Determinants of Firm Value in Indonesia’s Financial Sector: Profitability, Liquidity, Capital Structure, Growth, and Firm Size

Abstract

Objective: This study aims to examine the impact of profitability, liquidity, capital structure, corporate growth, and firm size on firm value among financial sector companies listed on the Indonesia Stock Exchange during the period 2021–2025.
Research Design & Methods: This study employs a quantitative approach using secondary data from the audited annual reports of financial sector companies listed on the Indonesia Stock Exchange. A total sample of 30 companies was selected, resulting in 150 panel observations. The dependent variable is enterprise value (PBV), while the independent variables are profitability (ROA and ROE), liquidity (CR), capital structure (DER), company growth, and firm size. The data were analyzed using panel data regression with EViews.
Findings: The results indicate that ROA has a negative effect on firm value, while ROE and capital structure have a positive effect. Firm liquidity and growth do not significantly affect firm value. Firm size was found to have a significant negative effect on firm value.
Implications: These findings indicate that investors in the financial sector place greater emphasis on shareholder returns, financing decisions, and resource efficiency than on mere asset growth or short-term liquidity. Therefore, management should focus on improving the quality of profitability and optimizing the capital structure.
Contribution & Value Added: This study enriches the literature on firm value by providing the latest empirical evidence from Indonesia’s financial sector and highlighting the distinct roles of ROA and ROE in explaining market valuation.