FINANCIAL AGILITY, MARKET DYNAMICS, AND FIRM VALUE: EVIDENCE FROM INDONESIAN LISTED FIRMS

Abstract

This study analyzes the crucial role of Financial Agility as a mediating mechanism in the relationship between Market Dynamics and Firm Value in non-financial companies listed on the Indonesia Stock Exchange (IDX). Using a quantitative and longitudinal design with panel data regression analysis for the period 2012–2024, this study develops and measures the first quantitative Financial Agility Index applied in the context of Indonesian public companies. The main findings show that although Market Dynamics has a direct effect on Firm Value, its significant effect is most strongly channeled through increased Financial Agility, confirming Financial Agility as an important mediator in line with Dynamic Capabilities Theory. The limitations of the study lie in the secondary data design, which restricts claims of absolute causality, but the implications are significant: corporate management must make financial flexibility a strategic capability to proactively respond to market volatility, thereby maintaining and increasing firm value in uncertain capital markets. This research makes an original contribution by validating the triangular relationship framework of market dynamics–financial agility–firm value in emerging markets.