The Mediation Role of Financial Performance in the Effect of Physical Capital on Firm Value

Amelia Dwi Wirantika, Maria Febry Herliani Kigo, Hambram Kharowi, Nurul Aini

Abstract


The purpose of this research is to investigate and analyze the function of financial performance in mediating the impact of physical capital on firm value. Several prior studies on the influence of physical capital (intellectual capital) on firm value had inconsistent findings, thus this study added the mediating variable of financial performance. This study employs a sample of manufacturing firms listed on the Indonesia Stock Exchange from 2015 to 2020. Using the purposive sampling method, a sample of 53 firms was obtained, for a total sample size of 318 company years. WarpPLS 7.0 is being used for hypothesis testing. According to the test results, the financial performance variable partially mediates the impact of physical capital on firm value (partial mediating). This study has implications for theory and practice in terms of the impact of physical capital and financial performance on firm value

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