THE EFFECT OF MARKET RISK AND FUNDAMENTAL RISK ON COMPANY VALUE WITH DIVIDEND EFFECTIVENESS BASED ON OPTIMIZATION OF PROFITS AS MODERATOR

Diana Puspitasari, Sugeng Wahyudi, Shintya Novitasari Rahmawati

Abstract


This study aims to determine the effect of market risk and fundamental risk on firm value with Dividend Effectiveness based on Profit Optimization as a moderator for Blue Chip companies in Indonesia for the 2014-2019 period. This research used Market Book Ratio explanatory variables to measure the firm value, as well as the main variables consisting of market risk as measured by market ratios consisting of Price Earning Ratio and fundamental risk as measured by fundamental ratios consisting of Debt Equity Ratio and Net Profit Margin, as well as novelty in the form of dividend effectiveness variables based on profit optimization as moderation. Testing data using smart PLS for panel data as much as 90 data obtained during the study period. An increase in debt (DER) will have an impact on the dividend distribution policy so that profits are not optimal, when profits are not optimal, then the company's signal indicates that the company's performance is also not good so that it has an impact on the decline in the value of the company (MBR). Meanwhile, a large Net Profit Margin indicates that the company's operations are running smoothly and have good financial performance but do not affect firm value. The next finding is that the effectiveness of dividends based on earnings optimization can be said to be a variable that has the potential to become a moderating variable in moderating. An increase in profits reflects the company's achievements so that it can improve the company's image and value. The results of this study can contribute to an indicator of investment made by investors. Also, the historical data obtained in this study can be used as an explanation to increase the company's book value in future periods. The main contribution in this research is the new findings of the variable dividend effectiveness resulting in profit optimization which can act as a moderator to increase firm value

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DOI: https://doi.org/10.35194/cp.v0i0.1324

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