The Effect of Profitability and Capital Structure on Company Value: An Empirical Study of LQ 45 Companies Listed on the Indonesia Stock Exchange (2019-2023)
DOI:
https://doi.org/10.59890/ijma.v4i4.63Keywords:
Profitability, Capital Structure, Firm ValueAbstract
This inquiry interrogates the mechanistic influence of operational profitability and capital structure architecture on the enterprise valuation of premier LQ45 corporations listed on the Indonesia Stock Exchange (IDX) across the 2019–2023 temporal horizon. Operating within a quantitative paradigm supported by descriptive and associative analytical designs, the empirical framework evaluates a refined sample of 20 corporate entities chosen via non-probability purposive filtering from a total baseline population of 45 enterprises. Utilizing longitudinal panel regression analysis on secondary metrics, the empirical outputs demonstrate that both earning capacity and financial leverage structure exert positive and statistically significant ramifications on market valuation, functioning both discretely and in tandem. Furthermore, the calculated coefficient of determination ( ) reveals that these dual independent predictors absorb the predominant variance within corporate enterprise value, while the remaining unexplained residual is governed by unobserved exogenous variables.
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