The Influence of Value-Based Management Implementation, Profitability, and Company Size on Company Value

Abstract

This research is motivated by the need to understand the most relevant indicators in explaining firm value in emerging markets, particularly following changes in investor behavior post-pandemic that increasingly emphasize long-term value creation. This study aims to analyze the effect of Market Value Added (MVA), Economic Value Added (EVA), Cash Value Added (CVA), profitability, and firm size on firm value. The study uses a quantitative causal-associative approach with panel data of 51 manufacturing companies listed on the Indonesia Stock Exchange during 2019–2024, resulting in 306 firm-year observations. The sample was selected purposively, while the analysis was conducted using panel data regression with a Fixed Effect Model after undergoing Chow and Hausman tests, multicollinearity tests, and heteroscedasticity tests. The results show that MVA and Return on Assets (ROA) have a positive and significant effect on firm value. Conversely, EVA, CVA, and firm size do not show a significant effect. Simultaneously, all independent variables have a significant effect on firm value, with the model's explanatory power reaching 17.51% based on the R-squared value. These findings suggest that markets respond more to market-based value creation and asset efficiency than to indicators based on cost of capital, cash flow, or asset size. Therefore, companies need to prioritize asset optimization and shareholder wealth creation, along with transformation mark.