Global Trade Tensions, Capital Structure, and Firm Value: Evidence from Multinational Companies Listed on the Indonesia Stock Exchange
DOI:
https://doi.org/10.38035/dijefa.v6i6.5740Keywords:
Global Trade Tensions, Capital Structure, Firm ValueAbstract
Global trade tensions are a critical issue with significant implications for multinational corporations. This study aims to analyze the influence of global trade tensions and capital structure on the firm value of multinational corporations listed on the Indonesia Stock Exchange during the 2021–2024 period. The research variables consist of the World Trade Uncertainty Index to represent global trade tensions, the Debt-to-Equity Ratio to capture capital structure, and Tobin’s Q ratio to measure firm value. The data were analyzed using multiple linear regression with 48 observations. The results indicate that the World Trade Uncertainty Index has a negative but insignificant effect on firm value, whereas the Debt-to-Equity Ratio has a positive and significant effect. These findings highlight that global trade uncertainty has not been strong enough to suppress the market value of companies, while optimal management of capital structure can enhance firm value. This study provides a theoretical contribution by reinforcing the perspectives of trade-off theory and signaling theory, and offers practical implications for financial managers and investors in designing financing strategies amid global uncertainty.
References
Abor, J. (2005). The effect of capital structure on profitability: An empirical analysis of listed firms in Ghana. Journal of Risk Finance, 6(5), 438–445.
Aizenman, J., & Lee, J. (2007). International reserves: Precautionary versus mercantilist views, theory and evidence. Open Economies Review, 18(2), 191–214.
Amiti, M., Redding, S. J., & Weinstein, D. E. (2019). The impact of the 2018 tariffs on prices and welfare. Journal of Economic Perspectives, 33(4), 187–210.
Athukorala, P. (2020). Global production sharing and trade patterns in East Asia. Asian Development Review, 37(1), 1–27.
Baker, S. R., Bloom, N., & Davis, S. J. (2016). Measuring economic policy uncertainty. Quarterly Journal of Economics, 131(4), 1593–1636.
Baltagi, B. (2005). Econometric analysis of panel data (3rd ed.). Wiley.
Bartram, S. M., Brown, G. W., & Minton, B. A. (2010). Resolving the exposure puzzle: The many facets of exchange rate exposure. Journal of Financial Economics, 95(2), 148–173.
Bekaert, G., Harvey, C. R., Lundblad, C., & Siegel, S. (2014). Political risk and international valuation. Journal of Corporate Finance, 29, 633–650.
Buckley, P. J., & Casson, M. C. (1976). The future of the multinational enterprise. Macmillan.
Caldara, D., Iacoviello, M., Molligo, P., Prestipino, A., & Raffo, A. (2019). Does trade policy uncertainty affect global economic activity? European Economic Review, 111, 3–23.
Caldara, D., Iacoviello, M., Molligo, P., Prestipino, A., & Raffo, A. (2020). The economic effects of trade policy uncertainty. Journal of Monetary Economics, 109, 38–59.
Chen, H. (2023). Trade policy uncertainty and corporate innovation: Evidence from China. Journal of International Economics, 142, 103730.
Chen, H., Lensink, R., & Sterken, E. (2011). Capital structure and firm performance: A panel data analysis for Chinese listed firms. Small Business Economics, 36(4), 351–373.
Cheong, D., Gu, W., & Wang, Z. (2020). The impact of the US–China trade war on ASEAN economies. The World Economy, 43(11), 2987–3014.
Chung, K. H., & Pruitt, S. W. (1994). A simple approximation of Tobin’s q. Financial Management, 23(3), 70–74.
Evenett, S. J., & Fritz, J. (2019). Going it alone? Trade policy after three years of populism. CEPR Press.
Frank, M. Z., & Goyal, V. K. (2009). Capital structure decisions: Which factors are reliably important? Financial Management, 38(1), 1–37.
Ghosh, M., & Ghosh, S. (2018). The multinational corporation in developing countries: Spillovers and linkages. Journal of International Business Studies, 49(6), 743–761.
Gujarati, D. N. (2003). Basic econometrics (4th ed.). McGraw-Hill.
Gulen, H., & Ion, M. (2016). Policy uncertainty and corporate investment. Review of Financial Studies, 29(3), 523–564.
Handley, K., & Limao, N. (2017). Policy uncertainty, trade, and welfare: Theory and evidence for China and the United States. American Economic Review, 107(9), 2731–2783.
Helpman, E., & Krugman, P. R. (1985). Market structure and foreign trade: Increasing returns, imperfect competition, and the international economy. MIT Press.
Ing, L. Y. (2019). Trade policy uncertainty and Indonesian trade performance. Bulletin of Indonesian Economic Studies, 55(2), 133–153.
Klein, J., & Wöhler, T. (2021). Multinationals and structural change in emerging economies. World Development, 142, 105412.
Kraus, A., & Litzenberger, R. H. (1973). A state‐preference model of optimal financial leverage. Journal of Finance, 28(4), 911–922.
Krugman, P. R. (1979). Increasing returns, monopolistic competition, and international trade. Journal of International Economics, 9(4), 469–479.
Margaritis, D., & Psillaki, M. (2010). Capital structure, equity ownership, and firm performance. Journal of Banking & Finance, 34(3), 621–632.
Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance, and the theory of investment. American Economic Review, 48(3), 261–297.
Modigliani, F., & Miller, M. H. (1963). Corporate income taxes and the cost of capital: A correction. American Economic Review, 53(3), 433–443.
Moruk, S. (2024). Capital structure and firm value in Indonesian manufacturing firms. Jurnal Manajemen dan Kewirausahaan, 26(1), 11–25.
Myers, S. C. (2001). Capital structure. Journal of Economic Perspectives, 15(2), 81–102.
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221.
Nurhayati, D., Pratama, A., & Sari, R. (2021). Trade policy shocks and Indonesian stock market reaction. Jurnal Keuangan dan Perbankan, 25(3), 511–523.
Pastor, L., & Veronesi, P. (2012). Uncertainty about government policy and stock prices. Journal of Finance, 67(4), 1219–1264.
Rajan, R. G., & Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. Journal of Finance, 50(5), 1421–1460.
Retnasih, D., & Syahda, M. (2025). Dampak perang dagang AS–Tiongkok terhadap industri di Indonesia. Jurnal Ekonomi dan Pembangunan Indonesia, 25(2), 133–145.
Ross, S. A. (1977). The determination of financial structure: The incentive-signalling approach. Bell Journal of Economics, 8(1), 23–40.
Setiawan, A. (2020). Market reaction to US–China trade war: Evidence from Indonesia. Gadjah Mada International Journal of Business, 22(2), 211–229.
Sha, F. (2025). Trade shocks and multinational supply chains. Journal of International Economics, 144, 103789.
Sinaga, A. (2022). Leverage and firm value in Indonesian companies. Jurnal Riset Akuntansi dan Keuangan, 10(1), 45–56.
Tobin, J. (1969). A general equilibrium approach to monetary theory. Journal of Money, Credit and Banking, 1(1), 15–29.
United Nations Conference on Trade and Development. (2020). World investment report 2020. United Nations.
Utami, L. (2019). Pengaruh struktur modal terhadap nilai perusahaan manufaktur di Indonesia. Jurnal Akuntansi Multiparadigma, 10(2), 211–225.
Wijaya, R. (2022). Hedging strategy and firm resilience in global uncertainty. Jurnal Keuangan dan Bisnis, 15(1), 55–70.
Wooldridge, J. M. (2010). Econometric analysis of cross section and panel data (2nd ed.). MIT Press.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Udyono, Muhammad Maula Razak, Rajaman
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish their manuscripts in this journal agree to the following conditions:
- The copyright on each article belongs to the author(s).
- The author acknowledges that the Dinasti International Journal of Economics, Finance & Accounting (DIJEFA) has the right to be the first to publish with a Creative Commons Attribution 4.0 International license (Attribution 4.0 International (CC BY 4.0).
- Authors can submit articles separately, arrange for the non-exclusive distribution of manuscripts that have been published in this journal into other versions (e.g., sent to the author's institutional repository, publication into books, etc.), by acknowledging that the manuscript has been published for the first time in the Dinasti International Journal of Economics, Finance & Accounting (DIJEFA).
