THE EFFECT OF PROFITABILITY AND CAPITAL STRUCTURE ON FIRM VALUE WITH INCOME SMOOTHING AS A MODERATING VARIABLE IN NON-CYCLICALS CONSUMER SECTOR COMPANIES LISTED ON THE INDONESIAN STOCK EXCHANGE FROM 2021 TO 2024

Abstract

The firm value is a reflection of investors perception of the success of a company in creating shareholder welfare, which is reflected in the stock market price. This study aims to examine the effect of profitability and capital structure on the firm value with income smoothing as a moderation variable. The object of research is consumer Non-cyclicals sector companies listed on the Indonesia Stock Exchange for the period 2021-2024. Sampling using purposive sampling method with a total of 26 samples of companies for 4 years of observation, so that 104 observational data were obtained. This study uses a quantitative approach with data analysis techniques Moderated Regression Analysis (MRA) through the application of EViews 12. The results showed that profitability has a positive and significant effect on the firm value which means that the higher the company's ability to generate profits, the higher the market
valuation of the company. In addition, the capital structure is proven to have a positive and significant effect on the value of the company, indicating that proper funding management is able to increase investor confidence and encourage an increase in the value of the company. In contrast, income smoothing has no effect on the value of the company, so the practice of profit smoothing is not a major factor in market valuation. Income smoothing is also not able to strengthen or weaken the effect of profitability and capital structure on the firm value it shows that the firm value is determined more by fundamental performance and real financial policies
than by profit management practices.