The effect of Intellectual Capital and Debt Policy on Bankruptcy Predictions and Its Implications on Firm Value

Abstract

Aims: This study aims to examine the effect of intellectual capital and debt policy on bankruptcy predictions and its implications for firm value. Study design: The design used in this research is causal research. Causal research aims to determine the effect or also the relationship between two or more variables. Place and duration of study: The population of this study consist of mining companies on the Indonesia Stock Exchange, with the observation year 2015-2019. The sampling technique used in this study is the purposive sampling method. After the sampling criteria were carried out, 13 companies met the sampling criteria, so the total number of observation was 52. Methodology: The analytical method used is path analysis, which is an extension of multiple linear analysis using SPSS 22 analysis tools. Results: The results showed that simultaneously the intellectual capital and debt policy had an influence on the prediction of bankruptcy and firm value, but partially the debt policy had a direct influence both on bankruptcy predictions and on firm value. The results of this study also prove that bankruptcy prediction indirectly provides a relationship between intellectual capital and firm value, However, debt policy will have a greater relationship if it is directly related to the value of the company without going through bankruptcy predictions, because when debt increases it lowers the zscore, which means the company is in an unhealthy condition so that it can reduce the value of the company.