The Role of Institutional Ownership and Agency Costs as Moderating Variables in the Effect of Capital Structure on Firm Value in the Energy Sector Listed on the Indonesia Stock Exchange, 2021–2024

Abstract

This study examines the role of institutional ownership and agency costs as moderating variables in the relationship between capital structure and firm value in energy sector companies listed on the Indonesia Stock Exchange (IDX) during the 2021–2024 period. Firm value is an important indicator for investors in assessing a company's prospects, while capital structure decisions are believed to influence a firm's ability to create value. However, this relationship is thought to be shaped by corporate governance mechanisms such as institutional ownership and asset-management efficiency, which reflects agency costs. The study uses a quantitative approach with a causal-associative research design. The sample consists of 25 energy sector companies selected through purposive sampling. Data were analyzed using Moderated Regression Analysis (MRA) on panel data. Firm value was proxied by Tobin's Q, capital structure was measured using the Debt-to-Equity Ratio (DER), institutional ownership was measured by the percentage of institutional shareholdings, and agency costs were inversely proxied by the Asset Turnover Ratio (ATO). The results show that capital structure has no significant effect on firm value. In addition, institutional ownership does not moderate the effect of capital structure on firm value. Conversely, ATO — as an inverse proxy for agency costs — negatively moderates the relationship between DER and Tobin's Q at the 10% significance level. This finding indicates that in firms with higher asset-utilization efficiency (or lower agency costs), the contribution of capital structure to firm value actually weakens. This study underscores the importance of operational efficiency in evaluating the effectiveness of capital structure policy in energy sector companies.