Capital Structure Mediation: Profitability and Dividend Policy Effects on Firm Value in IDX-Listed Service Firms, 2022–2024

This study aims to investigate the influence of profitability and dividend policy on firm value, with capital structure acting as a mediating factor, specifically within service sector companies listed on the Indonesia Stock Exchange during the 2022–2024 period. This study utilizes panel data regression techniques and SEM PLS bootstrapping mediation tests for analysis. The findings indicate that profitability has a positive and significant impact on firm value, underscoring its essential role as an indicator of corporate reliability and performance. Conversely, dividend policy does not significantly affect firm value, suggesting that dividends have a limited role in determining the value within Indonesia’s service sector. Furthermore, profitability negatively and significantly influences capital structure, as companies with higher profits tend to reduce their reliance on debt for operational financing. Capital structure neither directly affects nor mediates the relationship between dividend policy and firm value. However, it negatively mediates profitability and firm value. These results highlight the importance of enhancing profitability and effectively managing capital structure, as well as the necessity of tailoring management strategies to industry-specific characteristics. The study also recommends broadening the range of variables considered and testing in other sectors to enrich the understanding of firm value formation in Indonesia.