Financial Performance, Reputation, and Firm Value: Empirical Evidence of Non-financial Companies Listed in Indonesia Stock Exchange

Abstract

The research aims to investigate (1) the influence of financial performance on reputation, (2) the influence of financial performance on firm value, (3) the influence of reputation on firm value, (4) the influence of financial performance on firm value with reputation as a mediating variable. The sample of this study consisted of 108 non-financial companies listed in the Indonesia Stock Exchange during 2016-2018 which was selected using a purposive sampling method. The analysis method in this study uses path analysis. The reputation measurement used the corporate image index (CII) published by Frontier Consulting Group. The results showed that (1) financial performance has a positive and significant influence on company reputation, (2) financial performance has a positive and significant effect on firm value, (3) reputation has a positive and significant influence on firm value, (4) reputation mediates the influence financial performance on firm value. The implication of this research was the financial performance as a positive signal in improving the company's reputation which has an impact on increasing investor belief in the capital market.