The antecedents of financial performance and their implications for firm value in mining sector companies listed on the Indonesia Stock Exchange

Abstract

Indonesia is a nation characterized by its substantial endowment of natural resources. Based on the most recent data provided by the World Bank, Indonesia holds the fourth position in terms of global copper production, ranks fifth among the major nickel producers worldwide, stands at the eighth position in terms of global gold production, and is recognized as the largest coal producer globally. The allure of Indonesia's abundant natural resources serves as a magnet for potential investors. Furthermore, the valuation of mining industry stocks serves as a crucial metric for investors to allocate their capital and pursue potential profitability in forthcoming periods. The mining sector firms encompass a collection of enterprises that are publicly traded on the Indonesia Stock Exchange. These companies operate within several sub-sectors of mining, quarrying, and other related mining services. The swings observed in mining stock prices, characterized by both increases and losses, signify a dynamic and volatile market environment. The fluctuation in stock prices can be attributed to the interplay of supply and demand, which is influenced by a multitude of factors encompassing both macroeconomic and microeconomic considerations. The findings of this study indicate that the first model demonstrates a positive and statistically significant relationship between ownership structure, intellectual capital, and financial performance. Moreover, the moderation of intellectual capital in the context of the interaction between capital structure and financial performance demonstrates a noteworthy and unfavorable impact on financial performance. In contrast, it has been observed that both capital structure and exchange rates do not exert a substantial influence on financial performance. The findings of the second model indicate that various factors, such as capital structure, financial performance, ownership structure, and intellectual capital, have a statistically significant and positive impact on business value, with the exception of the exchange rate. In the present study, the findings pertaining to indirect influence through mediation reveal that the financial performance of firms plays a mediating role in the association between capital structure, ownership structure, exchange rates, and firm value. The findings of the analysis indicate that the proposed hypotheses can be accepted, with the exception of a few hypotheses that were rejected due to the lack of substantial effects observed in the results. The validation of many hypotheses within the initial framework provides empirical support for the theoretical propositions and conceptual frameworks posited by Jensen and Meckling (1976), Sveiby (2010), and Stewart and Ruckdeschel (1998). The acceptance of the hypothesis in the second model aligns with the viewpoints expressed by Brigham et al. (2015), Freeman (2015), and Jensen & Meckling (1976). The internal role of a firm plays a crucial function in attaining optimal financial performance and determining the value of a mining company.