The-role-of-foreign-ownership-on-the-link-between-financial ...

library.uns.ac.id digilib.uns.ac.id

i

THE ROLE OF FOREIGN OWNERSHIP ON THE LINK

BETWEEN FINANCIAL LEVERAGE AND FIRM VALUE :

EVIDENCE IN INDONESIA STOCK EXCHANGE 2009-2015

POST GRADUATE THESIS

As a partial fulfillment to achieve a Master Degree

Study Program in Magister Management

Main interest:

Financial Management

Submitted by

Pristin Prima Sari

NIM: S411508015

MASTER OF MANAGEMENT PROGRAM

FACULTY OF ECONOMIC AND BUSINESS

UNIVERSITY OF SEBELAS MARET

SURAKARTA

2017


ii


iii


iv


v

MOTTO

Succsess is My Right (Andrie Wongso)

Tiada Sukses diraih tanpa Keterlibatan orang lain, Pandai membawa diri

disetiap Pergaulan adalah ilmu hidup yang mutlak dimiliki oleh orang yang

mau Sukses (Andrie Wongso)


vi

DEDICATION

to my beloved Parents

to my beloved Brother

to my beloved colleagues

to my beloved college


vii

ACKNOWLEDGMENT

All praise and honor be to my God, Allah SWT who always gives bless,

mercy, love, grace and joy to the writer. Then the writer can finish this research that

the tittle is “The Role Of Foreign Ownership On The Link Between Financial

Leverage And Firm Value”. Moreover, the writer would like to express special

gratitude to:

1. Prof Dr. Muhammad Furqon Hidayatullah, M.Pd, the Director of Graduate

School of Sebelas Maret University for giving permission to conduct this

research

2. Dr. Hunik Sri Runing, the Dean of Economics and Business Faculty of

Sebelas Maret University for giving permission to conduct this study.

3. Prof. Dr. Asri Laksmi Riani, SE.MS, the head of Magister Management

Program of Sebelas Maret University who has given her recommendation and

opportunity to write this thesis

4. Irwan Trinugroho, SE, M.Si. Ph. D, as Supervisor, for his invaluable insight,

guidance and assistance during the whole process of this thesis writing.

5. All of Staffs in Master of Management of Sebelas Maret University who have

helped the author during study.


viii

6. My colleagues at Magister Management Program batch 44, very thankful for

the solidarity and friendship during our study.

7. My parents who support and help me to finish this study.

8. All of people who helped and supported the author during study that can not

be mentioned one by one.

At last, I realized that this study is not perfect. Thus, I accepted the recomendation for

developing this study.

Surakarta, 20 March 2017

Pristin Prima Sari


ix

TABLE OF CONTENT

Page

TITLE ..................................................................................................................... i

APPROVAL ........................................................................................................... ii

LEGITIMATION FROM THE BOARD OF EXAMINERS ................................. iii

PRONOUNCEMENT ............................................................................................. iv

MOTTO .................................................................................................................. v

DEDICATION ........................................................................................................ vi

ACKNOWLEDGEMENT ...................................................................................... vii

TABLE OF CONTENT .......................................................................................... ix

LIST OF TABLES .................................................................................................. xii

LIST OF FIGURES ................................................................................................ xiii

ABSTRACT ............................................................................................................ xv

CHAPTER I INTRODUCTION

1.1 Research Background ....................................................................................... 1

1.2 Problem Statement ............................................................................................ 7

1.3 Research Objectives .......................................................................................... 7

1.4 The Benefit Of Research ................................................................................... 7

1.5 Originality Of Research .................................................................................... 7

CHAPTER II THEORITICAL REVIEWAND DEVELOPING HYPOTHESES

2.1 Theoritical Review ........................................................................................... 9

2.1.1 Financial Leverage ........................................................................................ 9

2.1.2 Signaling Theory .......................................................................................... 10

2.1.2 Pecking Order Theory .................................................................................. 10

2.1.2 Trade Off Theory ......................................................................................... 11

2.1.2 Agency Theory ............................................................................................. 11

2.1.2 Foreign Ownership ....................................................................................... 13


x

2.2 Developing Hypothesis .................................................................................. 14

2.2.1 Financial Leverage And Firm Value ............................................................ 14

2.2.2 The Role Of Foreign Ownership On The Link Between Financial Leverage

And Firm Value ............................................................................................ 17

2.3Research Framework ......................................................................................... 22

CHAPTER III RESEARCH METHODOLOGY

3.1 Research Design ................................................................................................ 24

3.2 Research Data ................................................................................................... 24

3.3 Measuring And Operational Definition of Variables ........................................ 24

3.3.1 Firm Value ................................................................................................ 24

3.3.2 Financial Leverage .................................................................................... 25

3.3.3 Foreign Ownership .................................................................................... 25

3.3.4 Firm Age ................................................................................................... 25

3.3.5 Sales Growth ............................................................................................. 26

3.4 Data Analysis Technique .................................................................................. 28

3.4.1 Classic Assumption Test ................................................................................ 28

3.4.1.1 Normality Test................................................................................ ............ 28

3.4.1.2 Heteroskedastisity Test ................................................................................ 28

3.4.1.3 Multicolonierity Test ................................................................................ 29

3.4.1.4 Autocorelation Test ................................................................................ .... 29

3.4.2 Moderated Regression Analysis Test ......... .................................................. 29

3.4.3 Hypothesis Test ................................................................................ ............. 31

3.4.3.1 F Test ................................................................................ ......................... 31

3.4.3.2 Adjusted R Square Test ....................................................... ...................... 31

3.4.3.3 T Test ................................................................................ ........................ 31

CHAPTER IV FINDINGS AND DISCUSSION

4.1 Data Analysis ................................................................................................... 32

4.2 Descriptive Statistics ......................................................................................... 37


xi

4.3 Classic Assumption Results .............................................................................. 39

4.3.1 Normality Test ........................................................................................ 39

4.3.2 Multicolonierity Test .............................................................................. 40

4.3.3 Autocorelation Test ................................................................................. 41

4.3.4 Heteroskedastisity Test ........................................................................... 41

4.4 Financial Leverage And Firm Value ................................................................. 42

4.5 Foreign Ownership And Firm Value ................................................................ 43

4.6 Foreign Ownership And Financial Leverage .................................................... 44

4.7 Financial Leverage, Financial Leverage And Firm Value ................................ 45

4.8 The Role Of Foreign Ownership On The Link Between Financial Leverage

And Firm Value ................................................................................................. 48

4.9 Criterion of Moderation Test ............................................................................. 51

4.10 The Results of Hypothesis Test ....................................................................... 51

4.11 Discussion ....................................................................................................... 53

4.11.1 Financial Leverage And Firm Value ...................................................... 53

4.11.2 The Role Of Foreign Ownership On The Link Between Financial

Leverage And Firm Value................................................................................. 54

4.11.3 Control Variables And Firm Value ....................................................... 55

CHAPTER V CONCLUSION, LIMITATIONS, RECOMMENDATIONS AND

IMPLICATIONS

5.1 Conclusion ........................................................................................................ 57

5.2 Limitations ....................................................................................................... 58

5.3 Recommendations ............................................................................................. 58

5.4 Implications ....................................................................................................... 58

REFERENCES

APPENDIX


xii

LIST OF TABLES

Page

Table 2.1 Previous Studies ................................................................................... 20

Table 3.1 Measuring Variables ............................................................................ 27

Table 3.2 Criterion of Moderation Test ............................................................... 30

Table 4.1 Statistive Descriptive ............................................................................. 38

Table 4.2 Multikolonierity Test ........................................................................... 40

Table 4.3 Autocorelation Test .............................................................................. 41

Table 4.4 Heteroskedastisity Test ........................................................................ 41

Table 4.5 Results Of Financial Leverage And Firm Value ................................. 42

Table 4.6 Results Of Foreign Ownership And Firm Value ................................. 43

Table 4.7 Results Of Foreign Ownership And Financial Leverage ..................... 44

Table 4.8 Results Of Financial Leverage, Foreign Ownerhsip And Firm Value. 45

Table 4.9 Results Of Moderation Regression Analysis(MRA) ........................... 48

Table 4.10 Hypothesis Test Results ...................................................................... 52


xiii

LIST OF FIGURES

Page

Figure 1.1 Buying Foreign ................................................................................... 4

Figure 1.2 Capitalization And Buying Foreign ................................................... 5

Figure 2.1 Hypotheses Framework ....................................................................... 22

Figure 4.1 The Moving Average Of Data ............................................................. 32

Figure 4.2 The Moving Average Of Tobin-Q ....................................................... 34

Figure 4.3 The Moving Average Of DER............................................................. 34

Figure 4.4 The Moving Average Of Tobin-Q And DER ...................................... 35

Figure 4.5 The Moving Average Of Foreign ....................................................... 36

Figure 4.6 The Moving Average Of Sales ............................................................ 36

Figure 4.7 The Moving Average Of Tobin-Q And Foreign ................................. 36

Figure 4.8 Normality Histogram ........................................................................... 39

Figure 4.9 Normality Plots .................................................................................... 40


xiv

THE ROLE OF FOREIGN OWNERSHIP ON THE LINK

BETWEEN FINANCIAL LEVERAGE AND FIRM VALUE :

EVIDENCE IN INDONESIA STOCK EXCHANGE 2009-2015

By:

Pristin Prima Sari

NIM S. 411508015

ABSTRACT

This study is to get empirical proof the influence of financial leverage on firm value

and to get empirical proof the role of foreign ownership on the link between financial

leverage and firm value of consumer, trade, service, and investment, and miscellaous

industry in IDX during 2009-2015. This study uses panel data regression with fixed

method effect. F test shows that high financial leverage, foreign ownership, sales

growth and firm age is positively related to firm value. Foreign ownership strengthen

the relation between financial leverage and firm value. T test shows that high

financial leverage is positively related to firm value. Foreign ownership strengthen

the relation between financial leverage and firm value. Sales growth create negative

effect on firm value. Firm age create positive effect on firm value. This study

expected that it can deliver information as references for stockholder, firm

management, and goverment in making decision in foreign investment and financial

leverage.

Keywords : Financial Leverage, Foreign Ownership, Firm Value

The-role-of-foreign-ownership-on-the-link-between-financial ...

Documents

Transcript of The-role-of-foreign-ownership-on-the-link-between-financial ...