The Effect of Debt Policy, Dividend Policy, and Investment Decisions on Firm Value with Profitability as an Intervening Variable on the JII70 Index for the 2022-2024 Period

Rizki Nur Faizi; Edy  Suryadi

doi:10.47616/jamrems.v6i4.673

Authors

Rizki Nur Faizi Management Study Program, Faculty of Economics and Business, Muhammadiyah University of Pontianak
Edy Suryadi Management Study Program, Faculty of Economics and Business, Muhammadiyah University of Pontianak

DOI:

https://doi.org/10.47616/jamrems.v6i4.673

Keywords:

Financial Policy, Profitability, Company Value, JII70, Sharia Investment

Abstract

Firm value is an important indicator for assessing a company's success and prospects in the market. For companies registered with the JII70 (Indonesian Islamic Association of Indonesia) (JII70), firm value has a strategic dimension because, in addition to being required to demonstrate good financial performance, companies must also comply with sharia principles. Financial policies such as debt policy, dividend policy, and investment decisions are factors that can influence firm value, while profitability acts as an intervening variable that strengthens this relationship. This study uses a quantitative method with an associative research type to analyze the relationship between variables. Data were obtained through documentary studies using the financial statements of JII70 companies for the 2022–2024 period. The sampling technique used a non-probability method with purposive sampling. Analysis was carried out using correlation coefficient tests, coefficient of determination, simultaneous tests (F), and partial tests (t). The results of the correlation test indicate that debt policy, dividend policy, and investment decisions have a strong relationship with profitability (R = 0.038) and firm value through profitability (R = 0.679). The coefficient of determination shows that the three independent variables influence profitability by 5.1% and influence firm value through profitability by 46.2%. Simultaneous testing showed that the three policies had no significant effect on profitability, but did significantly influence firm value, with profitability as an intervening variable. Partially, all three variables significantly influenced both profitability and firm value. Debt policy, dividend policy, and investment decisions were shown to contribute significantly to firm value when mediated by profitability. Therefore, management needs to consider effective financial policy integration to enhance Sharia-compliant firm value.

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