Abstract:
Banking industry is a prominent sector for an economy as it can affect the money
circulation in the society. Therefore, it is important to understand the factors
affecting this sector, especially in relation to its growth. As such, the objective of
this study is to find the effect of the determinants for firm value (Tobin’s Q), as well
as the mediating role of profitability (ROA) in the relationship. In this research, the
determinants used are non-performing loan (NPL), capital structure (DER), and
firm size (Total assets). This research will focus on 10 IDX-listed banks categorized
within KBMI 3 and 4 within the period from 2016-2021 that have fulfilled the
criteria set by the author, and the data used will be secondary data as gathered from
the firm’s annual report. To analyze the data, the method of multiple regression and
path analysis (Sobel test) are applied, and the results show that non-performing loan
and capital structure have negative influence, while firm size and profitability have
positive effect on firm value. It is also found that non-performing loan, capital
structure, firm size, and profitability simultaneously affect firm value significantly.
In addition, the test also shows the capability of profitability in mediating the effect
of non-performing loan and capital structure on firm value, however, it is unable to
mediate the influence of firm size.
