The Role of Dividend Policy in Mediating the Influence of Capital Structure, Profitability, and Investment Opportunities on Firm Value

Abstract

Firm value is an indicator of investor confidence and corporate performance, particularly in Indonesia’s food and beverage sector, where market valuation fluctuated during 2019–2025. This study examines the effects of capital structure, profitability, and investment opportunity on firm value, while assessing dividend policy as a mediating variable. A quantitative design was employed using secondary data from annual reports and financial statements of food and beverage companies listed on the Indonesia Stock Exchange. Purposive sampling produced 20 companies observed over seven years, yielding 140 panel observations. Data were analyzed using panel data regression, path analysis, and the Sobel test with EViews 12, with firm size included as a control variable. The results show that capital structure has no significant effect on either dividend policy or firm value. Profitability positively affects dividend policy and firm value, while investment opportunity negatively affects dividend policy but positively and most strongly affects firm value. Dividend policy positively affects firm value and partially mediates the relationship between investment opportunity and firm value, but does not significantly mediate the effects of capital structure or profitability. The study concludes that investment opportunity is the dominant determinant of firm value, with dividend policy serving as a selective mediation mechanism.