Analysis of the influence of profitability on company value with dividend policy as an intervening variable

Abstract

Purpose: This study aims to determine the effect of profitability on firm value with dividend policy as an intervening variable in manufacturing companies on the Indonesia Stock Exchange for the 2015-2019 period.

Methods: This study took a population of manufacturing companies listed on the IDX during 2015-2019. Using the purposive sampling method, this study resulted in a sample of 21 companies with a total of 105 data analyzed. The analysis method used is descriptive statistics and path analysis techniques with the help of AMOS software.

Findings: The results showed that profitability has a significant positive effect on firm value, profitability has a significant positive effect on dividend policy, dividend policy has no impact on firm value, and dividend policy is unable to mediate the relationship between profitability and firm value.

Practical Implications: This study shows that profitability plays an important role in influencing firm value and dividend policy. However, dividend policy does not have a significant effect on firm value and does not serve as a mediator between profitability and firm value. Thus, companies are advised to prioritize increasing profitability as the main strategy and evaluate dividend policy so as not to hinder the growth of firm value, even though the dividend policy does not directly affect the value generated.