The potential impact of fundamental value, market value, and firm size as moderator variable on firm value at Indonesia palm oil company

Abstract

In palm oil entities on the Indonesia Stock Exchange, company size is one of the critical factors in the company's success to generate better company value. This study aims to analyze the effect of fundamental factors and market value on firm value with firm size as a moderating variable in palm oil entities listed on the Indonesia Stock Exchange for 2014 - 2020. The population in this study is oil palm plantation and processing companies. This study used purposive sampling and obtained eight companies with seven years of observation—data analysis using PLS-SEM with an error rate of 5%. Fundamental ratios have a positive but not significant effect on firm value, except market value and firm size have a positive and significant effect on firm value. Fundamental ratios have a positive and significant effect on market value. However, firm size cannot moderate the relationship between market value and firm value. Then the effect of the fundamental ratio on market value is 30.3%, and the rest is influenced by other factors, while the effect of the fundamental ratio and market value on firm value is 85.2%, and other factors influence the rest. Investors should choose issuers with higher ROA and book values. Company size does not strengthen the relationship between book value and the share price of palm oil entities, where the company size is not a factor that determines investor decisions.