Investment Opportunity Set, Free Cash Flow, and Capital Structure as Determinants of Technology Firm Value
Keywords:
Capital Structure, Firm Value, Free Cash Flow, Investment Opportunity Set, Technology SectorAbstract
The significant decline in Indonesia’s technology sector during 2022–2024 reflects a tech winter phenomenon that reduces investor confidence in management effectiveness in creating firm value. This study aimed to examine the effect of Investment Opportunity Set (IOS), Free Cash Flow (FCF), and Capital Structure on firm value in technology sector companies listed on the Indonesia Stock Exchange. This study employed a quantitative approach using secondary data with 80 observations from 28 companies selected through purposive sampling. Data analysis was conducted using panel data regression with the Fixed Effect Model (FEM) through EViews 12. The findings reveal that IOS has a positive and significant effect on firm value. In contrast, FCF has a negative and significant effect, while Capital Structure proxied by the Debt-to-Equity Ratio (DER) has no significant effect on firm value. These findings indicate that investment opportunities remain an important determinant of firm value, whereas high free cash flow is not necessarily perceived positively by investors when it is not utilized to support future growth opportunities.
References
[1] W. Tarczynski, M. Tarczynska-Luniewska, and S. Majewski, “The value of the
company and its fundamental strength,” Procedia Comput. Sci., vol. 176, pp.
2685–2694, Jan. 2020, doi: 10.1016/J.PROCS.2020.09.331.
[2] W. S. Yuliandhari and R. N. Nurramadhani, “Determinants Of Company Value In
Energy Sector Companies,” J. Akunt., vol. 28, no. 2, pp. 225–243, May 2024, doi:
10.24912/JA.V28I2.1681.
[3] D. Anura, Y. Fahruna, A. Azazi, H. Malini, and A. Syahputri, “Technology firm
value: The role of intellectual capital, enterprise risk management, and
sustainability reporting,” J. Manag. Sci., vol. 8, no. 1, pp. 189–198, 2025,
Accessed: Nov. 25, 2025. [Online]. Available:
https://exsys.iocspublisher.org/index.php/JMAS/article/view/590
[4] B. Sudiyatno, S. Sudarsi, E. H. Witjaksono, and I. R. Fitriati, “Does capital
structure moderate the impact of the investment opportunity set and institutional
ownership on firm value?,” Invest. Manag. Financ. Innov., vol. 20, no. 2, pp.
79–88, Apr. 2023, doi: 10.21511/imfi.20(2).2023.07.
[5] M. Mahirun, A. P. Ayuningrum, A. Kushermanto, T. R. Prasetiani, A. Jannati, and
K. Ardiyani, “GENERAL MANAGEMENT The Effect Of Capital Structure On
Firm Value Of Lq45 Index Listed In Indonesia Stock Exchange,” Qual. Access to
Success, vol. 25, no. 202, pp. 310–319, Sep. 2024, doi: 10.47750/QAS/25.202.33.
[6] K. D. S. Rini and N. P. S. H. Mimba, “Pengaruh Pengungkapan Corporate Social
Responsibility, Investment Opportunity Set dan Struktur Modal pada Nilai
Perusahaan,” E-Jurnal Akunt., vol. 28, no. 3, pp. 2019–2034, Sep. 2019, doi:
10.24843/EJA.2019.V28.I03.P24.
[7] A. R. Alamsyah, B. Subroto, S. Aisjah, and A. Djazuli, “The Effect of Ownership
Structure, Capital Structure, and Investment Opportunity Set on Firm Values
Mediated by a Dividend Policy,” Int. J. Innov. Creat. Chang., vol. 12, no. 6, pp.
459–483, 2020, Accessed: Nov. 16, 2025. [Online]. Available: www.ijicc.net
[8] F. Angelica and F. J. Tjhai, “The Investment Opportunity Set, Rasio Keuangan,
Kepemilikan Saham, Ukuran Dan Nilai Perusahaan,” E-Jurnal Akunt. TSM, vol. 3,
no. 1, pp. 131–142, Mar. 2023, doi: 10.34208/EJATSM.V3I1.1918.
[9] W. Wijayanto, M. Mustaruddin, and N. Afifah, “Determinants of Firm Value:
Perspectives of Free Cash Flow, Investment Opportunities, Managerial Ownership,
and Opportunistic Behavior,” AJARCDE (Asian J. Appl. Res. Community Dev.
Empower., vol. 8, no. 2, pp. 53–58, May 2024, doi:
10.29165/AJARCDE.V8I2.389.
[10] I. G. N. P. A. Suartawan and G. W. Yasa, “Pengaruh Investment Opportunity Set
dan Free Cash Flow Pada Kebijakan Dividen dan Nilai Perusahaan,” J. Ilm. Akunt.
dan Bisnis, vol. 11, no. 2, pp. 63–74, Mar. 2017, doi:
10.24843/JIAB.2016.V11.I02.P01.
[11] D. Marlina and H. B. Yanti, “Pengaruh Struktur Modal, Profitabilitas, Free Cash
Flow, dan Ukuran Perusahaan terhadap Nilai Perusahaan,” Al-Kharaj J. Ekon.
Keuang. Bisnis Syariah, vol. 7, no. 1, pp. 916-928–916 – 928, Jan. 2025, doi:
10.47467/ALKHARAJ.V7I1.5809.
[12] T. A. Zahra, N. Suryadi, M. M. Deli, and N. K. R. Utariani, “The Impact of
Corporate Social Responsibility, Investment Opportunity Set, and Capital
Structure on Firm Value: The Role of Good Corporate Governance as a
Moderating Variable,” INVEST J. Inov. Bisnis dan Akunt., vol. 5, no. 2, pp.
376–385, Nov. 2024, doi: 10.55583/INVEST.V5I2.920.
[13] E. K. S. Lai, A. R. A. Latiff, O. C. Keong, and T. C. Qun, “The Impact of Free
Cash Flow on Firm’s Performance: Evidence from Malaysia,” Eurasian Stud. Bus.
Econ., vol. 14, no. 1, pp. 3–16, 2020, doi: 10.1007/978-3-030-53536-0_1.
[14] A. M. Abrari, H. Pratikto, and E. Siswanto, “The Influence Of Corporate Social
Responsibility, Intellectual Capital, And Capital Structure On Firm Value With
Profitability As Intervening Variable (Study Of Raw Material And Manufacturing
Producing Sector Companies Listed On The Indonesia Stock Exchan,” Int. J.
Econ. Manag. Res., vol. 1, no. 3, pp. 38–54, Dec. 2022, doi:
10.55606/IJEMR.V1I3.41.
[15] N. K. R. S. Dewi and N. M. A. Erawati, “The Impact of Intellectual Capital,
Capital Structure, and Free Cash Flow on Firm Value,” E-Jurnal Akunt., vol. 34,
no. 10, pp. 2609–2620, Nov. 2024, doi: 10.24843/EJA.2024.V34.I10.P12.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Karlina Permata Indah Silaban, Rendra Arief Hidayat
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
