Factors That Affect Firm Value Moderated by Profitability

International Journal of Research and Scientific Innovation (IJRSI) | Volume VII, Issue VII, July 2020 | ISSN 2321–2705

Factors That Affect Firm Value Moderated by Profitability

Arista Andiani¹, Dwipraptono Agus Harjito^2*
1,2Department of Business and Economics, Universitas Islam Indonesia
*Corresponding author

Abstract – This study aims to determine the effect growth opportunity, capital structure, and dividend policy on firm value with profitability as a moderating variable. The population in this study were all companies listed on the Indeks Saham Syariah Indonesia during the 2014-2018 period, as many as 191 companies. Sampling was done by purposive sampling method. The sample in this study was manufacturing companies that had published financial statements during the 2014-2018 period. The data collection method was data documentation technique which is historical data in the form of financial reports and annual reports. Data analysis techniques used panel regression analysis techniques. The results of this study indicate that growth opportunity and capital structure had a significant positive effect on firm value. While the dividend policy had a significant negative effect on firm value. Other results showed that profitability can strengthen the influence of growth opportunity and dividend policy on firm value but can weaken the influence of capital structure on firm value.

Keywords: Company Value, Profitability, Growth Opportunity, Capital Structure, Dividend Policy

I. INTRODUCTION

Indonesia is entering a new industrial era marked by the digital era in the various sectors of life. Experts refer to this as the era of the industrial revolution 4.0. This phase presents the digitization and automation of the integration of the internet with manufacturing. One concept of the industrial revolution is the role of industry players. According to Suwardana (2018), company industry players are the organizational entities that make or provide goods or services for consumers. The spirit of a business is generally formed to generate profits (profit-oriented) and increase prosperity for its owners (self-interest). The industry plays an important role in economic development in all sectors of life, and the responsibility of government/industry owners is to equalize the growth of an industry.

One indicator to be able to achieve high economic growth in the industrial sector is that manufacturing companies must have good performance, by setting clear company goals and implementing appropriate strategies. The purpose of the company is to bring prosperity to the owner (shareholder), achieve maximum profit, and maximize the value of the company. The value of assets owned by a company such as securities (shares) is a reflection of the company’s value.

Read More