Email this article 
Leverage, Asymmetric Information, Firm Value, and Cash Holdings in Indonesia
Abstract
This research aimed to analyze the effect of leverage and asymmetry information on the firm value through cash holding as mediation variable. The populations of this research were all the firms which listed on the Indonesia Stock Exchange since 2012 – 2015. A sample of this research was a saturated sample and census, consisted of 56 firms related to the population criteria. This research used secondary data from the firm financial report through path analysis method. This research showed that leverage had a negative effect on the cash holdings, asymmetry information had a negative effect on the firm value through cash holding, and cash holding had a negative effect on the firm value. With leverage and effect on cash, holding cannot affect the firm value, due to investor risk-averse, investor risk seeker, and neutral investor has their own point of view in assessing the company. Cash holdings can lead to asymmetric information that can lead to agency conflict that can affect a company's performance, so that indirectly, with the existence of asymmetry information had an effect on the declining the firm value.
JEL Classifications: G32, G35
Keywords
Full Text:
PDFReferences
Ambarwati, S. D. A., & Hikmah, K. (2014). Hubungan struktur kepemilikan, tingkat utang, dividen, dan nilai perusahaan dalam mengurangi konflik keagenan di Indonesia. Jurnal Keuangan Dan Perbankan, 18(1), 29–39.
Clemons, R. (2014). Do external sources generate greater investor awareness that can affect a firm’s value and cost of capital? Review of Accounting and Finance, 9(4), 382–394.
https://doi.org/10.1108/09596110710757534.
Drobetz, W., & Grüninger, M. C. (2007). Corporate cash holdings: Evidence from Switzerland. Financial Markets and Portfolio Management, 21(3), 293–324. https://doi.org/10.1007/s11408-007-0052-8.
Gill, A., & Shah, C. (2011). Determinants of corporate cash holdings: evidence from Canada. International Journal of Economics and Finance, 4(1), 70–79. https://doi.org/10.5539/ijef.v4n1p70.
Isshaq, Z., Bokpin, G. A., & Mensah Onumah, J. (2009). Corporate governance, ownership structure, cash holdings, and firm value on the Ghana Stock Exchange. The Journal of Risk Finance, 10(5), 488–499. https://doi.org/10.1108/15265940911001394.
Jiang, C. X., Chua, R. Y. J., Kotabe, M., & Murray, J. Y. (2011). Effects of cultural ethnicity, firm size, and firm age on senior executives trust in their overseas business partners: Evidence from China. Journal of International Business Studies, 42(9), 1150–1173. https://doi.org/10.1057/jibs.2011.35.
Khan, A., Kaleem, A., & Nazir, M. (2012). Impact of financial leverage on agency cost of free cash flow: Evidence from the manufacturing sector of Pakistan. Journal of Basic and Applied Scientific, 2(7), 6694–6700.
Luo, Q., & Hachiya, T. (2014). Bank relations, cash holdings, and firm value: evidence from Japan. Management Research News, 28(4), 61–73. https://doi.org/10.1108/01409170510784805.
Meythi. (2013). Rasio keuangan terbaik untuk memprediksi nilai perusahaan. Jurnal Keuangan dan Perbankan, 17(2), 200–210.
Naseer, M., & Naseem, I. (2015). The relationship between working capital management and cash holdings of banks in Pakistan. IUP Journal of Bank Management, 14(2), 7.
Nyoman, D., & Werastuti, S. (2014). Model mediasi dalam hubungan antara intellectual capital disclosure, nilai perusahaan, dan financial performance. Jurnal Keuangan dan Perbankan, 18(1), 14–28.
Osazuwa, N. P., & Che-Ahmad, A. (2016). The moderating effect of profitability and leverage on the relationship between eco-efficiency and firm value in publicly traded Malaysian firms. Social Responsibility Journal, 12(2), 295–306. https://doi.org/10.1108/SRJ-03-2015-0034.
Rahmani, A., Rostami, V., Ghorbani, B., & Branch, T. (2015). The effect of the cash flow sensitivity to institutional ownership on the level of the companies ’ cash holding in Iran. European Online Journal of Natural and Social Sciences, 4(1), 1805–3602.
Selçuk, E. (2015). Corporate diversification and firm value: evidence from emerging markets. International Journal of Emerging Markets, 10(3), 294–310. https://doi.org/10.1108/IJoEM-12-2012-0180.
Shah, A. (2011). The Corporate Cash Holdings: Determinants and implications. African Journal of Business Management, 5(34), 12939–12950. https://doi.org/10.1177/1091142110381638.
Souissi, M., & Khlif, H. (2012). A meta-analytic review of disclosure level and cost of equity capital. International Journal of Accounting and Information Management, 20(1), 49–62. https://doi.org/10.1108/18347641211201072.
Wasiuzzaman, S. (2014). Analysis of corporate cash holdings of firms in Malaysia. Journal of Asia Business Studies, 8(2), 118–135. https://doi.org/10.1108/JABS-10-2012-0048.
Wijaya, A., Bandi, & Hartoko, S. (2010). Pengaruh kualitas akrual dan leverage terhadap cash holding perusahaan. Jurnal Akuntansi dan Keuangan Indonesia, 7(2), 170–186. https://doi.org/10.1017/CBO9781107415324.004.
Wijaya, H., & Wardani, P. (2017). Debt and agency conflict in Indonesian manufacturing firms. Jurnal Keuangan dan Perbankan, 21(40), 211–217.
Yendrawati, R., Agung, W., & Nugroho, S. (2012). Struktur kepemilikan, ukuran perusahaan dan praktek corporate governance terhadap manajemen laba. Jurusan Akuntansi Fakultas Ekonomi Universitas Islam Indonesia, 16(2), 188–195.
DOI: https://doi.org/10.26905/jkdp.v22i1.1334
Refbacks
- There are currently no refbacks.
Jurnal Keuangan dan Perbankan (Journal of Finance and Banking)
Diploma Program of Banking and Finance, Faculty of Economics and Business, University of Merdeka Malang
Published by University of Merdeka Malang
Mailing Address:
2nd floor Finance and Banking Building, Jl. Terusan Raya Dieng No. 57 Malang, East Java, Indonesia
Phone: +62 813-3180-1534
Email: jkp@unmer.ac.id
This work is licensed under a Creative
Commons Attribution-ShareAlike 4.0