Impact of the Pandemic on Ownership-Mediated Profitability on Firm Value

Abstract

This study aims to examine and analyze the impact of the profitability and size on the value of the company mediated by managerial ownership in the pre-pandemic and pandemic periods. This research was conducted on banking companies listed on the IDX during the period 2014–2020. By using the purposive sampling method with data availability criteria, there were 100 samples of companies. The analytical tool used in this research was SEM-PLS with WarpPLS 7.0 application. The results of the study explain that the impact of the pandemic makes companies conduct their activities. In this study, profitability cannot directly affect the value of the company, but by being mediated by managerial ownership, the indirect effect of profitability on company value is significant, as well as company size on company value. The novelty in this research is the existence of a new concept that adds intervention variables as part of this study. The financial literature explains that profitability is a measure of the company's effectiveness in operating assets to generate profits, in line with signal theory explaining why companies have the urge to provide financial statement information to external parties. Signal theory shows the existence of information asymmetry where the information received by the company's management and the interested parties is different. Company management knows more information about the company and the company's prospects than interested parties, such as investors and creditors. Therefore, managers issue financial statements to provide information to these interested parties. Keywords: signaling theory, size, profitability, firm value, pandemic. DOI: https://doi.org/10.55463/hkjss.issn.1021-3619.60.8