The Effect of Firm size and Diversification on Capital Structure and FirmValue (Study in Manufacturing Sector in Indonesia Stock Exchange)

This study aims to examine and analyze whether firm size, diversification, and capital structure to the firm value. The design of this study was to raise the theory of Modigliani and Miller and fundamental theories in financial management that discuss some of the functional relationship fundamental variables that determine the capital structure and corporate value. The locations of this study are in the Stock Exchange Indonesia at Jalan Sudirman Jakarta and Makassar Capital Market Information Center. The data collection of this study conducted at the beginning of April to the end of July 2015. The study population was 150 companies listed on the Indonesia Stock Exchange until the end of 2014. Sampling is purposive sampling with criteria for manufacturing companies listed in Indonesia Stock Exchange during the period of observation that is in 2006-2014, have complete data, have been audited by the auditor's opinion unqualified, published financial statements, and have positive equity, so that the total sample of 17 companies. The method used in this research is the analysis of structural equation modeling. The results showed no effect of capital structure on Firm's value. Diversification and Firm Size effect on firm value. Diversification has effect on capital structure. Firm size has no effect on the structure. No mediation effect of capital structure on relationship between diversification and Firm value. But there is mediation effect of capital structure to influence firm size on firm value.