The effect of R&D expenditures on firm value with firm size moderation in an Indonesia palm oil company

Figures & data

Table 1. A visual presentation of R&D expenditure and company value of palm oil company.

	R&D expenses (Billion Rupiahs)	Company value (Tobin’s Q) (Tobin’s Q = 1 = Fair Value; >1 = Overvalue; <1 = Undervalue)	Deviding of (B) to (A)(%)
Year	(A)	(B)	(C)
2022	182,696	1.040	0.000569
2021	178,959	1.070	0.000598
2020	136,651	1.000	0.000732
2019	150,124	1.090	0.000726

Table 2. Definition of variables.

Characteristics of variable	Name of variables	Symbol	Measurement
Firm value	Tobin’s Q	TBQ	Tobin’s Q is computed by dividing the market enterprise value by the total asset replacement value (Times). Tobin’s Q formulation: [(Market Value of Equity (MVE) + Liabilities) / Total Assets]. The ideal Tobin’s Q value is 1.0, which means the market has succeeded in valuing the company fairly (market value of assets = book value of assets). When Tobin’s Q < 1, a company can be classified as cheap (undervalued) because its book value is higher than its market value; this can attract parties interested in buying the company. On the other hand, when Tobin’s Q > 1, a company can be classified as expensive (overvalued), thus attracting parties who want to imitate the company’s business model in order to gain profits too. For example, see Usman et al. (2018), Aydoğmuş et al. (2022), Ibhagui (2019), Chung et al. (2019), Suhadak et al. (2019), Iswajuni et al. (2018).
Technology innovation	Research and development	RND	The natural logarithm of company R&D spending (LNR&D) is used to calculate R&D expenses. Research and development costs are costs incurred for product development, as well as costs for increasing company efficiency, including technology for process development. For example, see Osma and Young (2009), Freimane and Bāliņa (2016), Rahman and Howlader (2022).
Firm characteristics	Firm size	SIZE	SIZE is determined by taking the natural logarithm of the total assets (LNTA). Company size is the size of the company, which can be measured by total assets or the size of the company’s assets using the logarithmic value of total assets. For example, see Walsh (2008), Iswajuni et al. (2018), Kajüter et al. (2019), Bhutto et al. (2015)
Liquidity	Current ratio	CR	The current ratio is calculated by dividing the total value of current assets by the total value of current liabilities (in times). The current ratio is the most commonly used measure to find out how capable a company is of meeting its short-term liabilities. For example, see Walsh (2008), Gurbuz and Aybars (2010), Mohd Zaid et al. (2014)
Leverage	Debt to aset ratio	DAR	The debt to asset ratio is determined by dividing the total liabilities by the total assets (Times). DAR is a debt ratio used to measure the comparison between total debt and total assets. In other words, how much of the company’s assets are financed by debt or how much debt the company has affects asset management. For example, see Modigliani and Miller (1963), Walsh (2008), Gadanakis et al. (2020).
Profitability	Return on assets	ROA	Return on assets is calculated by dividing the net income before interest and taxes by the total assets, expressed as a percentage. Return On Assets is generally a type of profitability ratio, which is usually used to assess a company’s ability to earn profits through assets. For example, see Walsh (2008), Binti Mohamad and Mohd Saad (2010), Ali et al. (2019)
Activity	Total assets turnover	TAT	Total asset turnover is determined by dividing total sales by total assets (in terms of times). Total Assets Turnover is a ratio that describes asset turnover measured by sales volume during a certain period. Total Assets Turnover is influenced by the number of sales and total assets, both current assets and fixed assets. For example, see Walsh (2008), Alarussi and Alhaderi (2018), Chia et al. (2020).

Table 3. Sample description.

No	Description	Total
1	Palm oil company are listed on the IDX 2019–2022	14
2	The firms have not released the financial quarterly in 2019–2022	(2)
3	Samples number (with complete data)	12
4	Period of the research (Quarterly): 2019–2022	16
5	Initial observation	192
6	Data outlier (abnormal data)	(13)
7	Final observation (N)	179

Table 4. Result of descriptive analysis.

Variables	n	Minimum	Maximum	Mean	SD
TBQ (Times)	179	0.59	1.99	1.05	0.31
RND (LNR&D)	179	17.81	23.42	21.48	1.15
SIZE (LNTA)	179	26.82	31.39	30.10	1.10
CR (Times)	179	0.06	7.20	1.57	1.38
DAR (Times)	179	0.12	1.95	0.63	0.39
ROA (%)	179	−16.00	16.29	3.20	4.89
TAT (Times)	179	0.01	1.76	0.33	0.27
Valid N (listwise)	179

Table 5. The Pearson correlation coefficient and variance expansion coefficient (n = 179).

Variables	VIF	TBQ	RND	SIZE	CR	DAR	ROA	TAT
TBQ		1.00
RND	1.03	0.01*	1.00
SIZE	1.05	0.00**	0.20	1.00
CR	1,57	0.02*	0.57	0.36	1.00
DAR	1,52	0.00**	0.31	0.34	0.00**	1.00
ROA	1,23	0.19	0.52	0.30	0.02*	0.22	1.00
TAT	1,25	0.65	0.37	0.02*	0.82	0.13	0.00**	1.00

Note.

* p < 0.05.

** p < 0.01.

Table 6. Result from a moderated regression analysis.

		Coeff	SE	t	p	Conclusion (+-,$\le 0.05)$
Constant	iY	−19.076	7.2174	−2.643	.009
Research & Development (RND)	b1	1.016	0.337	3.015	.003	Positively significant
Firm Size (SIZE)	b2	0.628	0.238	2.634	.009	Positively significant
Research & development x Firm Size (RNDSIZE)	b3	−0.033	0.011	−2.947	.003	Negatively significant
Liquidity (CR)	b4	0.069	0.013	5.513	<.001	Positively significant
Solvability (DAR)	b5	0.703	0.045	15.651	<.001	Positively significant
Profitability (ROA)	b6	0.007	0.003	2.305	.022	Positively significant
Activity (TAT)	b7	0.081	0.057	1.441	.152	No. effect
R^2 = 0.685, MSE = 0.032
F (7,171) = 49.106, p < .001

Figure 1. Research model.

Figure 2. Graphical depiction of the influence of company size (SIZE) on the impact of research and development (RND) on firm value (TBQ).

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Data availability statement

The palm oil company material data yearly for 2019–2022 that support the findings of this study are openly available in (https://www.idx.co.id/id/perusahaan-tercatat/laporan-keuangan-dan-tahunan) at (https://www.idx.co.id/id). The next on (https://finance.yahoo.com/quote/%5EJKSE/), at shares historical data (https://finance.yahoo.com/quote/%5EJKSE/history?p=%5EJKSE).