Free Cash Flow, Leverage, and Firm Value: The Moderating Role of Managerial Ownership

Authors

  • Ade Ermalini Faculty of Economics and Business, Udayana University
  • I Dewa Nyoman Badera Faculty of Economics and Business, Udayana University

DOI:

https://doi.org/10.38035/dijefa.v6i3.4795

Keywords:

firm value, free cash flow, leverage, managerial ownership

Abstract

The firm value represented by its share price often fluctuates. To select profitable investments, investors must be able to estimate firm value. The purpose of this study is to gather empirical evidence regarding the influence of free cash flow and leverage on firm value, and how managerial ownership moderates this influence. The study population includes all companies listed on the Indonesia Stock Exchange between 2021 and 2023, with a sample of 760 companies and 2,016 observations. Purposive sampling was used to choose the sample. This study uses moderated regression analysis with STATA application. The findings indicate that free cash flow has a positive effect on firm value, while leverage has no effect on firm value. On the other hand, managerial ownership does not play a role in moderating the effect of free cash flow and leverage on firm value.

References

Adinegara, G. R., & Herliansyah, Y. (2023). Pengaruh Penerapan GCG yang Dinilai Menggunakan Corporate Governance Index, Kepemilikan Institusional, dan Kepemilikan Manajerial terhadap Nilai Pasar Perusahaan. Owner: Riset & Jurnal Akuntansi, 7(3), 2052–2061. https://doi.org/10.33395/owner.v7i3.1452

Aisyah, D. N., Angeline, Y., & Rusmanto, T. (2023). Impact of Big Data, Profitability, and Free Cash Flow to Company Value. Journal of Namibian Studies, 34(2), 675–690.

Astuti, L., & Murwani, J. (2022). Pengaruh Struktur Modal, Profitabilitas, Ukuran Perusahaan terhadap Nilai Perusahaan dengan Kepemilikan Manajerial sebagai Pemoderasi pada Perusahaan Manufaktur yang Terdaftar di BEI 2018-2020. Seminar Inovasi Manajemen Bisnis Dan Akuntansi (SIMBA) 4, 1–16.

Bahrun, M. F., Tifah, T., & Firmansyah, A. (2020). Pengaruh Keputusan Pendanaan, Keputusan Investasi, Kebijakan Dividen, Dan Arus Kas Bebas Terhadap Nilai Perusahaan. Jurnal Ilmiah Akuntansi Kesatuan, 8(3), 263–276. https://doi.org/10.37641/jiakes.v8i3.358

Bakhtiar, H. A., Nurlaela, S., & Hendra, K. (2020). Kepemilikan Manajerial, Kepemilikan Institusional, Komisaris Independen, Komite Audit, dan Nilai Perusahaan. AFRE (Accounting and Financial Review), 3(2), 136–142. https://doi.org/10.26905/afr.v3i2.3927

Benson, B. W., Chen, Y., James, H. L., & Park, J. C. (2020). So Far Away From Me: Firm Location and The Managerial Ownership Effect on Firm Value. Journal of Corporate Finance, 64, 1–51. https://doi.org/10.1016/j.jcorpfin.2020.101658

Dewi, G. A. I. P., & Badera, I. D. N. (2021). Pengungkapan Corporate Social Responsibility, Mekanisme Good Corporate Governance, dan Nilai Perusahaan. E-Jurnal Akuntansi, 31(11), 2774–2787. https://doi.org/10.24843/EJA.2021.v31.i11.p08

Dewi, I. G. A. A. D., & Widhiyani, N. L. S. (2023). Penerapan Good Corporate Governance terhadap Kinerja Perusahaan. E-Jurnal Akuntansi, 33(1), 270–283. https://doi.org/10.24843/eja.2023.v33.i01.p20

Dewi, N. K. R. S., & Erawati, N. M. A. (2024). The Impact of Intellectual Capital, Capital Structure, and Free Cash Flow on Firm Value. E-Jurnal Akuntansi, 34(10), 2609–2620. https://doi.org/10.24843/EJA.2024.v34.i10.p11

Djuharni, D., Kuncahyo, A. A., Sonhaji, S., & Mauludin, H. (2024). The Effect of Debt Policy, Profitability and Managerial Ownership on Company Value. International Journal Administration, Business & Organization, 5(1), 21–38. https://doi.org/10.61242/ijabo.24.386

Doorasamy, M. (2021). Capital Structure, Firm Value and Managerial Ownership: Evidence from East African Countries. Investment Management and Financial Innovations, 18(1), 346–356. https://doi.org/10.21511/imfi.18(1).2021.28

Dwianto, A., Triyono, Witono, B., & Achyani, F. (2023). Apakah Akuntansi Lingkungan Berkontribusi terhadap Faktor Internal dan Nilai Perusahaan? Jurnal Akuntansi Multiparadigma, 14(3), 626–635. https://doi.org/10.21776/ub.jamal.2023.14.3.43

Ekaputra, A. E., Fuadah, L. L., & Yuliana, S. (2020). Intellectual Capital, Profitability, and Good Corporate Governance Effects on Company Value. Binus Business Review, 11(1), 25–30. https://doi.org/10.21512/bbr.v11i1.6005

Erawati, T., & Jedaru, F. A. N. (2023). Arus Kas Bebas dan Nilai Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia. Reslaj?: Religion Education Social Laa Roiba Journal, 5(2), 533–547. https://doi.org/10.47467/reslaj.v5i2.1663

Ermawati, P. T., & Triyono. (2024). Pengaruh Leverage, Profitabilitas, dan Ukuran Perusahaan terhadap Nilai Perusahaan dengan Kepemilikan Manajerial sebagai Variabel Moderasi. Economics and Digital Business Review, 5(2), 722–737.

Firmansyah, A., Setiawan, T. A., & Fathurahman, F. (2020). Nilai Perusahaan: Kebijakan Utang, Good Corporate Governance, Cash Holding. Jurnal Akuntansi Dan Bisnis, 20(2), 237–254. https://doi.org/10.20961/jab.v20i2.568

Ghozali, I. (2021). Aplikasi Analisis Multivariate dengan Program IBM SPSS 26 Edisi 10 (10th ed.). Badan Penerbit Universitas Diponegoro.

Govindarajan, V. (1986). Impact of Participation in the Budgetary Process on Managerial Attitudes and Performance: Universalistic and Contingency Perspectives. Decision Sciences, 17(4), 496–516. https://doi.org/10.1111/j.1540-5915.1986.tb00240.x

Habakkuk, B. N., Nduati, K. S., & Wang’ombe, K. P. (2023). Asset Structure, Leverage, and Value of Listed Firms: Evidence from Kenya. Investment Management and Financial Innovations, 20(1), 184–194. https://doi.org/10.21511/imfi.20(1).2023.16

Hapsoro, D., & Bahantwelu, M. I. (2020). Does Earning Management Mediate The Effect of Capital Structure on Company Value? Jurnal Ekonomi Dan Bisnis, 23(1), 53–68. https://doi.org/10.24914/jeb.v23i1.2531

Hermuningsih, S., Kusuma, H., Erawati, T., & Rahmawati, A. D. (2022). Fundamental Aspects of Leverage, Profitability and Financial Distress as Mediating Variables that Influence Firm Value. Jurnal Akuntansi Dan Auditing Indonesia, 26(2), 130–144. https://doi.org/10.20885/jaai.vol26.iss2.art3

Hidayat, W. W. (2022). The Effect of Leverage and Liquidity on The Value of The Firm with Age as a Moderating Variable on Companies in Indonesia. Jurnal Ekonomi Modernisasi, 18(2), 264–275. https://doi.org/10.21067/jem.v18i2.7236

Ifada, L. M., Fuad, K., & Kartikasari, L. (2021). Managerial Ownership and Firm Value: The Role of Corporate Social Responsibility. Jurnal Akuntansi Dan Auditing Indonesia, 25(2), 161–169. https://doi.org/10.20885/jaai.vol25.iss2.art6

Jensen, M. C., & Meckling, W. H. (1976). Theory of The Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics 3, 3(4), 305–360. https://doi.org/10.1057/9781137341280.0038

Kristi, N. M., & Yanto, H. (2020). The Effect of Financial and Non-Financial Factors on Firm Value. Accounting Analysis Journal, 9(2), 131–137. https://doi.org/10.15294/aaj.v8i2.37518

Kwak, S. G., & Kim, J. H. (2017). Central Limit Theorem: The Cornerstone of Modern Statistics. Korean Journal of Anesthesiology, 70(2), 144–156. https://doi.org/10.4097/kjae.2017.70.2.144

Loriyani, N. N., & Mimba, N. P. S. H. (2023). Corporate Social Responsibility, Leverage, Kepemilikan Asing, dan Nilai Perusahaan dengan Firm Size sebagai Pemoderasi. E-Jurnal Akuntansi, 33(10), 2627–2646. https://doi.org/10.24843/eja.2023.v33.i10.p07

Lubis, R. K., Darmadi, S., Pratiwi, T. A., Windara, P. F., Lutvian, S., & Firas, R. (2025). Managerial Ownership as a Corporate Governance Mechanism in Shaping Leverage Decisions?: Insights from Indonesia. Cogent Business & Management, 12(1), 1–22. https://doi.org/10.1080/23311975.2025.2473043

Malelak, M. I., Soehono, C., & Eunike, C. (2020). Corporate Governance, Family Ownership and Firm Value: Indonesia Evidence. SHS Web of Conferences, 76(01027), 1–7. https://doi.org/10.1051/shsconf/20207601027

Mayzona, R., & Rusmanto, T. (2025). The Influence of Independent Commissioners, Leverage, and Corporate Social Responsibility Disclosure Strategy on Firm Value. Corporate & Business Strategy Review, 6(1), 156–165. https://doi.org/10.22495/cbsrv6i1art15

Nurwanto, A. (2022). Pengaruh Leverage, Free Cash Flow, Profitabilitas dan Likuiditas terhadap Nilai Perusahaan dengan Kebijakan Dividen sebagai Variabel Intervening (Studi pada Sektor Manufaktur yang Terdaftar di BEI Tahun 2014-2018). Jurnal Manajemen Terapan Dan Keuangan (Mankeu), 11(2), 488–499. https://doi.org/10.22437/jmk.v11i2.17967

Pek, J., Wong, O., & Wong, A. C. M. (2018). How to Address Non-normality: A Taxonomy of Approaches, Reviewed, and Illustrated. Frontiers in Psychology, 9(2104), 1–17. https://doi.org/10.3389/fpsyg.2018.02104

Pradnyani, I. A. D. C., Astika, I. B. P., Dwirandra, A. A. N. B., & Budiartha, K. (2021). The Impact of Free Cash Flow and Leverage on Firm Value with Dividend Payout as Mediator Variable. Eurasia: Economics & Business, 4(46), 55–71. https://doi.org/10.18551/econeurasia.2021-04

Prieto, A. B. T., Lee, Y., & Falcones, W. A. (2024). The Moderating Role of Corporate Governance in the Relationship between Leverage and Firm Value: Evidence from the Korean Market. Risks, 12(11), 1–19. https://doi.org/10.3390/risks12010011

R.Win, D. E., & Hasibuan, H. T. (2024). The Effect of Financial Performance on Firm Value: Dividend Policy’s Moderating Role. E-Jurnal Akuntansi, 34(5), 1343–1356. https://doi.org/10.24843/eja.2024.v34.i05.p20

Radja, F. L., & Artini, L. G. S. (2020). The Effect of Firm Size, Profitability and Leverage on Firm Value (Study on Manufacturing Companies Sector Consumer Goods Industry Listed in Indonesian Stock Exchange Period 2017-2019). SSRG International Journal of Economics and Management Studies, 7(11), 18–24. https://doi.org/10.14445/23939125/IJEMS-V7I11P103

Rahmi, N. U., & Wijaya, V. V. (2022). Pengaruh Enterprise Risk Management, Corporate Social Responsibility, Free Cash Flow dan Leverage Terhadap Nilai Perusahaan pada Perusahaan Sektor Consumer Goods yang Terdaftar di Bursa Efek Indonesia Tahun 2016-2019. Owner: Riset & Jurnal Akuntansi, 6(3), 2712–2720. https://doi.org/10.33395/owner.v6i3.853

Rasid, M. I. N., & Hafizi, M. R. (2022). Pengaruh Laporan Keuangan terhadap Pengambilan Keputusan Berinvestasi di Galeri Investasi Syariah FEBI IAIN Palangka Raya. AT-TIJARAH: Jurnal Penelitian Keuangan Dan Perbankan Syariah, 4(1), 17–36. https://doi.org/10.52490/attijarah.v4i1.430

Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2022). Fundamentals of Corporate Finance (13th ed.). McGraw Hill.

Sari, N. K. S. C., & Wirawati, N. G. P. (2024). Pengaruh Inflasi, Suku Bunga, Likuiditas, dan Leverage terhadap Nilai Perusahaan. E-Jurnal Ekonomi Dan Bisnis Universitas Udayana, 13(6), 1151–1161. https://doi.org/https://doi.org/10.24843/EEB.2024.v13.i06.p08

Setiyowati, S. W., Naser, J. A., & Astuti, R. (2020). Leverage dan growth opportunity mempengaruhi nilai perusahaan melalui profitabilitas. Jurnal Ekonomi Modernisasi, 16(1), 31–40.

Sihombing, P., & Zakchona, E. (2024). Determinants of Profitability, Liquidity, Solvency, and Activity Ratios on The Stock Price with Dividend Payout as Moderating Variable. Jurnal Ekonomi Dan Bisnis, 27(2), 1–24.

Simanjuntak, K. Y., & Hasibuan, H. T. (2023). Pengaruh Kebijakan Dividen, Profitabilitas, dan Leverage terhadap Nilai Perusahaan Indeks LQ45 Tahun 2019-2021. E-Jurnal Ekonomi Dan Bisnis Universitas Udayana, 12(09), 1705–1717. https://doi.org/10.24843/eeb.2023.v12.i09.p03

Soewarno, N., & Ramadhan, A. H. A. (2020). The Effect of Ownership Structure and Intellectual Capital on Firm Value with Firm Performance as an Intervening Variable. International Journal of Innovation, Creativity and Change, 10(12), 215–236.

Spence, M. (1973). Job Market Signaling. Quarterly Journal of Economics, 87(3), 355–374.

Sugiharto, S. A., & Hendratno. (2022). Pengaruh Pertumbuhan Perusahaan, Free Cash Flow, dan Investment Opportunity Set atas Nilai Perusahaan. Jurnal Ilmiah Manajemen, Ekonomi, & Akuntansi (MEA), 6(3), 829–844. https://doi.org/10.31955/mea.v6i3.2430

Suratman, A., & Ismedt, B. D. Y. (2023). The Influence of Institutional Ownership, Managerial Ownership, Independent Commissioners, Profitability, Leverage, and Size on Company Value with Earnings Management as Intervening (Empirical Study on Banking Bumn Listed on the Indonesian Stock Exchange. Journal of Economics, Finance and Management Studies, 06(07), 3495–3500. https://doi.org/10.47191/jefms/v6-i7-56

Susbiyani, A., & Animah. (2024). Testing Mediation Disclosure of Green House Gas on The Relationship Between Corporate Governance and Firms’ Value. Jurnal Reviu Akuntansi Dan Keuangan, 14(03), 736–755. https://doi.org/10.22219/jrak.v14i3.34412

Suwarti, T., Sudiyatno, B., Nurhayati, I., & Irsad, M. (2023). The Role of Accounting Conservatism in Mediating between Ownership Structure and Firm Value: Evidence from Indonesia. Hong Kong Journal of Social Sciences, 60(44), 444–455. https://doi.org/10.55463/hkjss.issn.1021-3619.60.44

Tjahjani, F., Tanoto, S. S., & Kalbuana, N. (2024). Dividend Policy Moderates Growth Opportunity, Free Cash Flow, and Debt Policy on the Firm Value. International Journal of Economic Literature (INJOLE), 2(1), 158–166.

Utami, N. C. R., & Astika, I. B. P. (2024). Profitabilitas, Arus Kas Bebas, dan Nilai Perusahaan. E-Jurnal Akuntansi, 34(4), 1053–1064. https://doi.org/10.24843/EJA.2024.v34.i04.p18

Wahyuni, M. D., & Badera, I. D. N. (2020). Ukuran Perusahaan Memoderasi Pengaruh Profitabilitas, Free Cash Flow, dan Likuiditas pada Kebijakan Dividen. E-Jurnal Akuntansi, 30(4), 1034–1048. https://doi.org/10.24843/eja.2020.v30.i04.p19

Wibowo, R. Y. K., Asyik, N. F., & Bambang, S. (2021). Pengaruh Struktur Kepemilikan, Arus Kas Bebas, Ukuran Perusahaan terhadap Nilai Perusahaan melalui Struktur Modal. EKUITAS (Jurnal Ekonomi Dan Keuangan), 5(3), 321–345. https://doi.org/10.24034/j25485024.y2021.v5.i3.4799

Yulianti, R., Suriana, I., & Kusno, H. S. (2021). Analisis Pengaruh Free Cash Flow, Kebijakan Dividen, dan Kepemilikan Saham Manajerial terhadap Nilai Perusahaan (Studi Kasus pada Bank BUMN periode 2010-2019). Jurnal Bisnis & Kewirausahaan, 17(1), 44–51. https://doi.org/10.31940/jbk.v17i1.2470

Yusphita, D. M., & Ekawati, E. (2023). How Do Intellectual Capital Disclosures Mediate Financial Structure and Company Performance? Evidence From Indonesia and Singapore. Jurnal Ekonomi Bisnis Dan Kewirausahaan, 12(1), 1–18. https://doi.org/10.26418/jebik.v12i1.54767

Downloads

Published

2025-07-12

How to Cite

Ade Ermalini, & I Dewa Nyoman Badera. (2025). Free Cash Flow, Leverage, and Firm Value: The Moderating Role of Managerial Ownership. Dinasti International Journal of Economics, Finance & Accounting, 6(3), 2434–2445. https://doi.org/10.38035/dijefa.v6i3.4795

Issue

Vol. 6 No. 3 (2025): Dinasti International Journal of Economics, Finance & Accounting (July-August 2025)

Section

Articles

License

Copyright (c) 2025 Ade Ermalini, I Dewa Nyoman Badera

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Authors who publish their manuscripts in this journal agree to the following conditions:

  1. The copyright on each article belongs to the author(s).
  2. The author acknowledges that the Dinasti International Journal of Economics, Finance & Accounting (DIJEFA) has the right to be the first to publish with a Creative Commons Attribution 4.0 International license (Attribution 4.0 International (CC BY 4.0).
  3. Authors can submit articles separately, arrange for the non-exclusive distribution of manuscripts that have been published in this journal into other versions (e.g., sent to the author's institutional repository, publication into books, etc.), by acknowledging that the manuscript has been published for the first time in the Dinasti International Journal of Economics, Finance & Accounting (DIJEFA).