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This is a Quantitative study (also classified as: Multiple Linear Regression Analysis).

September 10, 2025

The Effect of Profitability on Company Value in Banking Companies Listed on the Indonesia Stock Exchange Sabrin1*, Omasrianto1, Muhammad Amir2, Muhammad Nur Afiat3, Darmono4

Key Points

Profitability indicators, including ROA, ROE, and NPM, positively influence firm value in banking companies.
The analysis revealed that ROA and ROE significantly affect firm value, demonstrating the importance of financial performance.
Multiple linear regression analysis utilized data from 20 banking companies' audited annual financial statements.
Findings suggest that improving profitability metrics may enhance overall firm value in the banking sector.

Abstract

This study aims to analyse the effect of profitability on firm value in banking companies listed on the Indonesia Stock Exchange from 2019 to 2023. Profitability is measured using three main indicators: return on assets (ROA), return on equity (ROE), and net profit margin (NPM). Meanwhile, firm value is measured by using the price to book value (PBV) ratio. The research adopts a quantitative approach with multiple linear regression analysis, using secondary data from the audited annual financial statements of 20 selected banking companies, based on purposive sampling criteria. The results show that ROA, ROE, and NPM have a positive and significant effect on firm value both partially and simultaneously. Keywords: Profitability, firm value, banking, ROA, ROE, NPM

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The Effect of Profitability on Company Value in Banking Companies Listed on the Indonesia Stock Exchange Sabrin1*, Omasrianto1, Muhammad Amir2, Muhammad Nur Afiat3, Darmono4

Key Points

Abstract

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