THE INFLUENCE OF MODERATION LEVERAGE ON THE RELATIONSHIP BETWEEN PROFITABILITY AND FIRM VALUE

Empirical Study of Firms listed on the IDX, 2019-2021 period

Abstrak

Investors in the capital market hope that their investments will grow and develop in accordance with investment objectives, namely providing investor welfare. The investment value grows when the share price or firm value of the issuer increases. Many factors can influence company value, two factors of which are profitability and leverage. Previous research has provided empirical evidence that profitability and leverage can influence company value. This research wants to test the moderating effect of leverage on the relationship between profitability and firm value. The research population and sample used data from issuers on the Indonesia Stock Exchange for the 2019-2021 period. At the time this research was conducted, no research had been found that discussed the position of leverage as a moderating variable in the relationship between profitability and firm value. Based on the results of data analysis, it was found that profitability has a significant positive effect on company value. Leverage has a significant negative effect on company value. The interaction variable profitability and leverage insignificantly weakens the relationship between profitability and firm value. The results of this test can be concluded that leverage moderates, insignificantly weakens the relationship between profitability and company value, so that leverage is not proven to be a moderating variable in the relationship between profitability and company value.