The Effect of Profitability, Liquidity, and Dividend Policy on Company Value in The Banking Sector Listed on The Indonesian Stock Exchange 2016–2024

Maria Esperansa Ki () and Pristin Prima Sari
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Maria Esperansa Ki: Universitas Sarjanawiyata Tamansiswa
Pristin Prima Sari: Universitas Sarjanawiyata Tamansiswa

A chapter in Proceedings of the 4th International Conference on Management and Business (ICoMB 2025), 2026, pp 317-326 from Springer

Abstract: Abstract This research investigates the influence of profitability, liquidity, and dividend policy on firm value in banking institutions listed on the Indonesia Stock Exchange (IDX) from 2016 to 2024. Profitability is represented by Return on Equity (ROE), liquidity by the Loan to Deposit Ratio (LDR), and dividend policy by the Dividend Payout Ratio (DPR). At the same time, firm value is measured using Price to Book Value (PBV). The study utilizes a purposive sampling technique and selects 11 banks, resulting in 100 total observations. Data analysis is performed using multiple linear regression with SPSS. Empirical findings reveal that profitability has a significant positive relationship with firm value, indicating that banks with stronger profit performance tend to gain higher market appreciation. Conversely, liquidity and dividend policy show no significant linkage with firm value, suggesting that the ability to meet short-term liabilities and the amount of distributed dividends are not primary investor considerations. In simultaneous testing, all independent variables collectively demonstrate a significant effect on firm value. The model’s coefficient of determination (R2) of 0.568 indicates that the examined variables explain 56.8% of the variation in firm value. These findings emphasize the key role of profitability in enhancing firm value within the banking sector.

Keywords: Profitability; Liquidity; Dividend Policy; Firm Value; Banking Sector (search for similar items in EconPapers)
Date: 2026
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DOI: 10.2991/978-94-6239-656-2_26

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