Commodity prices, exchange rates and investment on firm’s value mediated by business risk : a case from Indonesian stock exchange

Abstract

This paper examines the influence of six commodity prices (Crude Oil, Coal, CPO, Gold, Nickel, Tin), exchange ratesand investment on the firm’s value during the period 2010-2014, both directly and indirectly through the mediation of business risk. By applying Common Effect approach for panel data on path analysis model, we found the oil price and exchange rate (USD/IDR) are affect the firm’s value, either directly or indirectly through business risk asmediation variable,but business risk does not mediate the effect of the investment on the firm’s value. The study's findings support previous research results and evidence of theories, especially about the relationship of commodity prices, exchange rates, risks and value of the company. These results are useful for individual and institutional investors, managers and policy makers.