The Effects of Profitability, Leverage, and Company Size on Firm Value (A Study of Companies in the Basic Materials Sector Listed on the Indonesia Stock Exchange for the Period 2021–2024)

Abstract

This research aims to examine the effects of profitability, leverage, and firm size on firm value among companies in the Basic Materials sector listed on the Indonesia Stock Exchange (IDX) during the 2021–2024 period. Profitability was proxied by Return on Assets (ROA), leverage was proxied by the Debt-to-Equity Ratio (DER), firm size was proxied by the natural logarithm of total assets (SIZE), and firm value was measured using Tobin’s Q. This research employed a quantitative approach using secondary data obtained from financial statements and annual reports published on the official IDX website. Using a purposive sampling technique, 45 companies were selected, resulting in 132 valid observations after outlier elimination. The data were analyzed using multiple linear regression with SPSS. The results showed that, partially, profitability (ROA) had no significant effect on firm value (t = 1.340; Sig. = 0.183 > 0.05), leverage (DER) had a positive and significant effect on firm value (t = 7.546; Sig. = 0.000 < 0.05), while firm size had a negative and significant effect on firm value (t = -10.755; Sig. = 0.000 < 0.05). Simultaneously, the three variables significantly affected firm value, with an Adjusted R Square value of 59.0% (F = 63.835; Sig. = 0.000 < 0.05). These findings indicate that, in the Basic Materials sector, investors place greater emphasis on capital structure and asset utilization efficiency than on short-term profitability levels when assessing firm value.