ABSTRACT
This research aims to examine the impact of capital structure and investment opportunity set on firm’s value of 25 consumer goods companies listed in Indonesian Stock Exchange during 2009-2012. Capital structure proxies in this research were debt to equity ratio, debt to assets ratio and long term debt to assets ratio. Investment opportunity set proxies in this research were market to book value of assets, market to book value of equity, capital expenditure to book value of assets and firm’s value proxies in this research were price to book value and price earnings ratio. The empirical result of Partial Least Square showed that both capital structure and investment opportunity set had positive significant impact on firm’s value. All indicators on capital structure variables proved to be valid for measuring capital structure while CAPBVA and PER were not valid used in measuring each variables. This findings showed that funding policies and investment opportunity set of a firm profoundly influenced the way a firm is viewed by investors and creditors.
