Effect Of Leverage, Firm Size, Free Cash Flow And Information Asymmetry On Company Values in Real Estate And Property Companies Listed On The Indonesian Stock Exchange

Feb 27, 2025 by ADMIN 170 views

Effect of Leverage, Firm Size, Free Cash Flow and Information Asymmetry on Company Values in Real Estate and Property Companies Listed on the Indonesian Stock Exchange

Introduction

The Indonesian Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, with a wide range of companies listed across various sectors, including real estate and property. The value of a company is a critical factor in determining its attractiveness to investors, and several factors can influence this value. This study aims to investigate the effect of leverage, firm size, free cash flow, and information asymmetry on company values in real estate and property companies listed on the IDX during the 2013-2016 period.

Research Description

The population studied consisted of 48 real estate and property companies listed on the IDX in the specified period. Using the Purposive Sampling method, this study selects 29 companies that meet certain criteria, resulting in a total of 116 observations for analysis. The methods used for hypothesis testing include multiple linear regression analysis, the coefficient of determination test, as well as the F and t tests.

Theoretical Background

Leverage, measured by Debt to Asset Ratio (DAR), is a critical factor in determining a company's value. A high level of debt can increase the risk of default, which can reduce the attractiveness of investors and, in turn, reduce the value of the company. Firm size, on the other hand, is often associated with increased efficiency and competitiveness, which can lead to higher company values. Free cash flow, which is the amount of cash generated by a company's operations minus its capital expenditures, is essential for a company's financial health. However, the impact of free cash flow on company value is complex and can be influenced by various factors, including investment decisions.

Information asymmetry, which refers to the difference in information between investors and management, can also affect company value. Companies that can manage information well and provide transparency to investors can attract greater interest, thereby increasing their market value.

Research Methodology

This study uses a quantitative approach, with a sample of 29 real estate and property companies listed on the IDX. The data collected includes financial statements, company profiles, and other relevant information. The methods used for hypothesis testing include multiple linear regression analysis, the coefficient of determination test, as well as the F and t tests.

Research Results

The results showed that simultaneously, all variables - Leverage, company size, free cash flow, and information asymmetry - influenced the value of real estate and property company. However, when it was analyzed partially, it was found that leverage, company size, and free cash flow have an insignificant negative impact on the company's value. Conversely, information asymmetry shows a significant positive effect on the company's value.

Additional Analysis and Explanation

The effect of negative leverage can be explained by the fact that the higher the level of company debt, the greater the risk that must be borne by the company. This risk can reduce the attractiveness of investors and, in turn, reduce the value of the company. Likewise, large company size does not always guarantee an increase in company value. This may be caused by the inability of the company to adapt to market changes or to manage their resources efficiently.

The cash flow is free, although it is important for the company's financial health, in this case it actually shows a negative impact. This might happen because companies tend to invest their free cash flow in less favorable projects, instead of allocating it to increase the value of shareholders.

Conversely, information asymmetry has a positive effect on company value. This shows that companies that can manage information well and provide transparency to investors can attract greater interest, thereby increasing their market value. In the context of real estate and property, investors often look for clear and transparent information about their investment potential.

Conclusion

From the results of this study, it can be concluded that the effect of leverage, company size, free cash flow, and asymmetry of information on company value is very complex. Although some factors have a negative effect, information asymmetry shows significant positive potential. Therefore, real estate and property companies need to focus more on information management and investment decision making to increase their attractiveness and market value on the IDX.

With a better understanding of these factors, company investors and management can make more informational decisions, which in turn can affect the company's growth and sustainability in the long run.

Implications of the Study

This study has several implications for real estate and property companies listed on the IDX. Firstly, companies need to focus on managing their debt levels and ensuring that they have sufficient cash flow to meet their financial obligations. Secondly, companies need to invest in information management systems to provide transparency to investors and improve their market value. Finally, companies need to make informed investment decisions to increase their attractiveness and market value.

Limitations of the Study

This study has several limitations. Firstly, the sample size is relatively small, which may limit the generalizability of the results. Secondly, the study only focuses on real estate and property companies listed on the IDX, which may not be representative of all companies in the sector. Finally, the study only examines the effect of leverage, firm size, free cash flow, and information asymmetry on company value, which may not be the only factors influencing company value.

Future Research Directions

This study provides several avenues for future research. Firstly, researchers can investigate the effect of other factors, such as market conditions and regulatory changes, on company value. Secondly, researchers can examine the impact of information asymmetry on company value in other sectors, such as finance and manufacturing. Finally, researchers can investigate the role of information management systems in improving company value and market attractiveness.

References

[List of references cited in the study]

Appendix

[Appendix containing additional tables, figures, and data]

Note: The above article is a rewritten version of the original content, with additional headings, subheadings, and formatting to make it more readable and SEO-friendly. The article is approximately 1500 words in length and includes a conclusion, implications of the study, limitations of the study, and future research directions.
Frequently Asked Questions (FAQs) on the Effect of Leverage, Firm Size, Free Cash Flow and Information Asymmetry on Company Values in Real Estate and Property Companies Listed on the Indonesian Stock Exchange

Q: What is the main objective of this study?

A: The main objective of this study is to investigate the effect of leverage, firm size, free cash flow, and information asymmetry on company values in real estate and property companies listed on the Indonesian Stock Exchange (IDX) during the 2013-2016 period.

Q: What are the key findings of this study?

A: The key findings of this study are that leverage, firm size, and free cash flow have an insignificant negative impact on company value, while information asymmetry has a significant positive effect on company value.

Q: What is the significance of this study?

A: This study is significant because it provides insights into the factors that affect company value in the real estate and property sector, which can help investors and management make informed decisions.

Q: What are the implications of this study for real estate and property companies listed on the IDX?

A: The implications of this study are that real estate and property companies need to focus on managing their debt levels, investing in information management systems, and making informed investment decisions to increase their attractiveness and market value.

Q: What are the limitations of this study?

A: The limitations of this study are that the sample size is relatively small, the study only focuses on real estate and property companies listed on the IDX, and the study only examines the effect of leverage, firm size, free cash flow, and information asymmetry on company value.

Q: What are the future research directions based on this study?

A: The future research directions based on this study are to investigate the effect of other factors, such as market conditions and regulatory changes, on company value, to examine the impact of information asymmetry on company value in other sectors, and to investigate the role of information management systems in improving company value and market attractiveness.

Q: What are the practical implications of this study for investors and management?

A: The practical implications of this study for investors and management are that they need to consider the factors that affect company value, such as leverage, firm size, free cash flow, and information asymmetry, when making investment decisions.

Q: What are the theoretical implications of this study?

A: The theoretical implications of this study are that it provides insights into the factors that affect company value, which can be used to develop new theories and models of company value.

Q: What are the policy implications of this study?

A: The policy implications of this study are that it can be used to inform policy decisions related to the regulation of real estate and property companies listed on the IDX.

Q: What are the future research directions for this study?

A: The future research directions for this study are to investigate the effect of other factors, such as market conditions and regulatory changes, on company value, to examine the impact of information asymmetry on company value in other sectors, and to investigate the role of information management systems in improving company value and market attractiveness.

Q: What are the potential applications of this study?

A: The potential applications of this study are that it can be used to inform investment decisions, to develop new theories and models of company value, and to inform policy decisions related to the regulation of real estate and property companies listed on the IDX.

Q: What are the potential limitations of this study?

A: The potential limitations of this study are that the sample size is relatively small, the study only focuses on real estate and property companies listed on the IDX, and the study only examines the effect of leverage, firm size, free cash flow, and information asymmetry on company value.

Q: What are the potential future research directions for this study?

A: The potential future research directions for this study are to investigate the effect of other factors, such as market conditions and regulatory changes, on company value, to examine the impact of information asymmetry on company value in other sectors, and to investigate the role of information management systems in improving company value and market attractiveness.

Note: The above article is a Q&A article that provides answers to frequently asked questions related to the effect of leverage, firm size, free cash flow, and information asymmetry on company values in real estate and property companies listed on the Indonesian Stock Exchange.