THE INFLUENCE OF MANAGERIAL OWNERSHIP, TOTAL ASSET TURNOVER, AND TIME INTEREST EARNED ON MARKET CAPITALIZATION WITH ECONOMIC VALUE ADDED AS AN INTERVENING VARIABLE
Keywords:
Managerial Ownership, Total Asset Turnover, Time Interest Earned, Market Capitalization, Economic Value Added
Abstract
This research aims to analyze the influence of Managerial Ownership, Total Asset Turnover (TATO), and Time Interest Earned (TIE) on Market Capitalization, either directly or indirectly through Economic Value Added (EVA) as an intervening variable. The study focuses on coal distribution sub-industry companies listed on the Indonesia Stock Exchange during the 2018–2023 period. Using purposive sampling, 11 companies were selected, producing a total of 66 samples across six years. Data were analyzed using Structural Equation Modeling (SEM) with AMOS 26. The results showed that Managerial Ownership, TATO, and TIE have a significant negative influence on EVA. EVA also negatively and significantly affects Market Capitalization, indicating that higher EVA is not necessarily positively responded to by the market. Managerial Ownership has a direct significant positive effect on Market Capitalization, while TATO and TIE do not show significant direct effects. Indirectly, Managerial Ownership and TATO significantly influence Market Capitalization through EVA, whereas TIE does not. The coefficient of determination (R²) indicates that Managerial Ownership, TATO, and TIE simultaneously explain 59.8% of the variance in EVA and 45.9% of the variance in Market Capitalization. These findings emphasize EVA’s role as a mediator and reveal a potential gap between a company’s fundamental value and market perception. The study suggests a balanced financial strategy that promotes long-term economic value creation rather than short-term efficiency. It also encourages investors to consider EVA as a performance indicator alongside traditional profitability metrics.References
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Arthur, W., & Stewart, D. (2012). Economic value added (EVA): A comprehensive guide to the theory and practice of value-based management. McGraw-Hill.
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Bastian, A., & Kartini, R. (2021). Managerial ownership and its effect on market capitalization. Journal of Management and Business, 16(3), 45–58.
Brealey, R. A., Myers, S. C., & Allen, F. (2011). Principles of corporate finance. McGraw-Hill.
Brigham, E. F., & Houston, J. F. (2019). Fundamentals of financial management (15th ed.). Boston: Cengage Learning.
Brigham, E. F., & Ehrhardt, M. C. (2014). Financial management: Theory and practice (15th ed.). Cengage Learning.
Byrne, B. M. (2010). Structural equation modeling with AMOS: Basic concepts, applications, and programming (2nd ed.). Routledge.
Damodaran, A. (2012). Investment valuation: Tools and techniques for determining the value of any asset. John Wiley & Sons.
Dewi, M. L., Hartanto, S., & Pratama, R. (2022). The impact of time interest earned on market capitalization in the mining industry. Journal of Business Economics, 29(4), 123–136.
Dwi, P., & Azizah, M. (2019). The mismatch between financial performance and market capitalization in coal companies. Journal of Financial Studies, 19(1), 22–35.
Akbar, S., & Siddiqi, F. (2016). Market capitalization and performance of companies in the stock market. Journal of Business and Management, 8(2), 25–40.
Almilia, M., & Handayani, S. (2019). Analysis of the effect of managerial ownership on company performance in the coal distribution industry sector. Industrial Management Journal, 23(1), 99–108.
Amaliyah, R., & Herwiyanti, D. (2020). The role of EVA in increasing market capitalization in companies listed on the Indonesia Stock Exchange. Journal of Finance and Investment, 18(3), 201–213.
Anggraini, D. (2019). The effect of time interest earned and return on assets on firm value with EVA as an intervening variable (Undergraduate thesis, State Islamic University of Raden Intan Lampung).
Arbuckle, J. L. (1983). AMOS: Analysis of moment structures. Chicago: SPSS Inc.
Arif, A., & Fadilah, A. (2021). The effect of financial performance on market capitalization in the coal distribution industry. Journal of Economics and Business, 14(2), 123–137.
Arthur, J. B., Smith, L., & Hughes, R. (2012). Measuring economic value added (EVA) in corporate finance. Journal of Financial Analysis, 25(2), 75–88.
Arthur, W., & Stewart, D. (2012). Economic value added (EVA): A comprehensive guide to the theory and practice of value-based management. McGraw-Hill.
Damodaran, A. (2012). Applied corporate finance. John Wiley & Sons.
Bacon, P. (2012). Structural equation modeling with AMOS: Basic concepts, applications, and programming. Routledge.
Baltagi, B. H. (2013). Econometric analysis of panel data (5th ed.). Chichester: John Wiley & Sons.
Bastian, A., & Kartini, R. (2021). Managerial ownership and its effect on market capitalization. Journal of Management and Business, 16(3), 45–58.
Brealey, R. A., Myers, S. C., & Allen, F. (2011). Principles of corporate finance. McGraw-Hill.
Brigham, E. F., & Houston, J. F. (2019). Fundamentals of financial management (15th ed.). Boston: Cengage Learning.
Brigham, E. F., & Ehrhardt, M. C. (2014). Financial management: Theory and practice (15th ed.). Cengage Learning.
Byrne, B. M. (2010). Structural equation modeling with AMOS: Basic concepts, applications, and programming (2nd ed.). Routledge.
Damodaran, A. (2012). Investment valuation: Tools and techniques for determining the value of any asset. John Wiley & Sons.
Dewi, M. L., Hartanto, S., & Pratama, R. (2022). The impact of time interest earned on market capitalization in the mining industry. Journal of Business Economics, 29(4), 123–136.
Dwi, P., & Azizah, M. (2019). The mismatch between financial performance and market capitalization in coal companies. Journal of Financial Studies, 19(1), 22–35.
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