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2023•Journal of Economics Finance and Management StudiesOpen access

Can Profitability Intervene in the Effects of Liquidity, Activity, and Leverage on Company Value?

Universitas 17 Agustus 1945 Surabaya – Indonesia, Erwin Dyah Astawinetu, Istiono Istiono, Universitas 17 Agustus 1945 Surabaya – Indonesia, Titiek Rachmawati, Universitas 17 Agustus 1945 Surabaya – Indonesia, Parikesit Penangsang, Universitas 17 Agustus 1945 Surabaya – Indonesia

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Abstract

This study was conducted to examine the effect of liquidity, leverage, and activity on company value using profitability as an intervening variable. The companies used as research objects are various manufacturing companies in IDX30 listed on the Indonesia Stock Exchange with an observation period of 2016-2021. All collected data was analysed with Smart PLS software. The results of the analysis show that, directly, leverage and activity affect profitability, and profitability affect company value. Meanwhile, liquidity has no effect on profitability. In addition, liquidity, leverage, and activity have no effect on company value. When profitability becomes an intervening variable, profitability amplifies the effect of leverage and activity on company value. However, profitability is not able to strengthen the effect of liquidity on company value.

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What this paper is about

This study was conducted to examine the effect of liquidity, leverage, and activity on company value using profitability as an intervening variable. The companies used as research objects are various manufacturing companies in IDX30 listed on the Indonesia Stock Exchange with an observation period of 2016-2021. All collected data was analysed with Smart PLS software. The results of the analysis show that, directly, leverage and activity affect profitability, and profitability affect company value. Meanwhile, liquidity has no effect on profitability. In addition, liquidity, leverage, and activity have no effect on company value. When profitability becomes an intervening variable, profitability amplifies the effect of leverage and activity on company value. However, profitability is not able to strengthen the effect of liquidity on company value.

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Available abstract

This study was conducted to examine the effect of liquidity, leverage, and activity on company value using profitability as an intervening variable. The companies used as research objects are various manufacturing companies in IDX30 listed on the Indonesia Stock Exchange with an observation period of 2016-2021. All collected data was analysed with Smart PLS software. The results of the analysis show that, directly, leverage and activity affect profitability, and profitability affect company value. Meanwhile, liquidity has no effect on profitability. In addition, liquidity, leverage, and activity have no effect on company value. When profitability becomes an intervening variable, profitability amplifies the effect of leverage and activity on company value. However, profitability is not able to strengthen the effect of liquidity on company value.

Key concepts: Profitability index, Market liquidity, Leverage (statistics), Stock exchange, Business, Enterprise value, Monetary economics, Finance

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