Managerial Ownership as a Moderator of Financial Performance and Capital Structure in Enhancing Firm Value

Muhammad Marshal Attarik; Diana Puspitasari; Amalia Nur Chasanah; Pradana  Jati Kusuma

doi:10.69725/jebi.v3i1.341

Authors

Muhammad Marshal Attarik Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia
Diana Puspitasari Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia
Amalia Nur Chasanah Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia
Pradana Jati Kusuma Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia

DOI:

https://doi.org/10.69725/jebi.v3i1.341

Keywords:

Financial performance, Capital structure, Firm value, Managerial ownership, Corporate governance

Abstract

Purpose—This study investigates the joint and conditional effects of financial performance and capital structure on firm value, while critically examining the moderating role of managerial ownership within an emerging market context.

Design/methodology/approach—Grounded in agency theory and signaling theory, this study employs a quantitative panel data approach to examine the interplay between profitability, leverage, and firm valuation. Financial performance is proxied by Return on Assets (ROA), capital structure by Debt to Equity Ratio (DER), and firm value by Price to Book Value (PBV). Advanced panel regression techniques are utilized to capture both direct and moderating effects.

Findings—The findings demonstrate that financial performance exerts a strong and statistically significant positive influence on firm value, underscoring its role as a credible signal of managerial efficiency and future growth prospects. In contrast, capital structure shows a negative yet statistically insignificant relationship, indicating that the market does not consistently price leverage. Notably, managerial ownership fails to moderate these relationships, suggesting that ownership alignment alone is insufficient to effectively resolve agency conflicts or enhance valuation outcomes.

Originality/value—This study challenges the conventional governance assumption that managerial ownership universally strengthens firm value. By revealing its limited moderating role, the study provides a refined perspective on the boundaries of agency alignment mechanisms. It highlights the contextual limitations of internal governance structures in shaping market perceptions.

Implications—The results emphasize the importance of strengthening fundamental performance indicators and credible signaling mechanisms rather than relying on ownership structures. Firms and policymakers should prioritize transparency, efficiency, and broader governance quality to sustain firm value and investor confidence.

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Author Biographies

Muhammad Marshal Attarik, Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia

Muhammad Marshal Attarik is a researcher in financial management and corporate governance at Universitas Dian Nuswantoro, Indonesia. His research focuses on firm value, capital structure, and governance mechanisms in emerging markets. He is particularly interested in empirical financial analysis and contributes to studies on corporate performance and market valuation.
Diana Puspitasari, Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia

Dr. Diana Puspitasari
Diana Puspitasari is a lecturer in corporate finance and governance at Universitas Dian Nuswantoro. Her research interests include financial performance, capital structure, and investment decision-making. She actively contributes to academic research related to corporate governance and sustainability in business practices.
Amalia Nur Chasanah, Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia

Amalia Nur Chasanah
Amalia Nur Chasanah is a lecturer and researcher specializing in financial management and empirical analysis. Her research focuses on corporate finance, financial performance, and applied quantitative methods. She contributes to academic studies involving financial modeling and firm-level analysis in emerging market contexts.
Pradana Jati Kusuma, Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Semarang 50131, Indonesia

Pradana Jati Kusuma
Pradana Jati Kusuma is a lecturer with expertise in quantitative finance and statistical analysis. His research interests include financial modeling, panel data analysis, and corporate finance. He supports empirical research through advanced statistical techniques and contributes to studies on firm performance and financial decision-making.

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