The Role of Capital Structure in Mediating the Effect of Profitability and Firm Size on Firm Value

Abstract

This study aims to analyze the role of capital structure in mediating the effect of profitability and firm size on firm value in manufacturing companies in the Consumer Non-Cyclicals sector listed on the Indonesia Stock Exchange (IDX) during the 2020–2024 period. This research uses a quantitative approach with a causal design. The sample was selected using purposive sampling, resulting in 13 companies with 65 observations. Data analysis was conducted using panel data regression with EViews 13, including descriptive statistics, model selection tests, t-test, coefficient of determination (R²), and Sobel test. The results indicate that profitability and firm size do not significantly affect capital structure. Profitability has a significant negative effect on firm value, while firm size has no significant effect. Capital structure significantly affects firm value negatively. Furthermore, capital structure does not mediate the relationship between profitability and firm value or between firm size and firm value.