Investment Opportunity Set Analysis as a Mediation of Influence of Capital Structure on Company Value with Economic Growth as a Moderating Variable

Abstract

This study aims to examine and analyze (1) the indirect effect of capital structure on firm value through the investment opportunity set mediation, (2) the direct effect of capital structure on firm value which is moderated by economic growth. This research was conducted at manufacturing companies listed on the Indonesia Stock Exchange (IDX) with data from 2015 to 2018. The data was collected using purposive sampling technique and the population was based on population criteria. The research sample companies are saturated or census samples and the number of research samples is 15 companies. The data analysis method is Path Analysis and Sobel Test which are used to test the investment opportunity set mediation variable. The results showed that the effect of capital structure on firm value was mediated significantly by IOS. Meanwhile, economic growth significantly moderates the effect of capital structure on firm value. Keywords—investment opportunity set, capital structure, firm value and economic growth