Analysis of firm value with investment decisions as a mediating variable

Cahyanti, Novita Ramadhani Sukma and Yuniningsih, Yuniningsih (2025) Analysis of firm value with investment decisions as a mediating variable. World Journal of Advanced Research and Reviews, 27 (1). pp. 1279-1286. ISSN 2581-9615

Firm value reflects the market's perception of a company's performance and future prospects, making it a crucial indicator for investors in making investment decisions. This study aims to analyze the effect of dividend policy and leverage on firm value, with investment decision as a mediating variable, in the banking sector listed on the Indonesia Stock Exchange during the 2020–2023 period. A quantitative approach was employed, using purposive sampling which resulted in a sample of 12 companies from a total population of 45. Data analysis was conducted using the Partial Least Square (PLS) method with the assistance of SmartPLS 4.0 software. The results reveal that dividend policy has a significant positive effect on firm value, while leverage has a significant negative effect. Meanwhile, investment decision does not mediate the relationship between either dividend policy or leverage and firm value. These findings offer strategic insights for financial policy management aimed at strengthening the firm’s position in the capital market.