Profitability, Leverage, and Sales Growth: The Mediating Role of Dividend Policy in Determining Firm Value

Abstract

Firm value represents the market's perception of a company's
performance and future prospects. This study seeks to provide
empirical evidence on the impact of profitability, leverage, and sales
growth on firm value, with dividend policy serving as a mediating
variable. The research sample comprises 60 energy companies selected
from a population of 87 firms listed on the Indonesia Stock Exchange
during the 2022–2023 period. Data were analyzed using path analysis
techniques, employing SmartPLS 4.0 to evaluate the proposed
relationships. The findings indicate that profitability, sales growth, and
dividend policy positively influence firm value, whereas leverage
exerts a negative effect. Moreover, profitability and sales growth
positively affect dividend policy, while leverage has a negative impact.
Dividend policy is shown to partially mediate the relationships
between profitability and leverage with firm value, and fully mediates
the relationship between sales growth and firm value.