The Influence of Risk Mitigation on Firm Value with Profitability as an Intervening Variable
DOI:
https://doi.org/10.38035/dijefa.v6i6.5915Keywords:
Risk Mitigation, Loan to Debt Ratio, Capital Adequacy Ratio, Operating Expenses to Operating Income, Return on Assets, Price to Book ValueAbstract
This study aims to analyze the effect of risk mitigation on firm value with profitability as an intervening variable in banking sub-sector companies listed on the Indonesia Stock Exchange during the period 2020–2024. The independent variables in this research are Loan to Debt Ratio (LDR), Capital Adequacy Ratio (CAR), and Operating Expenses to Operating Income (BOPO). The dependent variable is Price to Book Value (PBV), while the intervening variable is Return on Assets (ROA). The study employs purposive sampling, multiple regression analysis, and Sobel test using SPSS 25 software, with a total sample of 45 banks listed on the IDX. The findings indicate a significant negative effect of LDR on ROA, a significant positive effect of CAR on ROA, and a significant negative effect of BOPO on ROA. Furthermore, LDR has a significant negative effect on PBV, CAR has a significant positive effect on PBV, BOPO has a significant negative effect on PBV, and ROA has a significant positive effect on PBV. ROA, as an intervening variable, is able to mediate the relationship between risk mitigation variables and firm value.
References
Achmad, N., Suhartono, & Dewi, R. (2024). Does the price-to-book value still get influenced by the main factors of SDGs? SDGs Review Journal.
Adenuga, A. O., Mohammed, J. A., Laniyan, C. V., Akintola, A. A., & Asuzu, O. C. (2021). Measuring the impact of loan-to-deposit ratio on banks’ liquidity and profitability. Central Bank Research Journal.
Agnes, T. B., Blessky, M., & Samuel, R. (2023). The effect of CAR, NIM, BOPO, and LDR on ROA in state-owned banks. International Journal of Accounting, Management, Economics, and Social Sciences (IJAMESC).
Alamsyah, R., & Wijaya, A. (2020). The effect of capital adequacy ratio (CAR) on the profitability of the banking industry in Indonesia. Journal of Finance and Banking, 24(3), 123–136.
Alnabulsi, K., Kozarević, E., & Hakimi, A. (2023). Non-performing loans and net interest margin in the MENA region. International Journal of Financial Studies, 11(2), 1–15.
Ananda, R., & Sari, M. (2022). Efficiency and profitability analysis in the Indonesian banking sector. Journal of Economics and Finance, 15(1), 45–58.
Arifin, T., & Cahyono, R. (2024). Loan-to-deposit ratio, profitability, and firm value: Evidence from Indonesian banks. Journal of Finance and Banking, 28(1), 67–82.
Arseto, D. D., et al. (2022). The effect of capital adequacy ratio (CAR) and liquidity on profitability of Islamic commercial banks. Journal of Islamic Economics, 8(2), 45–60.
Basuki, D., & Rahman, A. (2024). Capital adequacy and firm value: The mediating role of profitability. Indonesian Journal of Accounting and Finance, 21(3), 101–115.
Cahyani, N., & Tubastuvi, R. (2023). BOPO and bank profitability: Evidence from Indonesian Islamic banks. Journal of Sharia Economics, 14(2), 55–70.
Dewi, K., & Indrawati, S. (2022). Operational efficiency (BOPO) and firm valuation in the Indonesian banking sector. Journal of Finance and Business, 19(1), 23–38.
Erfandi, H., Suryanto, M., & Hadi, P. (2022). Capital adequacy ratio and bank profitability: Evidence from Indonesian commercial banks. Journal of Finance, 10(2), 87–102.
Fadhilah, N., Santoso, E., & Wijaya, L. (2024). BOPO and profitability: Panel evidence from listed Indonesian banks (2018–2023). Journal of Finance and Banking, 28(2), 99–115.
Fatimah, S., & Suryadi, B. (2022). Liquidity ratios and firm valuation: An empirical study of Indonesian banks. Journal of Accounting and Finance, 17(3), 55–68.
Ghozali, I. (2020). Multivariate analysis application with IBM SPSS 25 (9th ed.). Semarang: Universitas Diponegoro Press.
Indrawati, L., & Rahman, F. (2020). Loan-to-deposit ratio and firm valuation: Evidence from the Indonesian banking sector. Journal of Finance, 12(1), 45–60.
Khan, A., Ahmed, S., & Raza, T. (2024). Loan-to-deposit ratio and profitability: Evidence from Pakistani banks. Asian Journal of Finance and Accounting, 16(1), 77–92.
Lestari, D., & Sari, R. (2024). Capital adequacy, profitability, and firm value: A mediation analysis. Widyatama Journal of Accounting and Finance, 21(2), 35–49.
Maimunah, S., & Fahtiani, T. (2019). The effect of NPL, ROA, and CAR on PBV in state-owned banks. Journal of Taxation, Accounting, and Public Finance, 8(2), 21–35.
Muhammad, A., et al. (2022). The effect of LDR on ROA at PT Bank Mandiri (Persero) Tbk. Journal of Administration and Management Sciences, 10(1), 55–70.
Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374.
Sugiyono. (2020). Business research methods: Quantitative, qualitative, and mixed methods approaches. Bandung: Alfabeta.
Wulan, M., Negoro, D. A., & Syah, T. Y. R. (2022). The effect of financial ratios in determining company value: Empirical study on banking companies listed on IDX 2015–2019. Budapest International Research and Critics Institute Journal, 5(4), 33–48.
Yulina, W. (2020). Value relevance of bank operational performance in Indonesia. Journal of Applied Finance and Accounting, 6(2), 50–63.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Widya Novita Sari, Neneng Susanti
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish their manuscripts in this journal agree to the following conditions:
- The copyright on each article belongs to the author(s).
- The author acknowledges that the Dinasti International Journal of Economics, Finance & Accounting (DIJEFA) has the right to be the first to publish with a Creative Commons Attribution 4.0 International license (Attribution 4.0 International (CC BY 4.0).
- Authors can submit articles separately, arrange for the non-exclusive distribution of manuscripts that have been published in this journal into other versions (e.g., sent to the author's institutional repository, publication into books, etc.), by acknowledging that the manuscript has been published for the first time in the Dinasti International Journal of Economics, Finance & Accounting (DIJEFA).
