Rethinking Financial Flexibility and Market Valuation: Evidence from ASEAN Manufacturing Companies

Wirda Mardyaningsih, Bulan Nettiary Kelara, Belinda Mora Siagian, Rahma Febrianti

Abstract


This study examines the effects of financial flexibility, represented by the Current Ratio (CR), Debt-to-Equity Ratio (DER), and Net Cash Flow from Operating Activities (CFO), on market valuation, measured by the Enterprise Value-to-Revenue (EV/Revenue) ratio, among manufacturing firms in ASEAN countries. It also investigates the moderating role of firm size. A quantitative research design was employed using balanced panel data comprising 944 manufacturing companies from ASEAN countries over the 2020–2025 period, resulting in 5,664 firm-year observations. Data were extracted from the Refinitiv database and analyzed using panel data regression. The empirical findings indicate that liquidity, proxied by the Current Ratio (CR), does not significantly influence market valuation. In contrast, leverage, represented by the Debt-to-Equity Ratio (DER), has a positive and significant effect, whereas Net Cash Flow from Operating Activities (CFO) exhibits a significant negative relationship with market valuation. The moderation analysis shows that firm size neither strengthens nor weakens the relationship between financial flexibility and market valuation. These findings suggest that investors in ASEAN manufacturing firms place greater emphasis on financing decisions and future growth prospects than on short-term liquidity or firm size when assessing firm value. This study contributes to the financial flexibility literature by providing empirical evidence using EV/Revenue as a market valuation proxy for ASEAN manufacturing firms during the post-pandemic period.

Keywords


Financial Flexibility, Market Valuation, Firm Size, ASEAN Manufacturing Firms

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DOI: http://dx.doi.org/10.33087/ekonomis.v10i2.2911

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