Panel data model estimation: The effect of managerial ownership, capital structure, and company size on corporate value

Abstract

Previous studies have been found that managerial ownership, capital structure, and firm size affect the firm's value. This research uses panel data regression method. By using the panel data of Property and Real Estate firms listed on the Indonesia Stock Exchange, there are 117 observations that combine cross-section data of 39 companies with time-series data during the period 2014 to 2016. From the model selection results, it was found that the fixed effect model is the best model compared with common effect model and random effect model. By applying the best model base, the researchers found an evidence to suggest that the managerial ownership significantly positively affects firm's value. The results also showed that firm size significantly positively affects firm's value. However, the empirical results do not show evidence that capital structure significantly affects the firm's value. The results of this study are consistent with the stated literature that managerial ownership and firm size are the determinants of firm's value. These factors must be considered by the owners of capital and managers in maximizing the value of the company.