Impact of Capital Structure and Firm Growth on Corporate Value: Evidence from PT Vale Indonesia Tbk (2020-2024)

Abstract

Background: Previous research has widely examined the relationship between capital structure and
firm value, emphasizing how financial leverage impacts market perception and company performance.
However, empirical findings remain inconsistent, particularly in the mining industry, where external
factors such as commodity prices and global demand fluctuations can influence firm value. Therefore,
this study focuses on PT Vale Indonesia Tbk to address this research gap and provide a clearer
understanding of how capital structure and company growth affect firm value during the 2020-2024
period.

Purpose: This study aims to determine the effect of capital structure and company growth on firm
value at PT Vale Indonesia Tbk for the 2020-2024 period, thereby identifying whether internal financial
factors significantly influence the company's market valuation.

Methodology: The research employs a quantitative method with a descriptive-associative approach.
Secondary data were collected from PT Vale Indonesia Tbk's annual financial reports published on
the Indonesia Stock Exchange (IDX) website. Firm value was proxied by the Price to Book Value
(PBV), capital structure was measured by the Debt to Equity Ratio (DER), and company growth by the
sales growth ratio. Data analysis was conducted using SPSS version 27 through multiple linear
regression tests, including classical assumption tests, t- test, F-test, and the coefficient of
determination (R).

Finding: The results of this study show that the capital structure (DER) variable has a negative but
insignificant influence on firm value (PBV) at PT Vale Indonesia Tbk during the 2020–2024 period.
This means that changes in the company’s debt proportion did not significantly affect market
perception or share value. The company growth (GROWTH) variable also shows a positive but
insignificant effect, indicating that the increase in total assets or sales growth has not directly raised
the firm’s market value. When tested simultaneously, both capital structure and company growth do
not have a significant impact on firm value. This suggests that external factors such as global nickel
prices, demand trends, and macroeconomic conditions have a stronger role in shaping the company’s
valuation compared to internal financial factors.

Limitation: This study is limited to one mining company, PT Vale Indonesia Tbk, so the results cannot
be generalized to other sectors. The observation period of five years (2020–2024) may not fully
represent long-term financial dynamics, especially in an industry that depends heavily on global market
fluctuations. The analysis also focuses only on quantitative financial data, without including non-
financial variables such as management quality, market sentiment, or government policy, which could
also influence firm value. Future research is suggested to use a longer observation period, include
several companies for comparison, and add external factors to provide a more comprehensive
understanding of firm value determinants.

Originality: The originality of this study lies in its focus on PT Vale Indonesia Tbk, one of the major
mining companies in Indonesia, during a period of economic recovery and price volatility in the
global market. While many previous studies examined the manufacturing or financial sectors, this
research provides a closer view of how internal financial factors, especially capital structure and
growth, influence firm value in the mining industry. The study offers empirical evidence that is relevant
to the context of resource-based industries and emphasizes the importance of balancing financial decision-making with external economic conditions that shape company performance and investor
perception.