Research Paper | Economics | Indonesia | Volume 8 Issue 1, January 2019
The Effect of Interest Rate and Financial Leverage on Profitability and Firm Value in Manufacturing Companies in Indonesia Stock Exchange
Sitti Sakirah, Muhammad Ali, Cepi Pahlevi, Maat Pono
This study aims to examine and analyze the influence of interest rates and financial leverage on profitability and firm value. This study uses explanatory survey and research methods. The population in this study were all public companies as many as 531 companies until 2016. The target sample in this study were manufacturing companies listing successively from 2010-2016. The sampling technique was determined by purposive sampling technique and the criteria for sampling were 31 companies. The data used are secondary data sourced from manufacturing companies' financial statements during the period of 2010 - 2016. Data analysis was performed using structural equation modeling or Structural Equation Modeling (SEM), which in processing data using AMOS software. The results of the analysis show that the interest rate directly has a negative and significant effect on profitability, but financial leverage does not affect profitability. The interest rate has a positive and significant effect on firm value and financial leverage has a positive and significant effect on firm value. The results of the analysis also show that indirectly the interest rate has a significant effect on firm value through profitability. However, financial leverage does not affect on the firm value through profitability. The results of this study support capital structure theory from Modigliani and Miller, trade off theory and signaling theory.
Keywords: Interest Rate, Financial Leverage, Profitability, Firm Value
Edition: Volume 8 Issue 1, January 2019
Pages: 979 - 985
How to Cite this Article?
Sitti Sakirah, Muhammad Ali, Cepi Pahlevi, Maat Pono, "The Effect of Interest Rate and Financial Leverage on Profitability and Firm Value in Manufacturing Companies in Indonesia Stock Exchange", International Journal of Science and Research (IJSR), https://www.ijsr.net/search_index_results_paperid.php?id=ART20194265, Volume 8 Issue 1, January 2019, 979 - 985
227 PDF Views | 153 PDF Downloads
Similar Articles with Keyword 'Interest Rate'
Research Paper, Economics, India, Volume 4 Issue 4, April 2015
Pages: 2954 - 2959Relative Importance of Income, Interest and Price In The Determination of Demand for Money in India: A Time Series Analysis
Tarun Das
Research Paper, Economics, China, Volume 5 Issue 10, October 2016
Pages: 1582 - 1587Analysis of Interest Rate and Stock Price in Africa: Case Study of Ghanaian Listed Firms
Bridget Opoku-Agyemang, Grace Ofori-Abebrese, Benjamin Korankye
Research Paper, Economics, Nigeria, Volume 3 Issue 11, November 2014
Pages: 2571 - 2577Investigation of the Impact of Non-Oil Revenue on Economic Growth in Nigeria
Ude Damian Kalu, Agodi Joy E.
Research Paper, Economics, Indonesia, Volume 5 Issue 8, August 2016
Pages: 1090 - 1096Analysis the Influence of Internal Factor and External Factor on Yield Bonds Government in 2011-2014
Utami Yuliani, Bambang Juanda, Trias Andati
Research Paper, Economics, China, Volume 7 Issue 9, September 2018
Pages: 679 - 684Evolutionary Game Analysis of New Rural Financial Model under the Background of "Internet +"
Xueqi Zhang
Similar Articles with Keyword 'Profitability'
Research Paper, Economics, Nigeria, Volume 3 Issue 10, October 2014
Pages: 309 - 317Cassava Processing Technology Adoption and Poverty Reduction among Operators in Benue State, Nigeria
Joseph Fefa, Christopher O. Obute, Samuel Igbabee Ucherwuhe
Research Paper, Economics, Zimbabwe, Volume 5 Issue 1, January 2016
Pages: 1798 - 1805Positive Aspects of Conservation Agriculture
Washington Muzari
Research Paper, Economics, China, Volume 6 Issue 8, August 2017
Pages: 1774 - 1782Research of Financial Early Warning on Enterprises Listed on the New Third Board Based on KLR Model
Jianze Zhou
Research Paper, Economics, Indonesia, Volume 2 Issue 4, April 2013
Pages: 485 - 490Managerial and Institutional Ownership Analysis to National Private Banking Profitability at Indonesia Stock Exchange 2005-2009
Ikaputera Waspada
Research Paper, Economics, Ethiopia, Volume 5 Issue 5, May 2016
Pages: 2161 - 2167Evaluation of Consolidated Financial Performance Analysis of Dedebit Credit & Saving Institution (DECSI)
Teshale Berhane, Mohammedawel Yesuf, Kifle Negash
Similar Articles with Keyword 'Firm Value'
Research Paper, Economics, Indonesia, Volume 8 Issue 1, January 2019
Pages: 972 - 978Intellectual Capital Analysis and Hedging Decisions on Dividend Policies and Firm Value in Manufacturing Companies on the Indonesia Stock Exchange
Normiyati N, Cepi Pahlevi, Abdul Rakhman Laba, Mursalim Nohong
Research Paper, Economics, Indonesia, Volume 8 Issue 1, January 2019
Pages: 979 - 985The Effect of Interest Rate and Financial Leverage on Profitability and Firm Value in Manufacturing Companies in Indonesia Stock Exchange
Sitti Sakirah, Muhammad Ali, Cepi Pahlevi, Maat Pono