Abstract
This study aims to test whether profitability acts as a moderating variable that is able to moderate the influence of the company growth and capital structure on the firm value. The independent variables used in this study are company growth and capital structure, while profitability is the moderating variable.The research sample was taken from manufacturing industrial companies listed on the Indonesia Stock Exchange (IDX) during the period 2016 - 2018. The study used panel data which is a combination of cross section and time series data, with data analysis using multiple regression.The results showed that company growth and profitability had a positive effect on the firm value, while capital structure had does not effect. The results of the analysis show that profitability does not moderate the effect of company growth and capital structure on the firm value, the interaction of company growth and capital structure with profitability has a negative impact on the firm value.
Highlights
Every of the company tries to maximize firm value in order to exist in running its business
This study was conducted with the aim of examing whether the profitability proxied with return on equity (ROE) as a moderating variable is able to moderate the effect of firm growth (AG) and capital structure (CS) on firm value (PBV)
It can be concluded that company growth (AG) and profitability (ROE) have a positive effect on firm value, while capital structure (CS) has a negative effect
Summary
Every of the company tries to maximize firm value in order to exist in running its business. In this regard, management which has earned the trust of the owners strives to work hard to achieve this goal. The success of management in managing the firm cannot be separated from the role of investors as the owner of the capital who has given them confidence. Management must be able to answer this belief by working hard, increasing its performance by generating high profitability so that investors are interested in investing their funds. Investors before deciding to invest their funds in the capital market will seek information in advance about the condition of the company's financial performance (Ha and Minh 2018)
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