The Influence of Liquidity, Profitability, Solvency, and Firm Size on the Firm Value of Banking Companies Listed on the IDX

Abstract

This research aims to analyse the impact of liquidity, profitability, solvency, and firm size on the corporate value of banking companies listed on the Indonesia Stock Exchange (IDX) during the 2022–2024 period.  Employing a quantitative research design with secondary data, 27 banks were selected through purposive sampling, providing 81 observations analysed via multiple linear regression. Firm value was measured using Price-to-Book Value (PBV), liquidity by Loan-to-Deposit Ratio (LDR), profitability by Return on Assets (ROA), solvency by Debt-to-Equity Ratio (DER), and firm size by the natural logarithm of total assets. All four independent variables exert a positive and statistically significant influence on firm value, both individually and simultaneously (F = 7.326; sig. = 0.000). The model yielded a coefficient of determination (R²) of 0.778.  The findings demonstrate that 77.8% of the variance in banking corporate value is explained by this model. This highlights that sound liquidity, robust profitability, managed debt structure, and larger operational scale are vital determinants for driving investor valuation in the Indonesian banking sector.