Analysis of the Robustness of Corporate Value Determinants Using Price-to Book Value and Tobin’s Q

Abstract

This research aims to examine the effect of profitability, capital structure, dividend policy, and the Covid-19 effect on firm value, with firm size as a control variable, in property and real estate companies listed on the Indonesia Stock Exchange. This research employed a quantitative approach using panel data regression on eight companies selected through purposive sampling over the 2019–2024 period, resulting in 48 firm-year observations. Price to Book Value (PBV) is used as the primary proxy for firm value, with Tobin’s Q employed as a robustness check. The results indicate that capital structure has a positive and significant effect on firm value when measured using PBV, at the 10% significance level. Firm size, as the control variable, is also negative and significant at the 10% level in both models. However, profitability, dividend policy, and the Covid-19 effect do not have a significant effect on firm value under either proxy. Capital structure also loses its significance when firm value is measured using Tobin’s Q, indicating that this result is not fully consistent across proxies. This finding suggests that, within the property and real estate sector, firm value is more strongly associated with structural characteristics such as firm size rather than short-term financial ratios. This study concludes that improving firm value in the property and real estate sector cannot rely solely on financial ratio management, but must also consider structural firm characteristics and the sensitivity of results to the valuation proxy used.