The role of EVA in determining company’s value through the ownership structure and internal factors

Abstract

Purpose: This study aims to determine the influence of liquidity, leverage, asset-size on company’s value through the ownership structure of manufacturing companies in Indonesia. Design/Methodology/Approach: The study uses an explanatory design using secondary data in the form of financial statement data obtained from manufacturing companirs in the Indonesia Stock Exchange for seven years, the period 2010 - 2016 which was published in Indonesian Capital Market Directory. Samples were taken by purposive sampling, 46 companies for seven years using the path analysis method. Findings: The results showed that leverage did not influence the ownership structure, while the asset size had a positive influence on the ownership structure. Liquidity does not influence the value of the company, asset size has a positive and significant influence on company value while leverage a significant negative influence, on company value. Practical/Implication: Various ways can be taken to increase the value of the company, among others, by maintaining and paying attention to the liquidity variables. Asset size can be increased while the company's leverage can be pressed. For future research external factors need to be considered for inclusion in the model, in order to produce a better model. The existence of several findings that are not in accordance with previous researches may be due to the characteristics, behavior and culture of capital market actors in Indonesia that are different from the characteristics and culture of the capital market actors in developed countries. Originality/Value: The study implies a recommendation for manufacturing companies to considered to include behavioral and cultural aspects in the model in a way to perform better.