Funding Source Choice and Investment Decision on The Value Level of Islamic Firms
Riskin Hidayat, Sri Hermuningih, Adi Wijaya, Atikah Raid Khorunisa, and Renyarosari Bano Seran

Universitas Sarjanawiyata Tamansiswa

Abstract

This study examines the influence of funding choices proxied by liquidity and debt policy as well as investment decisions on firms that have high and low firm value. The sample in this study are firms included in the Jakarta Islamic Index on the Indonesia Stock Exchange with a total sample of 17 firms during the period 2014-2023 with a total of 170 observations. The results found that liquidity has a significant positive influence on firm value in the sample as a whole and in firms with low value, while liquidity has a positive and insignificant influence on firms with high value. This suggests that low-value firms tend to use liquidity or internal funding to increase their value. The results also show that debt policy has a positive and insignificant influence on firm value in the entire sample and debt policy has a negative and insignificant influence on low-value firms. However, debt policy has a significant positive influence on firms with low value. This means that high value firms tend to use debt to increase their value. In addition, this study also proves that investment decisions have a significant positive influence on firm value

Keywords: funding sources, liquidity, debt policy, investment decisions, firm value level

Topic: Economics