This study examines whether capital structure mediates the relationship between profitability, growth opportunities, and firm value in Indonesian transportation firms. A quantitative explanatory design is employed using balanced panel data from 20 transportation companies listed on the Indonesia Stock Exchange during 2020–2024, yielding 100 firm-year observations. Panel regression and Baron and Kenny mediation analysis are applied. Profitability significantly enhances firm value; however, this effect becomes insignificant when capital structure is introduced, providing strong evidence that capital structure operates as a transmission mechanism of the profitability-firm value relationship. Growth opportunities exhibit no significant direct or indirect impact on firm value during the observation period. The study extends capital structure theory by demonstrating that financing decisions mediate firm valuation in an emerging market context. Managers in capital-intensive industries should prioritise financing strategies alongside operational performance to enhance firm value. The analysis is limited to a single industry and a short observation period, restricting generalisability.
Mahmoud et al. (Tue,) studied this question.