The Effect of Corporate Performance on Firm Value with Dividend Policy as an Intervening Variable in Manufacturing Companies

Abstract

This study aims to evaluate the extent to which corporate performance influences firm value, with dividend policy serving as an intervening variable in manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2019–2023 period. Corporate performance is measured using liquidity through the current ratio, profitability through return on assets, and leverage through the debt-to-equity ratio, while firm value is proxied by Price to Book Value (PBV) and dividend policy is measured using the Dividend Payout Ratio (DPR). This study applies a quantitative approach using Partial Least Squares Structural Equation Modeling (PLS-SEM) for data analysis. The results reveal that liquidity, profitability, and leverage do not have a direct significant effect on firm value. However, profitability and leverage significantly influence dividend policy, although dividend policy is not able to mediate the relationship between corporate performance and firm value. These findings indicate that traditional financial indicators alone are insufficient to explain market value in Indonesian manufacturing companies, as investors also consider other factors such as long-term business strategies, corporate governance quality, and future growth prospects. This research contributes to the development of financial management literature and provides practical insights for management and policymakers in formulating sustainable financial strategies.