The Antecedent of Profitability Concerning Investment Decisions on Firm Value Through Capital Structure in Large Companies at Indonesia

Abstract

The purpose of this research is to determine the impact of investment decisions on firm value using capital structure as the intervening variable and profitability as the antecedent. Using 120 samples of non-bank companies listed on the LQ45 Index between 2016 and 2020. Using SEM-PLS, we discovered that: investment decisions and capital structure have a significant positive effect on firm value, investment decisions and profitability have a significant positive effect on capital structure (DER), and capital structure partially mediated investment decisions on firm value. The findings of this study support the signal theory of firm value, in which investment decisions can be a positive signal in increasing firm value. Other factors, such as capital structure, also contribute to a positive signal in increasing firm value. The signals can be seen on the company's side, where the right and good investment with promising prospects will increase investor confidence.