The Influence Of Investment Decisions And Capital Structure On Firm Value With Profitability As An Intervening Variable (Empirical Study On Real Estate & Property Sector Companies Listed On The Indonesia Stock Exchange 2021 2024)

Abstract

This study is to examine the effect of investment decisions and capital structure toward firm value with profitability for mediating variable real estate and property companies listed on the Indonesia Stock Exchange during the year of 2021–2024. This is motivated by inconsistent research in prior studies as well as the phenomenon of low firm value reflected in the Price to Book Value (PBV) ratio within the property sector. This is based on Agency Theory and also supported by Signaling Theory that explains the relationship between corporate financial decisions, profitability, and also firm value. This employs a quantitative approach by using Partial Least Squares–Structural Equation Modeling (PLS-SEM) and applies purposive sampling to determine the research sample. The variables include investment decisions proxied by Total Asset Growth (TAG), capital structure using Debt to Equity Ratio (DER), profitability by Return on Assets (ROA), and also firm value by Price to Book Value (PBV). Results indicate that investment decisions and also capital structure do not have a direct effect on firm value; however, both variables significantly influence profitability, and profitability significantly affects firm value. Furthermore, profitability is shown to fully mediate the relationship investment decisions and capital structure on firm value. These findings suggest that the impact of financial decisions on firm value does not occur directly but operates through the ability of a company to generate profits. The study implies effective management of investment decisions and also capital structure should be oriented toward improvingprofitability as the primary mechanism for enhancing firm value. Key Word: Investment Decisions, Capital Structure, Profitability, Firm Value