The Influence of Profitability, Capital Structure, and Firm Size on Firm Value in the Consumer Non-Cyclicals Sector of the Indonesia Stock Exchange for the 2021–2024 Period
Keywords:
Profitability (ROA), Capital Structure (DER), Firm Size (Size), Firm Value (PBV), Consumer Non-CyclicalsAbstract
This study was conducted to evaluate the determinants of Firm Value, proxied by Price to Book Value (PBV), in Consumer Non-Cyclicals sector companies on the Indonesia Stock Exchange (IDX) during the 2021-2024 period. The independent variables tested include Profitability (Return on Assets/ROA), Capital Structure (Debt to Equity Ratio/DER), and Firm Size (Log Size). Using the purposive sampling method, 12 sample companies were obtained with a total of 48 panel data observations. Through a series of classical assumption tests and model selection tests (Chow, Hausman, and Lagrange Multiplier), the Random Effect Model (REM) was determined as the most efficient estimation model. The regression analysis results show that partially, Profitability has a positive and significant effect on Firm Value, reinforcing the relevance of Signaling Theory where net profit is perceived as a signal of future prospects. Conversely, Capital Structure and Firm Size do not have a significant partial effect on PBV, indicating that investors in this sector tend to disregard debt levels and asset scale when performing valuations. Simultaneously, the three variables have a significant effect on Firm Value with a coefficient of determination of 9.24%. This low Adjusted R-Squared value indicates the presence of external factors or other fundamental variables that are more dominant in influencing investor expectations in the primary consumer goods sector during the observation period.
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