence and investment opportunities have a significant effect on stock returns, and dividend policy is able to moderate the effect of established investment opportunities on stock returns. The implication of this research is the need for investors to pay attention to the level of debt that the company uses in financing the company's operating activities, as well as the size of the set of investment opportunity set the company has which can affect the stock returns that investors will receive.Penelitian ini bertujuan untuk melihat bagaimana pengaruh pengaturan ukuran perusahaan, leverage, dan peluang investasi terhadap return saham dengan kebijakan dividen sebagai variabel moderasi pada perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia selama tahun 2017-2019. Sampel dipilih dengan metode purposive sampling dan data yang valid sebanyak 52 perusahaan. Teknik pengolahan data menggunakan analisis regresi berganda yang dibantu dengan program EViews 10 dan Microsoft Excel 2010. Hasil penelitian menunjukkan bahwa pengaruh dan peluang investasi berpengaruh signifikan terhadap return saham, dan kebijakan dividen ternyata mampu memoderasi pengaruh peluang investasi yang telah ditetapkan terhadap return saham. Implikasi dari penelitian ini adalah perlunya investor memperhatikan tingkat hutang yang digunakan perusahaan dalam membiayai kegiatan operasi perusahaan, serta besarnya set set kesempatan investasi yang dimiliki perusahaan yang dapat mempengaruhi return saham. yang akan diterima investor.

Momentum, Acceleration and Non-Linearities in Equity Valuation on the Shanghai Stock Exchange

<p>The standard empirical paradigm for assessing the relationship between the market value of a firm’s equity and the accounting information appearing in the firm’s financial statements, is based on the assumption that the firm is indefinitely constrained to operate within its existing investment opportunity set. Based on this assumption, the Ohlson (1995) model, which is developed by characterising a firm’s investment opportunity set in terms of a first order vector system of stochastic differential equations, shows that the market value of a firm’s equity will be a linear combination of its current abnormal earnings, the current value of an “information” variable and the current book value of its equity. However, the pre-existing empirical evidence shows that the Ohlson (1995) model does not provide a satisfactory description of the relationship between the market value of a firm’s equity and the information appearing in its published financial statements. Recent developments in equity valuation theory also show that the higher order derivatives of the accounting variables comprising a firm’s investment opportunity set - that is, the momentum and acceleration of the accounting information disclosed in a firm’s financial statements - can potentially make a significant contribution to the overall market value of equity. This in turn will mean that a firm’s investment opportunity set ought to be characterised in terms of a second or third order system of stochastic differential equations. Omitting the momentum and acceleration of the accounting variables from the equity valuation process could lead to the under-estimation of equity values. Moreover, recent empirical evidence also shows that the market value of a firm’s equity is potentially, a complex non-linear function of a firm’s accounting information appearing in financial statements. The non-linear effects arise out of the adaptation (real) options associated with a firm’s ability to modify or even abandon its existing investment opportunity set. However, empirical work on the relationship between the market value of equity and the accounting information appearing in financial statements continues to be based on linear models which do not take account of either the momentum and acceleration in a firm’s accounting variables or the non-linear effects associated with the real options available to the firm. Given this, it is all but inevitable that when these valuation effects are ignored, systematic biases will arise in empirical work dealing with the determinants of equity values. Moreover, empirical work in this area has been almost exclusively based on North American and European data. There is, in particular, a dearth of empirical work in developing countries like the People’s Republic of China. This dissertation refines the equity valuation models summarised in the literature by incorporating momentum, acceleration and non-linear equity valuation effects and then empirically tests them against data obtained from the Shanghai Stock Exchange (SSE). The empirical analysis summarised in this dissertation shows that neither earnings momentum nor earnings acceleration exhibit a significant impact on the market value of equity for the pooled sample data on which the empirical analysis is based. However, when the pooled sample data are divided into three equally numerous groups based on each firm’s operational efficiency, earnings momentum for firms with moderate operational efficiency exhibits a significant association with the market value of equity. This contrasts with the low-efficiency and high-efficiency sub-sample firms, where earnings momentum appears to have an imperceptible effect on equity prices. However, whilst it is shown that earnings momentum can have an impact on equity prices of moderate-efficiency firms, its effect is minimal in explanatory terms and adds very little to parsimonious regression models based on earnings and book value alone. Earnings acceleration does not appear to impact on equity values - neither for the pooled sample data nor for any of the three efficiency sub-samples. The empirical analysis summarised in this dissertation also shows that there is a strong non-linear relationship between the market value of equity and the accounting information appearing in published financial reports for firms listed on the SSE. In particular, for low-efficiency firms liquidation option value appears to make a significant contribution to the overall market value of equity. For high-efficiency firms growth option value appears to make a significant contribution to the overall market value of equity. For firms with moderate operational efficiency real option value is negligible and thus for these firms the relationship between the market value of equity and the accounting variables on which the empirical analysis is based is approximately linear.</p>

Momentum, Acceleration and Non-Linearities in Equity Valuation on the Shanghai Stock Exchange

<p>The standard empirical paradigm for assessing the relationship between the market value of a firm’s equity and the accounting information appearing in the firm’s financial statements, is based on the assumption that the firm is indefinitely constrained to operate within its existing investment opportunity set. Based on this assumption, the Ohlson (1995) model, which is developed by characterising a firm’s investment opportunity set in terms of a first order vector system of stochastic differential equations, shows that the market value of a firm’s equity will be a linear combination of its current abnormal earnings, the current value of an “information” variable and the current book value of its equity. However, the pre-existing empirical evidence shows that the Ohlson (1995) model does not provide a satisfactory description of the relationship between the market value of a firm’s equity and the information appearing in its published financial statements. Recent developments in equity valuation theory also show that the higher order derivatives of the accounting variables comprising a firm’s investment opportunity set - that is, the momentum and acceleration of the accounting information disclosed in a firm’s financial statements - can potentially make a significant contribution to the overall market value of equity. This in turn will mean that a firm’s investment opportunity set ought to be characterised in terms of a second or third order system of stochastic differential equations. Omitting the momentum and acceleration of the accounting variables from the equity valuation process could lead to the under-estimation of equity values. Moreover, recent empirical evidence also shows that the market value of a firm’s equity is potentially, a complex non-linear function of a firm’s accounting information appearing in financial statements. The non-linear effects arise out of the adaptation (real) options associated with a firm’s ability to modify or even abandon its existing investment opportunity set. However, empirical work on the relationship between the market value of equity and the accounting information appearing in financial statements continues to be based on linear models which do not take account of either the momentum and acceleration in a firm’s accounting variables or the non-linear effects associated with the real options available to the firm. Given this, it is all but inevitable that when these valuation effects are ignored, systematic biases will arise in empirical work dealing with the determinants of equity values. Moreover, empirical work in this area has been almost exclusively based on North American and European data. There is, in particular, a dearth of empirical work in developing countries like the People’s Republic of China. This dissertation refines the equity valuation models summarised in the literature by incorporating momentum, acceleration and non-linear equity valuation effects and then empirically tests them against data obtained from the Shanghai Stock Exchange (SSE). The empirical analysis summarised in this dissertation shows that neither earnings momentum nor earnings acceleration exhibit a significant impact on the market value of equity for the pooled sample data on which the empirical analysis is based. However, when the pooled sample data are divided into three equally numerous groups based on each firm’s operational efficiency, earnings momentum for firms with moderate operational efficiency exhibits a significant association with the market value of equity. This contrasts with the low-efficiency and high-efficiency sub-sample firms, where earnings momentum appears to have an imperceptible effect on equity prices. However, whilst it is shown that earnings momentum can have an impact on equity prices of moderate-efficiency firms, its effect is minimal in explanatory terms and adds very little to parsimonious regression models based on earnings and book value alone. Earnings acceleration does not appear to impact on equity values - neither for the pooled sample data nor for any of the three efficiency sub-samples. The empirical analysis summarised in this dissertation also shows that there is a strong non-linear relationship between the market value of equity and the accounting information appearing in published financial reports for firms listed on the SSE. In particular, for low-efficiency firms liquidation option value appears to make a significant contribution to the overall market value of equity. For high-efficiency firms growth option value appears to make a significant contribution to the overall market value of equity. For firms with moderate operational efficiency real option value is negligible and thus for these firms the relationship between the market value of equity and the accounting variables on which the empirical analysis is based is approximately linear.</p>