THE EFFECT OF CAPITAL MAINTENANCE ON FIRM VALUE: THE MEDIATING ROLE OF FINANCIAL PERFORMANCE AND THE MODERATING EFFECT OF OWNERSHIP CONCENTRATION
DOI:
https://doi.org/10.33102/ca1q2h52Keywords:
Capital Maintenance, Financial Performance, Firm Value, Ownership Concentration, Agency Theory, Signaling Theory, Stakeholder TheoryAbstract
This study examines the effect of capital maintenance on firm value, with financial performance as a mediating variable and ownership concentration as a moderating factor. In increasingly competitive financial markets, maintaining capital integrity is essential for ensuring long-term sustainability and preventing the overstatement of profits. Using a quantitative explanatory design, the study employs panel data from 100 non-financial listed firms over a five-year period (2019–2023), resulting in 500 firm-year observations. Data were collected from annual reports and financial databases and analyzed using descriptive statistics, correlation analysis, multiple regression, mediation and moderation analysis, and Structural Equation Modeling (SEM). The findings reveal that capital maintenance has a significant positive effect on firm value and financial performance. Financial performance is also found to have a strong and significant impact on firm value, confirming its role as a key transmission mechanism. Mediation analysis indicates that financial performance partially mediates the relationship between capital maintenance and firm value, highlighting both direct and indirect effects. Moreover, ownership concentration significantly moderates the relationship between financial performance and firm value, strengthening the effect under higher concentration levels. The study concludes that firm value creation is driven by the interaction between accounting discipline, financial performance, and governance structure. These findings contribute to Agency Theory, Signaling Theory, and Accounting Theory by providing integrated empirical evidence. The study offers practical implications for managers, investors, and policymakers regarding capital preservation, performance enhancement, and governance effectiveness in enhancing sustainable firm value.
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