The Effect of Profitability on Company Value with Dividend Payout Ratio as Moderation Variable

ABSTRACT: The company’s goal in general is to maximize profits. In addition to maximizing profits,increasing company value is an important goal in the company. Increasing the value of the company is a goodthing because it reflects the company’s ability to prosper its shareholders. This study aims to obtain empiricalevidence regarding the Dividend Payout Ratio as a moderating effect of profitability on firm value. Purposivesampling is used in the method of determining the sample in this study. This research was conducted on the LQ45 Index company for the 2017-2019 period on the Indonesia Stock Exchange. The sample in this study were 26companies that were observed for 3 observation periods in order to obtain 78 research objects. The data analysistechnique used is Moderated Regression Analysis (MRA). Based on the research results, it can be concludedthat profitability, which is proxied by ROE, has a positive effect on company’s value. Dividend Payout Ratio isable to moderate the effect of profitability on firm value. This shows that the dividend payout ratio is able tostrengthen investors assessment of the company when the company’s profitability has increased.

KEYWORDS: profitability, dividend payout ratio, company value