The Effect of Diversification of Revenue, Profitability, and Firm Size on the Value of Banking Companies

Abstract

This research investigates how revenue diversification, profitability, and firm size affect the valuations of banking companies listed on the Indonesia Stock Exchange during 2020-2023. This study used numbers and data from 144 chosen banking companies to analyze how revenue diversification, profitability, and firm size affect their value on the Indonesia Stock Exchange from Grounded in signaling theory, this investigation examines fundamental variables as signals that communicate company prospects to investors. Results indicate that revenue diversification has insignificant negative effects on firm value, profitability has significant positive impacts, and firm size has significant negative influences. Simultaneously, these three variables significantly affect firm value, with adjusted R² reaching 55.1%. These findings help improve signal theory and provide useful advice for investors and bank managers on how to increase corporate value in Indonesia's banking sector during important economic times.