The Influence of Financial Decisions and Business Strategy on Company Value with Financial Performance as a Mediation Variable Please create a background
DOI:
https://doi.org/10.24256/kharaj.v8i3.11506Keywords:
financial decisions, business strategy, financial performance, firm value, SEM-PLSAbstract
This study aims to analyze the effect of financial decisions and business strategy on firm value with financial performance as a mediating variable. The proposed hypotheses suggest that financial decisions and business strategy have both direct and indirect effects on firm value through financial performance. This research employs a quantitative approach with an explanatory design. The sample consists of companies listed on the Indonesia Stock Exchange during the 2020–2024 period, selected using purposive sampling. The data used are secondary data obtained from annual financial reports. The variables include financial decisions, business strategy, financial performance, and firm value. Data analysis was conducted using Structural Equation Modeling (SEM) based on Partial Least Squares (PLS).
The results indicate that financial decisions and business strategy have a positive and significant effect on firm value. In addition, both variables positively influence financial performance. Financial performance also has a positive effect on firm value and partially mediates the relationship between financial decisions and business strategy on firm value. The implications suggest that integrating financial policies with business strategy is crucial for enhancing firm value. These findings provide practical insights for managerial decision-making and offer directions for future research to expand the model with additional variables or different contexts
References
Alghifari, E. S., Hermawan, A., Gunardi, A., Rahayu, A., & Wibowo, L. A. (2022). Corporate financial strategy in an emerging market: Evidence from Indonesia. Journal of Risk and Financial Management, 15(8), 362. https://doi.org/10.3390/jrfm15080362
Anita, S. Y., Prayoga, R., Hernawan, M. A., Mayndarto, E., & Putra, C. I. W. (2025). Firm value and financial performance: Systematic literature review. Journal of Business Economics and Accounting, 5(1), 28–42.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.
Kaya, A., Pamucar, D., Gürler, H. E., & Ozcalici, M. (2024). Determining financial performance using multi-criteria decision-making methods. Financial Innovation, 10(21).
Khan, S., & Shoaib, A. (2024). Firm value adjustment speed through financial friction. Humanities and Social Sciences Communications, 11, 613.
Modigliani, F., & Miller, M. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review, 48(3), 261–297.
Myers, S. C. (1984). The capital structure puzzle. Journal of Finance, 39(3), 575–592.
Putri, I. A. J., Budiyanto, & Triyonowati. (2023). Financial performance and firm value: The role of signaling theory. International Journal of Scientific Research and Management, 11(4), 4776–4783.
Ramadhan, A., Arum, E. D. P., & Wiralestari. (2025). Financial performance and company value. International Journal of Economics and Business Research.
Rodríguez Valencia, L. (2025). Financial performance and corporate governance on firm value. International Journal of Financial Studies, 13(3), 123.
Ross, S. A. (1977). The determination of financial structure: The incentive-signalling approach. Bell Journal of Economics, 8(1), 23–40.
Suteja, J., Gunardi, A., Alghifari, E. S., Susiadi, A. A., Yulianti, A. S., & Lestari, A. (2023). Investment decision and firm value. Journal of Risk and Financial Management, 16(1), 40.
Türegün, N. (2022). Financial performance evaluation by multi-criteria decision-making techniques. Heliyon, 8(5), e09361.
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180.
Yulianah, Y. (2024). Deciphering financial strategy management: Insights into performance and investment decision-making. Journal of Business and Management Research, 7(1), 50–62.
Downloads
Published
How to Cite
Issue
Section
Citation Check
License
Copyright (c) 2026 Hani Krisnawati, Y. Sutomor, Sukirman, Muhammad Nurul Anwar
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. In line with the license, authors are allowed to share and adapt the material. In addition, the material must be given appropriate credit, provided with a link to the license, and indicated if changes were made. If authors remix, transform or build upon the material, authors must distribute their contributions under the same license as the original.
