THE ANALYSIS OF FIRM VALUE IN INDONESIA PROPERTY AND REAL ESTATE COMPANIES

Firm value is one of the factors that can affect investors and the public. Investors tend to invest their capital in companies that have good firm value because if firm value is good it will have a good impact on dividend distribution and shareholder welfare. While from the community point of view, the public will use a product or service of a company that has a brand image or a good image because with a brand image or a good image, the public will have the view that the company has good quality and performance. The purpose of this study is to examine the effect of profitability, capital structure, managerial ownership and institutional ownership on the firm value of property and real estate companies listed on the Indonesia Stock Exchange in 2014-2017. Sample of this study is purposive sampling method. The analytical method of the study is multiple regression analysis. The results showed that the regression model was able to explain well the effect of profitability, capital structure, and managerial ownership on the firm value. This is indicated by the value of Adj R-Square = 80.34%. Hypothesis test results inform that profitability, capital structure and managerial ownership affect the firm value. Introduction The Firm Value has an important meaning in the business, because the Firm Value is a brand image or a company image that can affect the good name of the company in public. If a company has a brand image or a good image, the public will be confident and believe in the company and investors will be interested in investing in the company. If a company has a brand image or a bad image, the public is not sure and will not trust the company and investors will not be interested in investing in the company. Firm value can be said to be a market value which is closely related to stock prices by giving investors an insight into the risks and prospects of the company in the future [1]. The Firm Value is very important because with high firm value, it will be followed by the high prosperity of shareholders. Thus it can be concluded that, a good firm value will have a good impact on investors and dividend distribution, this will attract investors to invest in a company. In this study, the discussion of the factors that influence the Firm Value is applied to the data of property and real estate companies in 2014-2017 period. Firm value is one of the factors that can affect investors and the public, investors tend to invest their capital in companies that have good firm value because if the Firm Value is good it will have a good impact on dividend distribution and shareholder welfare while from the community point of view, the public will use a product or service of a company that has a brand image or a good image because with a brand image or a good image, the public will have the view that the company has good quality and performance. Property and real estate companies are used in this study because of the development carried out by the Indonesian government regarding city and regional arrangements, more property and real estate companies have sprung up to fulfill these demands. Whereas for the study period, 2014-2017 was chosen because the economic development in Indonesia in that period experienced a decline according to the Central Statistics Agency. The period was interesting to be chosen as a period of research because with a declining economy does the Firm Value have a consistently stable value in the period research. Several studies that examine the factors that influence the firm value, among others, [2] conclude that firm value can be influenced by capital structure, company size and company risk. [3,4] concluded that firm value can be influenced by capital structure, investment decisions and dividend policies. [5,6] firm value can be influenced by managerial ownership and institutional ownership. [7,8,9]. Conclude that firm value can be influenced by capital [Oktarina* et al., 5(9): Sept, 2018] ISSN: 234-5197 Impact Factor: 3.765 INTERNATIONAL JOURNAL OF RESEARCH SCIENCE & MANAGEMENT http: // www.ijrsm. com © International Journal of Research Science & Management [86] structure, profitability, and company size. [10] Concluded that firm value can be influenced by company performance with dividend policy as moderation, financial performance used is liquidity, profitability, leverage. From the research above, the researchers made a review of the factors that influence the Firm Value by combining previous studies. Literature Review Signalling theory Signaling theory reveals how a company should give a signal to users of financial statements. The signal is in the form of information about what has been done by management to realize the ownership of the owner. The signal can also be in the form of information stating that the company is better than other companies. The signal is given by managers to reduce information asymmetry between management as company managers and parties with an interest in the information [11]. According to [11], there are two kinds of information asymmetry, namely: 1. Adverse selection, namely that managers and other insiders usually know more about the situation and prospects of the company than outside parties, and there may be facts that are not conveyed to the principal. 2. Moral hazard, namely that the activities carried out by a manager are not entirely known to investors (shareholders, creditors), so that managers can take actions beyond the knowledge of shareholders who violate the contract and actually ethically or normally may not be feasible. Signaling theory suggests how a company should give a signal to users of financial statements. The signal is in the form of information about what has been done by management to realize the wishes of the owner. The signal can also be in the form of information stating that the company is better than other companies. The signal is given by the manager to reduce information asymmetry between management as company manager and parties with an interest in the information. Stakeholder theory Stakeholder theory states that all stakeholders have the right to be provided with information about how organizational activities affect stakeholders even when stakeholders choose not to use the information and even when stakeholders cannot directly play a constructive role in survival [12]. The main objective of stakeholder theory is to help corporate managers understand the environment of stakeholders and manage more effectively among the existence of relationships within the company. A broader goal is to help corporate managers increase the value of the company from the impact of stakeholder activities and minimize losses to stakeholders. Agency theory Agency theory proposed by Jensen and Meckling in 1976 is a theory used to explain the relationship between the agent (who receives authority) and the principal (the party who gives authority) that is built so that the company's objectives can be achieved optimally [13]. The main principle of this theory states that there is a working relationship between the party that gives authority, namely the investor with the party who receives authority, namely the manager. This shows that the agency relationship is a contract whereby one or more people (principals) involve another person (agent) to do some services on their behalf which involves some decision-making authority to the agent. Based on agency theory, the manager as an agent must run the company in accordance with the mandate of the investor as the principal well so as to produce good performance that affects the value of the company. Firm Value The main purpose of the company is to maximize the value of the company. Companies that maximize the value of their company, can be said that companies also maximize the welfare of the company's shareholders. The value of the company is the investor's perception of the success rate of the company which is reflected in the company's stock price [14]. High stock prices make the value of the company also high and vice versa. This will have an impact on the level of market confidence in the company for prospects in the future. [Oktarina* et al., 5(9): Sept, 2018] ISSN: 234-5197 Impact Factor: 3.765 INTERNATIONAL JOURNAL OF RESEARCH SCIENCE & MANAGEMENT http: // www.ijrsm. com © International Journal of Research Science & Management [87] Profitability on Firm value Profitability becomes a measuring tool used by investors to determine whether a company is healthy or not, so that profitability is one of the attractions for investors to invest in a company. If profitability is high, the Firm Value is good, on the contrary if profitability is low, the Firm Value is low. Profitability is closely related to sales where if a company has high sales, indirectly high profitability, but this is inseparable from the existence of a brand image or company image where the company must have a brand image or a good image so that customers or consumers will be sure and believe in the quality of the company. Consumers tend to choose a product or service from a company with good quality and trusted. If a company has a brand image or a good image it can generate high sales and will have an impact on high profitability and followed by high Firm Value. In this study profitability is measured by using Return on Equity (ROE) in line with research conducted by [7] and [10] which uses Return On Equity (ROE) as a measuring tool to measure profitability. [7] stated that Return On Equity (ROE) had a significant positive effect on firm value, the statement was in line with the research of [10] which states the same thing that Return On Equity (ROE) has a significant positive effect on firm value. H1: There is an influence of ROE on Firm value Capital Structure on Firm value Companies can be said to have good firm value if they have less debt than equity. Equity can increase by increasing the share capital owned by the company by giving signals or