influence of investment decisions and financing decisions on firm value with financial performance as a mediating variable

Abstract

This research investigates the complex relationship between managerial decisions and firm value within the Indonesian coal mining sub-sector, motivated by the inconsistent alignment of firm value with operational performance and commodity price fluctuations. The study aims to analyze how investment decisions, financing decisions, and financial performance influence firm value. Using a quantitative approach and path analysis, the study collected 75 observations from 15 coal companies listed on the Indonesia Stock Exchange from 2020–2024. The findings reveal that investment decisions have no significant effect on firm value, but they do have a significant positive impact on financial performance. Conversely, financing decisions have a significant positive effect on firm value, while negatively affecting financial performance. Financial performance, in turn, has a significant positive effect on firm value and acts as a significant mediator between investment decisions and firm value. These results are consistent with Signaling Theory, Pecking Order Theory, and Trade-off Theory. The study's implications are crucial for both financial managers and investors, emphasizing that a combination of strategic investment and balanced funding, along with strong financial performance, is essential for enhancing firm value.