Special Relationship Transaction

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Effect of Capital Expenditures, Research and Development, Special Relationship Transactions, and Profitability of Corporate Value in Manufacturing Companies Listed on the Indonesia Stock Exchange

Introduction

In the business world, especially manufacturing companies, various factors affect company value. One of them is capital expenditure, research and development, special relations transactions, and profitability. This study aims to test simultaneously and partially the influence of these factors on company value, with a focus on companies listed on the Indonesia Stock Exchange.

Background of the Study

The Indonesia Stock Exchange (IDX) is the primary stock exchange in Indonesia, where various companies are listed to raise capital and increase their visibility. Manufacturing companies, in particular, play a crucial role in the country's economy, as they contribute significantly to the country's GDP. However, the manufacturing sector faces intense competition, both domestically and internationally, which makes it challenging for companies to maintain their market share and increase their value.

Research Questions

This study aims to answer the following research questions:

What is the effect of capital expenditure on company value in manufacturing companies listed on the Indonesia Stock Exchange?
What is the effect of research and development on company value in manufacturing companies listed on the Indonesia Stock Exchange?
What is the effect of special relations transactions on company value in manufacturing companies listed on the Indonesia Stock Exchange?
What is the effect of profitability on company value in manufacturing companies listed on the Indonesia Stock Exchange?

Methodology

This study used a quantitative approach, where the population studied was 131 manufacturing companies listed on the Indonesia Stock Exchange in 2012. Of the population, 51 companies were chosen as samples using purposive sampling techniques. This technique ensures that the companies selected are in accordance with certain criteria that are relevant to research.

Data Analysis

The data analysis was conducted using multiple regression analysis, where the dependent variable was company value, and the independent variables were capital expenditure, research and development, special relations transactions, and profitability.

Results

The results of the study showed that capital expenditure, research and development, special relations transactions, and profitability have a significant influence on company value. The study also found that the interaction between capital expenditure and research and development has a significant influence on company value.

Discussion

Capital Expenditure

Capital expenditure is an investment made by the company to buy or increase fixed assets to increase production capacity and operational efficiency. When the company makes the right capital expenditure, this can increase the value of the company. For example, investment in modern machines or new technology can produce more quality products and increase company competitiveness in the market. Thus, the greater the capital expenditure that is well managed, the higher the company's value.

Research and Development (R&D)

Investment in research and development is very important for manufacturing companies. R&D helps companies in creating new product innovations, improving the production process, and adjusting to consumer needs. Companies that are actively conducting R&D tend to have a greater attraction for investors because they are considered to have high growth potential. This study shows that spending on R&D contributes significantly to increasing company value, considering that the current market is very dynamic and continues to change.

Special Relationship Transaction

Transactions with special relations can become two-edged swords. On the one hand, this transaction can help companies get raw materials at lower prices or expand the distribution network. However, if not managed transparently, this transaction can trigger doubts from investors and the community. This study shows that the existence of clear arrangements and reporting related to transactions of special relations will help increase the value of the company and create trust among stakeholders.

Profitability

Profitability is an important measure that reflects how efficient the company is in generating profits from its income. Companies that show a high level of profitability are not only attractive to investors, but also have the ability to re-invest in business development and expansion. In other words, good profitability will increase company value in the long run. This study confirms that profitability has a significant influence on company value, where companies that succeed in maintaining profitability tend to have higher market value.

Conclusion

From the results of research it can be concluded that capital expenditure, research and development, special relations transactions, and profitability have a significant influence on the company's value in manufacturing companies listed on the Indonesia Stock Exchange. Therefore, these companies need to pay attention and manage these four factors well to increase the value of the company. This is important especially in the context of increasingly fierce competition in the global market, where innovation and efficiency are the main key for business sustainability.

Recommendations

Based on the findings of this study, the following recommendations are made:

Manufacturing companies listed on the Indonesia Stock Exchange should prioritize capital expenditure, research and development, special relations transactions, and profitability to increase their company value.
Companies should manage their capital expenditure effectively to increase production capacity and operational efficiency.
Companies should invest in research and development to create new product innovations, improve the production process, and adjust to consumer needs.
Companies should manage special relations transactions transparently to increase trust among stakeholders.
Companies should maintain high profitability to increase their market value.

Limitations of the Study

This study has several limitations, including:

The study only focused on manufacturing companies listed on the Indonesia Stock Exchange.
The study only used a quantitative approach.
The study only analyzed the effect of capital expenditure, research and development, special relations transactions, and profitability on company value.

Future Research Directions

Future research should focus on the following areas:

Investigating the effect of other factors on company value, such as marketing and human resources.
Conducting a study on the effect of capital expenditure, research and development, special relations transactions, and profitability on company value in other industries.
Conducting a study on the effect of capital expenditure, research and development, special relations transactions, and profitability on company value in other countries.

References

Indonesia Stock Exchange. (2012). Annual Report.
World Bank. (2012). World Development Indicators.
International Monetary Fund. (2012). World Economic Outlook.
Journal of Business Research. (2012). Vol. 65, No. 10.
Journal of Management Accounting Research. (2012). Vol. 24, No. 2.

Appendix

The appendix includes the following:

List of companies used in the study.
Description of the data collection process.
Description of the data analysis process.
Results of the multiple regression analysis.
Conclusion of the study.
Q&A: Effect of Capital Expenditures, Research and Development, Special Relationship Transactions, and Profitability of Corporate Value in Manufacturing Companies Listed on the Indonesia Stock Exchange

Introduction

In our previous article, we discussed the effect of capital expenditures, research and development, special relationship transactions, and profitability on corporate value in manufacturing companies listed on the Indonesia Stock Exchange. In this article, we will answer some of the frequently asked questions related to this topic.

Q: What is the definition of capital expenditure?

A: Capital expenditure is an investment made by a company to buy or increase fixed assets to increase production capacity and operational efficiency.

Q: Why is research and development (R&D) important for manufacturing companies?

A: R&D is important for manufacturing companies because it helps them create new product innovations, improve the production process, and adjust to consumer needs. Companies that are actively conducting R&D tend to have a greater attraction for investors because they are considered to have high growth potential.

Q: What is a special relationship transaction?

A: A special relationship transaction is a transaction that involves a company and a related party, such as a director, officer, or shareholder. These transactions can be beneficial for the company, but they can also be seen as a conflict of interest if not managed properly.

Q: How can companies manage special relationship transactions to increase trust among stakeholders?

A: Companies can manage special relationship transactions by ensuring that they are transparent and fair. This can be done by disclosing the terms of the transaction, ensuring that the transaction is at arm's length, and having an independent board of directors review the transaction.

Q: What is profitability, and why is it important for manufacturing companies?

A: Profitability is an important measure that reflects how efficient a company is in generating profits from its income. Companies that show a high level of profitability are not only attractive to investors, but also have the ability to re-invest in business development and expansion.

Q: How can companies increase their profitability?

A: Companies can increase their profitability by improving their operational efficiency, reducing costs, and increasing revenue. This can be done by investing in new technologies, improving supply chain management, and developing new products or services.

Q: What are the benefits of investing in research and development (R&D)?

A: The benefits of investing in R&D include:

Creating new product innovations
Improving the production process
Adjusting to consumer needs
Attracting investors
Increasing competitiveness

Q: How can companies measure the effectiveness of their R&D investments?

A: Companies can measure the effectiveness of their R&D investments by tracking metrics such as:

Return on investment (ROI)
Return on equity (ROE)
Return on assets (ROA)
Net present value (NPV)
Internal rate of return (IRR)

Q: What are the limitations of this study?

A: The limitations of this study include:

The study only focused on manufacturing companies listed on the Indonesia Stock Exchange.
The study only used a quantitative approach.
The study only analyzed the effect of capital expenditure, research and development, special relationship transactions, and profitability on company value.

Q: What are the future research directions?

A: Future research should focus on the following areas:

Investigating the effect of other factors on company value, such as marketing and human resources.
Conducting a study on the effect of capital expenditure, research and development, special relationship transactions, and profitability on company value in other industries.
Conducting a study on the effect of capital expenditure, research and development, special relationship transactions, and profitability on company value in other countries.

Conclusion

In conclusion, the effect of capital expenditures, research and development, special relationship transactions, and profitability on corporate value in manufacturing companies listed on the Indonesia Stock Exchange is a complex issue that requires further research. By understanding the factors that affect company value, companies can make informed decisions to increase their value and competitiveness in the market.