The Effect of Free Cash Flow and Financial Leverage on Financial Performance of Toll Road Infrastructure and Building Construction Companies Listed on the Indonesia Stock Exchange for Period 2014-2018

Finna Delphinia Santoso

Abstract: This study aims to examine and analyze the effect of free cash flow and financial leverage on the financial performance of toll road infrastructure and building construction companies listed on the Indonesia Stock Exchange for period 2014-2018 This research uses a quantitative approach with panel data regression. The research sample used purposive sampling and obtained 60 data. This study analyzes financial performance with a proxy of Tobin's Q. Free cash flow is considered as excess cash to fund all of company projects and must be paid to shareholders if the company wants to remain efficient for a longer period of time. Financial Leverage used to measured and find out how much the company is financed by debt. This study used 6 control variables, such as Agency Cost, Capital Structure, Industry, Corporate Social Responsibility, Age, and Size. The results of the study are free cash flow negatively effect the company's financial performance while financial leverage does not effect the company's financial performance.

Keywords: Free Cash Flow, Financial Leverage, Financial Performance, Tobin's Q, Infrastructure, Construction

How to Cite?: Finna Delphinia Santoso, "The Effect of Free Cash Flow and Financial Leverage on Financial Performance of Toll Road Infrastructure and Building Construction Companies Listed on the Indonesia Stock Exchange for Period 2014-2018", Volume 9 Issue 6, June 2020, International Journal of Science and Research (IJSR), Pages: 1109-1115, https://www.ijsr.net/getabstract.php?paperid=SR20616124700, DOI: https://dx.doi.org/10.21275/SR20616124700