THE ROLE OF THE ECONOMIC ENVIRONMENT IN INFLUENCED THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND COMPANY VALUE IN INDONESIA
DOI:
https://doi.org/10.18623/rvd.v23.n2.4287Keywords:
Economic Environment, Corporate Value, Financial PerformanceAbstract
The economic environment plays a significant role in influencing the relationship between financial performance and firm value. This study aims to examine whether the economic environment, proxied by interest rates, inflation, and Gross Domestic Product (GDP), can influence the relationship between financial performance, proxied by Return on Assets (ROA), Debt to Equity Ratio (DER), Current Ratio (CR), and Total Asset Turnover (TATO), and firm value, proxied by Price Book Value (PBV). The study was conducted on food and beverage subsector companies listed on the Indonesia Stock Exchange (IDX) during the period 2018–2024. The results show that of the four financial performance indicators, only ROA, DER, and TATO influence PBV. The only economic environment that has been shown to moderate is inflation, which strengthens the influence of ROA on PBV and acts as a quasi-moderator. The implication of this study is that in financial analysis, understanding the role of the economic environment is crucial for predicting future financial performance and firm value. Therefore, companies must monitor changes in the economic environment and adjust their business strategies to increase company value.
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