Firms’ value determinants: evidence from Jakarta Islamic Index (JII)

Abstract

Several factors, including the debt-to-equity ratio (DER), liquidity, firm size, and profitability, are believed to be capable of influencing the value of a company. However, the results of prior research indicate that there is a gap in knowledge. This study aims to investigate the impact of DER, current ratio (CR) and quick ratio (QR), firm size, the return of assets (ROA) and the return of equity (ROE) on the value of companies as measured by Tobin's q. The research employed a quantitative approach, including secondary data gathered from the Indonesia Stock Exchange's official website. Multiple regression is the type of analysis employed. The sampling strategy employs the purposive sampling method, with 22 sample companies selected from a population of 47 companies. This study was conducted on JII listed firms between 2017 and 2020. The results suggested that the DER, liquidity, company size, and profitability all had simultaneous effects on the value of the company, as evidenced by a significance value of 0.000 and a F value of 85.035. The significance value is greater than 0.05, indicating that DER, current ratio, quick ratio, company size, and ROA have no effect on the company's value. In the meantime, the ROE variable has a marginal impact on the value of the company, with a significance value of 0.000