pdf Financial Decisions and Profitability in the Formation of Firm Value
Keywords:
Firm value , Dividend policy, Capital structure, Investment decisions, ProfitabilityAbstract
Research Objectives - This study aims to analyze the effect of investment decisions, debt policy, dividend policy, and profitability on firm value in manufacturing companies within the food and beverage subsector listed on the Indonesia Stock Exchange during the 2021–2024 period.
Method - This research employs a quantitative approach with an explanatory design based on secondary data derived from annual financial statements. The analysis utilizes multiple linear regression, accompanied by classical assumption tests, t-tests, F-tests, and the coefficient of determination (R²).
Research Findings - The empirical results indicate that profitability and dividend policy have a positive and significant effect on firm value. Investment decisions and debt policy also demonstrate a positive influence, although with a more moderate level of significance. These findings suggest that investors respond more strongly to earnings-generating capability and dividend consistency than to leverage policy alone.
Theory and Practical Implications - The findings reinforce the relevance of Signaling Theory and Trade-Off Theory within the context of a post-pandemic emerging market. From a policy perspective, management should prioritize enhancing profitability and maintaining dividend stability to strengthen market perceptions of firm value.
Novelty - This study offers a simultaneous integration of PER, DER, DPR, and ROA within a single sectoral empirical model during the economic recovery period of 2021–2024.
Downloads
References
Baker, M., & Wurgler, J. (2004). A catering theory of dividends. Journal of Finance, 59(3), 1125–1165.
Brigham, E. F., & Houston, J. F. (2021). Fundamentals of financial management (15th ed.). Cengage Learning.
Fama, E. F., & French, K. R. (1998). Taxes, financing decisions, and firm value. Journal of Finance, 53(3), 819–843.
Ghozali, I. (2016). Aplikasi analisis multivariate dengan program IBM SPSS 23. Badan Penerbit Universitas Diponegoro.
Gujarati, D. N., & Porter, D. C. (2009). Basic econometrics (5th ed.). McGraw-Hill.
Kraus, A., & Litzenberger, R. H. (1973). A state-preference model of optimal financial leverage. Journal of Finance, 28(4), 911–922.
Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review, 48(3), 261–297.
Myers, S. C. (1984). The capital structure puzzle. Journal of Finance, 39(3), 575–592.
Myers, S. C. (2001). Capital structure. Journal of Economic Perspectives, 15(2), 81–102.
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221.
Ross, S. A. (1977). The determination of financial structure: The incentive signaling approach. Bell Journal of Economics, 8(1), 23–40.
Saunders, M., Lewis, P., & Thornhill, A. (2019). Research methods for business students (8th ed.). Pearson Education Limited.
Spence, M. (1973). Job market signaling. Quarterly Journal of Economics, 87(3), 355–374.
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Muhammad Cahyadi, Novita Gabriella S (Author)
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
