The Influence of Liquidity, Leverage, and Profitability on Firm Value of Indonesian Pharmaceutical Companies: the Moderating Role of Dividend Policy
Keywords: liquidity; leverage; firm value; dividend policy
AbstractThe firm value is an indicator of the level of success of the company in terms of assessing the prosperity of shareholders. High firm value will encourage investors to invest their funds in a company. Therefore, the purpose of this study is to analyze the effect of liquidity, leverage and profitability on firm value. Moreover, this study also will examine the role of dividend policy as a moderating variable. The samples of this study are 11 pharmaceutical companies listed on the Indonesian Stock Exchange from 2019 to 2021. Multiple Linear Regression is applied in order to examine the influence of liquidity, leverage, and profitability on firm vale. Furthermore, Moderated Regression Analysis (MRA) is used to identify the role of dividend policy as moderator. The results of analysis show that liquidity and leverage have a positive but not significant effect on firm value. Meanwhile, profitability has a significant positive effect on firm value. The results of the moderation analysis show that dividend policy fails to moderate the relationship between liquidity and firm value. Similar to liquidity, dividend policy is also not successful in moderating the effect of leverage on firm value. On the other hand, dividend policy can moderate the relationship between profitability and firm value.