The Effect of Capital Structure, Profitability, and Firm Size on Firm Value (On Basic Materials Sector Companies Listed on the Indonesia Stock Exchange (IDX) in 2020-2024)
Abstract
Reasons for doing this investigation include the fact that, from 2020 to 2024, firm valuation fluctuations across Basic
Materials enterprises listed on the Indonesia Stock Exchange (IDX) have been identified. Firm value is an important
indicator of a company's overall performance and development potential from an investor's perspective. According to
signalling theory, investors have more faith in a company's future prospects when it sends out positive signals to the
market. This research aims to examine the impacts of company value on profitability, capital structure, and business
size. This investigation relies on secondary data culled from the annual reports of IDX-listed Basic Materials
companies for the years 2020–2024. The study's population consists of large Basic Materials businesses; 18 of them
were followed for five years, collecting a total of 90 data points. Using a purposive sampling technique, we selected
this sample. This quantitative study employs descriptive statistics and regression analysis on panel data. The findings
reveal that firm value is substantially impacted by company size, profitability, and capital structure. A company's worth
is unaffected by profitability when looked at independently; the only factors that matter are capital structure and the
size of the organization.
Keywords-capital structure, profitability, firm size, firm value
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