Profitability Effect on Firm Value Through Dividend Policy Mediation in Indonesian Manufacturing Companies 2019-2023

Abstract

This study provides empirical evidence regarding dividend policy's mediating role in the relationship between profitability and firm value in Indonesian manufacturing companies. Utilizing purposive sampling methodology, we examined 42 manufacturing companies listed on the Indonesia Stock Exchange (IDX) during 2019-2023, resulting in 210 observations. The analysis employed WarpPLS version 8.0 software for PLS-SEM analysis. Our findings reveal that profitability (ROA), capital structure (DER), and dividend policy (DPR) demonstrate significant positive effects on firm value (PBV). Additionally, profitability exhibits a positive influence on dividend policy. The mediation analysis confirms that dividend policy successfully mediates the relationship between profitability and firm value. However, liquidity (CR) shows a significant negative impact on firm value, contradicting our initial hypothesis.