The Effect of Profitability, Dividend Policy, and Profit Growth on Company Value Through Price Earning Ratio In Food and Beverage Sector Manufacturing Companies on the Indonesia Stock Exchange

1. Introduction

The manufacturing sector, particularly the food and beverage industry listed on the Indonesia Stock Exchange (IDX), is recognized as one of the pillars of the national economy due to its high resilience as a defensive sector, capable of withstanding fluctuations in the macroeconomic cycle (Juliani Putri & Mulyandini, 2023). The characteristics of the food sector based on meeting the primary consumption needs of the domestic community make it an investment instrument that is in great demand by shareholders (Nainggolan & Siswanti, 2025). Nevertheless, the appreciation of global and domestic capital markets for firm value in this sector exhibited significant volatility throughout the 2020–2024 period (Andri Dwi Aprianto et al., 2020). The phenomenon of fluctuations in the objective assessment of capital market participants is clearly illustrated by the average movement of the index PBV food and beverage industry (G. Ardiansyah & Kharisma, 2024). In 2020, the average combined PBV ratio opened observations on the premium corridor by 1.84 times, reflecting investors' initial optimism (Asakir, 2023; Faisal, 2020). However, as the market adjusts after the global health crisis, the PBV ratio slumped sharply to a low of 1.38 times in 2021, before finally moving flat at 1.46 times in 2023, and closing weaker at 1.27 times by the end of 2024 (Andri Dwi Aprianto et al., 2020). This appreciation gap is even more contrasting at the individual level of issuers; where PT Mayora Indah Tbk (MYOR) is able to enjoy a premium PBV ratio of 5.37 times, while similar issuers such as PT Garudafood Putra Putri Jaya Tbk (GOOD) actually recorded a low PBV that is close to its actual equity book value (Nainggolan & Siswanti, 2025).

The dynamics of the rise and fall of external market appreciation are theoretically closely related to the quality of the vibrations of internal fundamental financial signals as well as the effectiveness of financial decisions released by corporate management (Diantimala et al., 2021; Faisal et al., 2020). The characteristics of the company's value formation are structurally influenced by three main financial determinants, namely the level of printing operating profit or profitability, the cash dividend allocation policy, and the accelerated rate of annual profit growth (Faisal et al., 2020; Novita et al., 2025). Profitability proxied through ROA reflects the efficiency of managerial asset management in generating net profits (Alfianita & Santosa, 2022). On the other hand, the dividend policy is measured through Dividend Payout Ratio (DPR) describes the management's commitment to distributing net cash to maximize the prosperity of current capital owners (Pasaribu et al., 2023). Meanwhile, the rate of profit growth acts as a parameter of the issuer's operational capability in expanding market share and minimizing the cost burden (Suhartono et al., 2022). The dynamic interaction of these three financial microeconomic variables simultaneously captured the attention of financial analysts and determined the tolerance limit of investors' buying prices in the secondary market (Ayu et al., 2025; Valentine et al., 2022).

The appreciation of the company's value itself is defined as the accumulation of perceptions, levels of trust, and objective assessment of capital market participants on the capacity of managerial governance in multiplying the nominal value of shareholders' initial investment into a competitive premium market value (G. Ardiansyah & Kharisma, 2024; Sihaloho & Rochyadi, 2021). A high market valuation of a company's equity is crucial for the food manufacturing industry to maintain the industry's competitiveness and facilitate access to low-cost capital resource allocation on the stock exchange (Beatrice Angelia Puspitasari et al., 2024; Khan et al., 2024). When a company consistently maintains a PBV ratio above one, this indicates that it possesses intangible assets in the form of a superior governance reputation (Faisal et al., 2020; Sihaloho & Rochyadi, 2021). Therefore, close supervision of capital owners is necessary to evaluate the causality trajectory of the internal factors underlying the fluctuations in the market book value (Paminto et al., 2016; Umbung et al., 2021).

Profitability is widely regarded as one of the most sensitive fundamental indicators, functioning as a credible signal within the framework of signalling theory (Spence, 1973). Companies that record high ROA performance indicate superior operational performance, which is then responded positively by investors through an increase in the volume of stock purchase transactions on the stock exchange (Alfianita & Santosa, 2022). Nevertheless, empirical evidence points to a research gap, in which the average ROA of the sample firms remained relatively stable within the range of 7.60% to 8.66%, yet failed to sustain a corresponding stability in the combined PBV ratio, which instead exhibited a declining trend (Andri Dwi Aprianto et al., 2020). This absolute reliance on accounting profitability signals is controversial, as improvements in profit margins are not necessarily responded to by the market instantly if they are not accompanied by long-term governance confidence (Marpaung & Hocky, 2023).

Meanwhile, dividend policy, as reflected in the DPR, plays a strategic role as an external monitoring mechanism, drawing on the perspective of agency theory (Jensen & Meckling, 1976). The distribution of net profits in the form of cash dividends effectively restricts managerial discretion over free cash flow (FCF), thereby curbing opportunistic behavior among managers who tend to pursue empire-building through overinvestment (Faisal et al., 2020; Nianty et al., 2023). The certainty of cash inflows from dividends has been shown to provide greater utility satisfaction for shareholders, as postulated by Bird in the Hand Theory (Billy, 2024; Sutanti & Munawaroh, 2022). However, data from the food and beverage industry panel recorded very volatile fluctuations in the DPR, where the dividend payment ratio had plummeted to a level of 23.42% in 2021 before jumping radically to its peak of 57.87% in 2022. This inconsistency in the direction of cash allocation policy often triggers panic selling, as the market speculates on the deterioration of the issuer's internal fundamentals (Fadilla et al., 2020; Faisal et al., 2020).

Profit growth presents an overview of the operational maturity and expansion of the company's commercial share from one period to the next (Putu Ari Aryawati et al., 2022; Suhartono et al., 2022). Signals accelerating steady net profit growth act as positive signals which confirms that the issuer's products have high market acceptability (G. Ardiansyah & Kharisma, 2024; Spence, 1973). However, management often faces operational dilemmas; When the rate of profit growth declined drastically from its peak of 71.04% in 2021 to breaking through the negative zone of -8.26% at the end of 2024, management was forced to cut the dividend portion to secure working capital (G. Ardiansyah & Kharisma, 2024). This empirical contradiction gives rise to a new research gap, whereby some researchers have found a significant effect of growth on market value, while others have found a neutral response from stock market participants due to diminished expectations of cash dividends (G. Ardiansyah & Kharisma, 2024; Umbung et al., 2021).

The direct causal relationship between internal fundamental variables (ROA, DPR, Growth) and macro market valuation (PBV) is not entirely linear, thereby necessitating relative price expectations as a mediating variable (Widhiarso, 2010). The PER variable is present as a secondary market psychological indicator, bridging internal accounting-based fundamental performance factors with investors' perceptions of stock prices (Ermad et al., 2026; Usman & Lestari, 2021). The PER ratio reflects the nominal amount, in rupiah, that investors are willing to pay to acquire every rupiah of earnings per share (EPS) reported by the issuer (M. F. Ardiansyah et al., 2020; Sihaloho & Rochyadi, 2021). Through a path analysis approach, fluctuations in the accounting signal are first filtered within the PER expectation space before ultimately shaping the final pricing decisions in the secondary market (Andreas et al., 2021; Widhiarso, 2010). Historical PER data from 2020 to 2024 show a drastic decline in the average PER of combined food and beverage issuers, from a premium level of 57.60 times in 2020 to a more rational level of 15.76 times in 2024. This weakening pattern in fair share price multiples aligns closely with the decline in the combined PBV of food and beverage issuers, thereby underscoring the important role of PER as a mediating variable (Sihaloho & Rochyadi, 2021).

As an element of novelty that distinguishes this study from conventional research, this article integrates the demands of environmentally conscious business behavior into the conceptual framework of corporate financial accounting (Adam, 2023; Faisal et al., (2020). In the modern stock exchange trading ecosystem, food and beverage manufacturing issuers are no longer evaluated solely on the mechanical capacity to print commercial profitability, but are obliged to work in harmony with the ecological compliance of the corporation (Faisal et al., 2020). Corporations that neglect social responsibility and environmental sustainability in the vicinity of their factories run the risk of regulatory and legal sanctions as well as consumer boycotts, which in turn degrade brand reputation and trigger residual increases in agency costs (Diantimala et al., 2021; Jensen & Meckling, 1976). Conversely, transparency in the disclosure of green governance performance serves as a credible secondary signal that reinforces earnings quality in the eyes of global institutional investors in the stock exchange (Spence, 1973; Umbung et al., 2021). The integration of conventional financial variables with corporate environmental management is laid as a critical foundation, by including deductive testing from previous researchers such as Faisal, Majid, & Sakir (2020), Diantimala et al. (2021), and Ermad et al. (2026) to ensure the validity of the data model of this article's panel.

Previous empirical studies have confirmed the inconsistency of the direction of the relationship where profitability and healthy company growth are believed to act as positive catalysts that boost the value of the equity market (Ayu et al., 2025; Ganawati et al., 2025). Other research proves that the PER and ROA ratios have been proven to have a significant direct effect in controlling the direction of fluctuations in the equity market value of companies in the consumption sector (Pasaribu et al., 2023). The positive correlation between the acceleration of net profit growth and the stability of asset returns was also confirmed to be the main driver of the strengthening of stock prices (Suhartono et al., 2022). Nevertheless, such studies generally purely test multiple linear correlations directly without involving the psychological intermediation channel of multiples of profit feasibility specifically proxied by the PER ratio (G. Ardiansyah & Kharisma, 2024; Juliani Putri & Mulyandini, 2023). In addition, the majority of previous financial research used historical databases before the economic crisis and had not integrated the dynamics of the latest panel data changes post-global pandemic (Khan et al., 2024; Novita et al., 2025).

Therefore, this study is essential in elaborating and measuring the influence of profitability, dividend policy, and profit growth on the formation of firm value through the PER as a mediating variable, in the food and beverage subsector on the IDX, using actual panel data up to 2024. This article is expected not only to offer a substantive theoretical contribution that enriches the body of knowledge in financial management, but also to serve as an operational and strategic reference for corporate financial managers in balancing the allocation of retained earnings; to assist investors in the secondary market in conducting rational fundamental analysis so as to avoid suboptimal speculative investments; and to provide a basis for consideration for regulators such as the Financial Services Authority (OJK) and the IDX in formulating regulations on green governance disclosure for national manufacturing issuers.

2. Theoretical Studies

2.1 Signal Theory

The problem of information asymmetry in the capital market can be mitigated through the mechanism of information exchange between insiders within the company and external parties. This concept lies at the heart of signalling theory, a theoretical foundation pioneered by Spence in 1973. From a corporate finance perspective, managers possess access to more complete and up-to-date information regarding the issuer's operational conditions and future prospects compared to outside investors (Dyana Novita Taristy et al., 2022; Spence, 1973). Therefore, the annual financial report acts as an instrument of release signals or signals that reflect the optimism and credibility of management towards the business sustainability of the entity it manages (Adeliani & Roosdiana, 2022). Investors in the stock exchange will actively process, dissect, and interpret such financial ratio signals to determine whether the information presented conveys good news or, conversely, bad news (Dyana Novita Taristy et al., 2022). Within the framework of this study, signalling theory is used as the theoretical foundation to examine how signals of profitability (ROA), dividend policy (DPR), and profit growth are evaluated by investors through the filtering mechanism of the mediating variable, the earnings multiple (PER), before ultimately shaping firm value (PBV) (Diantimala et al., 2021; Faisal et al., 2020).

2.2. Agency Theory

(Jensen & Meckling, 1976) Agency theory explains that shareholders, acting as the principal, delegate operational mandates to managers (the agent) in the hope of maximizing their wealth. Nevertheless, there is a natural human tendency to prioritize one's own interests (self-interested behavior), which gives rise to a divergence of interests between the two parties. The negative impact of this agency conflict is considered particularly vulnerable to worsening if the corporation holds surplus free cash flow in the absence of a strict control mechanism (Nianty et al., 2023). (Faisal et al., 2020) found that in the dynamics of stock markets in developing countries such as Indonesia, this agency problem more often manifests as a conflict of interest between controlling majority shareholders and minority shareholders. In order to mitigate such deviant behavior, the cash dividend allocation policy, as reflected in the dividend DPR, serves as a highly effective external monitoring mechanism to limit managerial discretion over the use of free cash flow (Faisal et al., 2020).

2.3. Bird in the Hand Theory

The certainty of returns on investment through cash dividends is generally considered by investors to hold greater value than the prospect of future gains from price appreciation (capital gains). This premise lies at the heart of bird-in-the-hand theory, a concept in dividend policy pioneered by Myron Gordon and John Lintner. The psychological underpinning of this theory is investors' risk aversion, whereby one rupiah of dividends received today is regarded as possessing an absolute level of certainty, free from uncertainty (Sutanti & Munawaroh, 2022). On the other hand, procurement Capital gains in the future is highly dependent on the volatility of stock price movements in the secondary market which is influenced by macroeconomic shocks (Indarti & Nurdhiana, 2021). Therefore, investors are willing to accept a higher share price for manufacturing issuers that implement a generous and consistent dividend payment policy, thereby systematically lowering shareholders' required rate of return and encouraging an increase in the market value of corporate equity (Faisal et al., 2020; Wijaya et al., 2025).

2.4. The Effect of Profitability on Company Value

Firm value is defined as the collective perception and level of confidence accorded by capital market participants to a corporation's financial health, operational performance, and business sustainability prospects (G. Ardiansyah & Kharisma, 2024). In empirical financial research, the degree of external equity valuation is commonly proxied by the price to PBV ratio (Purwaningrum, 2011). This ratio measures the actual closing share price in the secondary market against the net book value of equity per share (M. F. Ardiansyah et al., 2020). Related to this, (Indarti & Nurdhiana, 2021) emphasized that high profit is the main target of shareholders, considering that this profitability factor functions as the most powerful stimulant in boosting the value of the company's PBV.

Based on signal theory, the acquisition of the ROA reflects efficient mastery of production technology and disciplined internal cost management (Spence, 1973). This positive profitability signal was met with an increase in equity purchase transactions by stock exchange participants, which in turn drove up the issuer's actual market share price (Beatrice Angelia Puspitasari et al., 2024). This surge in stock prices on the stock exchange will automatically widen the gap between the value of the stock market capitalization and the net book value of the corporation's equity, which is reflected in the increase in the company's PBV ratio (Faisal et al., 2020). Conversely, the inefficiency of printing operating profits will directly damage the financial reputation of the corporation and degrade the valuation of the stock market to a low point (Juliani Putri & Mulyandini, 2023).

H1: Profitability has a significant effect on the Company Value of manufacturing companies in the food and beverage sector listed on the Indonesia Stock Exchange.

2.5. The Effect of Dividend Policy on Company Value

The dividend policy reflects the company's commitment to balancing the fulfillment of cash return rights for current investors and the need to retain profits for future business expansion (Pasaribu et al., 2023). In the accounting management research exchange, the ratio DPR is consistently adopted as a single measurement indicator (Akhmadi & Januarsi, 2021). The dividend payout ratio compares the nominal amount of dividends per share to total earnings per share (EPS) (Pasaribu et al., 2023). The policy of distributing net profits in the form of cash dividends plays a strategic role in shaping the appreciation of firm value on the stock exchange (Pasaribu et al., 2023).

In accordance with the postulates of agency theory, the establishment of a stable DPR is regarded by the market as evidence of management's commitment to protecting the rights of minority shareholders from potential misappropriation of funds by controlling parties (Jensen & Meckling, 1976). The absence of suspected agency conflicts fosters a conducive investment climate, encouraging investors to pay share prices above the nominal book value of equity (Faisal et al., 2020). Empirical findings from emerging stock markets demonstrate that the distribution of cash dividends serves as a signal of liquidity health that significantly strengthens firm value (Ermad et al., 2026). The certainty of receiving cash dividends today provides greater utility satisfaction for shareholders, as postulated by bird-in-the-hand theory (Billy, 2024).

H2: Dividend Policy has a significant effect on the Company's Value in food and beverage sector manufacturing companies listed on the Indonesia Stock Exchange.

2.6.The Effect of Profit Growth on Company Value

Profit growth is defined as the percentage rate of increase or decrease in a firm's net profit after tax from one accounting period to the next (Indarti & Nurdhiana, 2021). The annual net profit growth rate is measured using the annual relative change formula in order to avoid bias arising from differences in firm size (Umbung et al., 2021). This growth indicator reflects the allure of the expected future return of investment for shareholders in the secondary market (Diantimala et al., 2021). The signals of accelerating profit growth released by management provide investors with assurance regarding the company's going concern and its long-term corporate resilience (Ayu et al., 2025). When profit growth moves positively, the market will seize on it as a strong indication that the company is in a very productive expansion phase (Ayu et al., 2025). This is the basis why profit growth analysis is a crucial agenda for investors before investing their capital (G. Ardiansyah & Kharisma, 2024).

Investors on the stock exchange demonstrate a strong willingness to assign a premium valuation (Market Premium) to manufacturing stocks that exhibit an expanding trajectory of sales volume growth (G. Ardiansyah & Kharisma, 2024). This optimistic response from capital market participants is reflected in the gradual and sustained increase in stock prices over time (Ivani & Efendi, 2024). This condition will inevitably widen the gap between the external share price and the book value, thereby increasing the company's Price to Book Value (PBV) ratio (Ivani & Efendi, 2024). Conversely, a sharp slowdown or contraction in earnings growth will be negatively responded to by the market and lower the value of the company's equity (G. Ardiansyah & Kharisma, 2024). The trend of declining net profit indicates the pressure of inefficiency of factory operating costs or weakening of market absorption of food and beverage products (Nasehah & Widyarti, 2012). Therefore, the consistency of net profit growth plays an absolute role as the main driver of strengthening the appreciation of corporate value in the capital market (Hanifah & Riyanti, 2021).

H3: Profit Growth has a significant effect on the Company Value of food and beverage sector manufacturing companies listed on the Indonesia Stock Exchange.

2.7. The Effect of Profitability on Price Earning Ratio (PER)

PER is defined as a secondary market valuation ratio that measures the extent to which the current market price per share is a multiple of the net earnings per share reported by the company (Sihaloho & Rochyadi, 2021). The PER ratio acts as a psychological indicator that translates how much rupiah is willing to be poured by stock exchange investors to compete for every rupiah of net profit generated by the company's management (Wiratno et al., 2022). In the perspective of modern investment theory, the definition of PER represents the duration of the term of return on capital (Payback Period) from the decision to purchase secondary equity instruments (Billy, 2024). A premium PER value indicates that the stock is categorized as a growth stock, one that carries promising prospects for accelerating revenue (Adeliani & Roosdiana, 2022). However, a PER that is excessively above the industry average may also serve as an early warning signal of stock price inflation that is not supported by the company's fundamentals (Indarti & Nurdhiana, 2021).

The level of profitability (Return on Assets/ROA) achieved by a company is the primary indicator representing the quality of internal operational efficiency in generating net profit for capital owners (Sihaloho & Rochyadi, 2021). In accordance with the basic principles of signaling theory, the achievement of a high ROA ratio acts as a positive signal (good news) that communicates the issuer's favorable future prospects to capital market participants (Spence, 1973). Investors on the stock exchange respond enthusiastically to this profitability signal by raising their expectations regarding the multiple of the fair share price they are willing to pay in the stock market (Gunawan & Alpi, 2023). Consequently, an increase in the efficiency of corporate asset management in generating profit will encourage a rise in the relative price multiple, or Price Earnings Ratio (PER), in the secondary market (Sihaloho & Rochyadi, 2021). Optimal management of fixed assets, such as food manufacturing machinery, is a prerequisite for maintaining the return on working capital within the industry's safe threshold (Muninggarsih & Giyartiningrum, 2025). Thus, strengthening accounting-based profitability serves as the primary foundation driving profit multiple capitalization on the Indonesia Stock Exchange (Muninggarsih & Giyartiningrum, 2025).

H4:Profitability has a significant effect on Price Earning Ratio in manufacturing companies in the food and beverage sector listed on the Indonesia Stock Exchange.

2.8. The Effect of Dividend Policy on Price Earning Ratio (PER)

The net profit distribution policy in the form of cash dividends (Dividend Payout Ratio) constitutes a managerial signal that is highly crucial in influencing the psychology and expectations of capital market participants (Pasaribu et al., 2023). Through the establishment of a stable DPR ratio, management conveys concrete signals regarding the strength of liquidity and the certainty of the company's future net cash flow (Adeliani & Roosdiana, 2022). From the perspective of agency theory, the dividend distribution commitment is regarded positively by investors, as it succeeds in limiting the accumulation of free cash flow that is prone to misuse by managers for suboptimal investment projects (Jensen & Meckling, 1976). The distribution of net profit to investors in cash compels managers to continue operating efficiently and to consistently maintain financial performance (Faisal et al., 2020). This minimizes the risk of capital owners' funds being misappropriated to finance suboptimal investment projects or ventures that fail to provide added value to the core business (Faisal et al., 2020).

This reduction in agency risk through dividend distribution significantly fosters public shareholders' confidence (Faisal et al., 2020). The positive sentiment of market participants systematically boosts the relative stock price on the capital exchange, thereby increasing the price eligibility multiple, or PER, of the related issuers (Ermad et al., 2026; Rehman et al., 2025). The increase in the proportion of cash dividend allocation is responded to adaptively by adherents of the Bird in the Hand Theory, which prioritizes cash returns free from future risk (Desta & Mulyana, 2021). Retail and domestic institutional investors tend to use dividend payment history as a key filter in formulating their long-term investment allocation strategies (Khan et al., 2024). Therefore, a well-calibrated dividend payout ratio acts as a key catalyst that strengthens the valuation of manufacturing companies' profit multiples in the eyes of public investors (Ermad et al., 2026).

H5: Dividend Policy has a significant effect on the Price Earning Ratio of food and beverage manufacturing companies listed on the Indonesia Stock Exchange.

2.9. The Effect of Profit Growth on Price Earning Ratio (PER)

The acceleration of the profit growth rate is a fundamental indicator that reflects operational maturity, expansion of commercial market share, and the effectiveness of the company's competitive strategy (Diantimala et al., 2021). A positive annual profit growth signal distinguishes high-quality issuers (good-quality firms) from companies experiencing business saturation, triggering an optimistic revision of future earnings estimates by capital market analysts (Ayu et al., 2025). Capital market participants on the stock exchange are willing to grant appreciation in the form of higher price multiples (Growth Premium) to stocks that exhibit consistent net profit growth trends (G. Ardiansyah & Kharisma, 2024). This psychological phenomenon among stock exchange investors directly encourages the strengthening of the PER of manufacturing issuers in the secondary market (Ermad et al., 2026). Periodic increases in profit provide positive signals that trigger mass buying transactions among stock market investors (Suhartono et al., 2022).

However, if the profit growth rate slows sharply into negative territory, the market will respond drastically by cutting the limit of the stock's fair price multiple (G. Ardiansyah & Kharisma, 2024). This decline in the profit growth curve will systematically drag down the valuation curve of secondary market profit multiples (G. Ardiansyah & Kharisma, 2024). The alignment of these two curves provides strong theoretical confirmation of the sensitivity of stock exchange investors' assessments to the stability of growth information supplied by manufacturing issuers' operations (G. Ardiansyah & Kharisma, 2024). When profit growth plummets, investors speculate that the issuer has lost its commercial market share due to the pressure of industry competition (Hanifah & Riyanti, 2021). Thus, consistent net profit growth plays a vital role as the main driver in strengthening the PER ratio of the food and beverage manufacturing industry sector (Suhartono et al., 2022).

H6: Profit Growth has a significant effect on the Price Earning Ratio of food and beverage sector manufacturing companies listed on the Indonesia Stock Exchange.

2.10. The Effect of Price Earning Ratio (PER) on Company Value

The multiple of stock price to net profit, or PER, is an indicator of actual market sentiment that reflects investors' psychological assessment and price tolerance on the stock exchange (Adeliani & Roosdiana, 2022). The PER ratio measures the extent to which the market is willing to translate an issuer's operating profit per share into market capitalization value (Khan et al., 2024). An increase in the PER ratio reflects investors' positive perception of a low business risk profile and high future profitability prospects for manufacturing companies. The market premium sentiment reflected in a high PER value will proportionally inflate the actual stock price in the secondary market. Therefore, this ratio serves as a crucial parameter for the stability of long-term stock trading volumes (Pasaribu et al., 2023).

Through the mechanism of stock price movements, the strengthening of PER is strongly and positively correlated with an increase in the PBV ratio, which represents the achievement of maximized firm value (Faisal et al., 2020; Nainggolan & Siswanti, 2025). A decline in the PER multiple proves to be the main reason explaining why the average firm value curve can decline in the secondary market (Nainggolan & Siswanti, 2025). This simultaneous decline confirms the validity of the postulate that the market profit multiple exerts dominant control in determining the degree of appreciation of manufacturing companies' equity book value (Nainggolan & Siswanti, 2025). Conversely, if the PER ratio declines due to a loss of market confidence, it will systematically drag the company's value down to a very low level (Ika et al., 2021). Management must not overlook the importance of maintaining the stability of this fair share price to ensure continued access to low-cost capital in the future (Noryani, 2020).

H7: Price Earning Ratio has a significant effect on the Company Value of food and beverage sector manufacturing companies listed on the Indonesia Stock Exchange.

2.11. PER as a Mediation of the Influence of Profitability on Company Value

The expectation multiple of secondary market stock prices, measured through the PER, has been empirically proven to function as a significant intermediary variable, or mediator, in explaining the transmission of profitability's influence on firm value (Widhiarso, 2010). In accordance with the basic principles of signaling theory, the profitability achieved by management, as measured by ROA, indirectly inflates the PBV ratio through a mechanistic process (Faisal et al., 2020). These internal financial signals are first evaluated, filtered, and interpreted through the relative price perceptions of capital market participants on the secondary exchange (Spence, 1973). When a profitability signal is deemed credible and promising, investors respond by raising the limit of the fair share price multiple, or PER (Sihaloho & Rochyadi, 2021). It is this multi-layered linkage that aligns micro-level accounting data with external market valuations (Usman & Lestari, 2021).

The increase in the secondary market's PER value then acts as the main catalyst in raising the actual stock market price, which in turn strengthens the appreciation of the company's value, or PBV (Sihaloho & Rochyadi, 2021). The inconsistency in the direct influence of ROA on PBV, which has frequently sparked debate in previous research (research gap), can be elegantly bridged through the presence of this multi-level mediation pathway (Usman & Lestari, 2021). Management's inability to maintain the stability of ROA will disrupt the chain of these positive signals, resulting in a decline in PER values and a failure to achieve premium firm value (Juliani Putri & Mulyandini, 2023). This mediation phenomenon confirms the strategic role of PER as a bridge for information transmission that aligns internal accounting performance with external macro-market assessments (Widhiarso, 2010).

H9: Price Earning Ratio (PER) mediates the effect of profitability on Company Value in food and beverage sector manufacturing companies on the Indonesia Stock Exchange.

2.12. PER as a Mediation of the Influence of Dividend Policy on Company Value

The policy of distributing net profit through cash dividends affects the formation of firm value (Price to Book Value) in stages, through the intermediating transmission of secondary market sentiment as measured by PER (Faisal et al., 2020; Pasaribu et al., 2023). Based on agency theory, the announcement of a consistent cash dividend distribution is captured by the market as a positive signal regarding liquidity maturity and managerial governance compliance in mitigating agency risk (Jensen & Meckling, 1976). Success in mitigating agency costs triggers an optimistic response from external investors, manifested throu (Faisal et al., 2020). The reduction of managerial discretion over free cash fosters positive sentiment among stock market participants (Faisal et al., 2020).

The strengthening of the market PER ratio serves as the next driving force, massively escalating the secondary market stock price until it succeeds in propelling the PBV ratio to a premium level (Indarti & Nurdhiana, 2021). This indirect path (indirect effect) demonstrates that dividend policy does not solely affect the structure of real equity on the balance sheet, but rather operates through the psychological channels of capital market investors who are sensitive to the certainty of cash returns on capital (Rehman et al., 2025). Sharp fluctuations in the dividend payout curve have been shown to transmit sentiment-driven shifts that govern the movement of the secondary market's profit multiple curve (Ermad et al., 2026). The effectiveness of this mediation channel provides an important recommendation for food manufacturing managers to consistently formulate a stable dividend ratio, in order to maintain the company's value defense on the IDX (Ermad et al., 2026).

H9: Price Earning Ratio (PER) mediates the effect of dividend policy on Company Value in food and beverage sector manufacturing companies on the Indonesia Stock Exchange.

2.13. PER as a Mediation of the Effect of Profit Growth on Company Value

The acceleration of annual net profit growth affects the achievement of PBV indirectly, by utilizing the role of the PER as an intermediate variable, or conceptual mediator (Diantimala et al., 2021). The net profit growth signals released by management are enthusiastically evaluated by stock exchange market participants eager for long-term capital gains (Ayu et al., 2025). Investors are willing to grant appreciation in the form of premium price multiples (Growth Premium), reflected in the surge of PER share value in the secondary market as it projects an expansive business trajectory (Khan et al., 2024). This increase in growth is a vital parameter that determines the level of optimism among stock exchange analysts in assessing issuers' prospects (Juliani Putri & Mulyandini, 2023).

The increase in the PER multiple then serves as the main driving force in raising the actual stock market price on the exchange, until it succeeds in elevating the achievement of the company's value ratio, or PBV (Faisal et al., 2020). This proof of the causality chain among these parameters confirms the dominant role of PER mediation within the econometric structure of the food and beverage manufacturing industry panel data (Widhiarso, 2010). The successful demonstration of this indirect pathway (indirect effect) through the PER mediator offers a novel conceptual contribution to strengthening financial management theory within the basic manufacturing cluster in Indonesia (Wiratno et al., 2022). The accuracy of this multi-level mediation model complements a comprehensive framework for testing corporate value on the Indonesia Stock Exchange (G. Ardiansyah & Kharisma, 2024).

H10: Price Earning Ratio (PER) mediates the effect of profit growth on Company Value in food and beverage manufacturing companies on the Indonesia Stock Exchange.

3. Research Methods

3.1. Types, Approaches, and Design of Research

To test the empirically constructed hypotheses, this study relies on a quantitative approach based on the analysis of secondary data in the form of official numerical figures (Ivani & Efendi, 2024) and (Yoewono, 2023) also classify this research as a causal-verificative (associative) type, in which the main focus is to map and confirm cause-and-effect relationships among the research variables. This causal research design is employed to examine in depth the influence of a combination of internal fundamental financial variables on the appreciation of external equity value (Rehman et al., 2025). The econometric approach is strictly applied to minimize the researcher's subjectivity in the process of drawing scientific conclusions (Siregar et al., 2023). Through a causal-verificative structure, researchers can draw valid deductive conclusions regarding the direction and significance of the influence of each financial parameter tested (Salmawati et al., 2023).

The main characteristic of this study's design is the use of a path analysis model integrated into econometric panel data (Rehman et al., 2025). This stratified model is used to separate the magnitude of the direct effect from the indirect effect, which often operates through a market mediator (Rehman et al., 2025). his research does not intervene in or manipulate the operational data of the research subjects, but rather captures historical data that has already occurred in the secondary capital market (ex-post facto) (Nianty et al., 2023). Audited annual financial statement data are treated as a reflection of credible managerial signals, in accordance with the postulates of signaling theory (Spence, 1973). The use of this structured research design provides methodological assurance, such that the resulting regression parameter estimates are unbiased and possess high internal validity (Rehman et al., 2025).

The panel data employed in this research design combine time-series data with cross-sectional data (Rehman et al., 2025). The observation period is limited to five consecutive years, from 2020 to 2024. This combined panel data (pooled data) were analyzed using EViews software. This approach offers a substantial methodological advantage, as it is able to specifically control for individual heterogeneity among issuers (Adeliani & Roosdiana, 2022). In addition, panel data regression provides a greater number of degrees of freedom, thereby improving estimation efficiency and minimizing the risk of multicollinearity among variables (Faisal et al., 2020).

3.2. Population and Research Sample

The population of this research consists of all food and beverage companies within the manufacturing subsector that are officially listed on the IDX and actively traded between 2020 and 2024. To draw the sample from this population, the researchers employed a purposive sampling technique, thereby avoiding random selection. This non-probability technique relies on a set of specific standards or criteria deliberately formulated by the researcher from the outset. In order to avoid accounting information bias that could compromise the accuracy of the panel data regression estimation model, the researcher established strict data completeness standards for the selected sample. Three fundamental criteria were used to filter the sample: the continuity of the company's listing status on the stock exchange throughout the research period; the periodic presentation of audited annual financial statements; and the availability of the financial ratio indicators that constitute the focus of the complete observation model.

The application of these sample selection criteria yielded a credible and representative final sample, capable of representing the dynamics of Indonesia's food and beverage industry. Based on the first criterion, the company must have been consistently listed on the IDX from January 1, 2020 to December 31, 2024, without experiencing delisting. The second criterion requires issuers to have published annual financial reports in Rupiah currency units periodically throughout the observation period. The third and most crucial criterion is that the company must have recorded positive net profit and distributed cash dividends at least once during the observation period, so that the Dividend Payout Ratio (DPR) and Price Earnings Ratio (PER) values are not mathematically undefined or missing. This gradual elimination process from the initial population resulted in 26 food and beverage manufacturing companies qualifying as the final research sample.

The merger of the number of individual sample units of 26 companies with a duration of observation time of 5 years (2020–2024) resulted in a total of 130 units of pooled data observations. The availability of this abundant number of observations provides an adequate degree of freedom in the processing of computer econometrics, so that it is able to produce stable residual variance values and meet the rules of statistical test power. Some of the leading issuers included in this final sample list include PT Mayora Indah Tbk (MYOR), PT Indofood Sukses Makmur Tbk (INDF), PT Garudafood Putra Putri Jaya Tbk (GOOD), PT Ultrajaya Milk Industry & Trading Company Tbk (ULTJ), as well as other food and beverage issuers. Through the use of a panel database of these 26 selected issuers, specific heterogeneities between companies such as differences in operational scale, trademark strength, and profit-holding capacity can be optimally controlled within the test model.

3.3. Types, Sources, and Data Collection Techniques

The type of data employed in this study's research design is secondary quantitative data, in the form of historical numerical figures sourced from companies' official annual financial statements (Andri Dwi Aprianto et al., 2020). The data structure is arranged in a panel data format (pooled data), which integrates the cross-sectional dimension of 26 sample issuers with the time-series dimension spanning the period from 2020 to 2024 (Rehman et al., 2025). All accounting and external market data were collected using the documentation method, by downloading financial statement documents through the information disclosure portal of the Indonesia Stock Exchange, at the official website www.idx.co.id. In addition to relying on the IDX's primary database, secondary data collection techniques were also combined with tracking annual stock closing price data, as well as the volume of shares outstanding, through credible financial platforms such as Yahoo Finance and IDN Financials (M. F. Ardiansyah et al., 2020). The use of financial statement data that has been audited by an independent public accountant guarantees the objectivity and reliability of the data, thereby avoiding accounting information bias (Siregar et al., 2023). All collected data components were then systematically tabulated into a Microsoft Excel spreadsheet before being imported into the EViews program for the multi-level econometric modeling stage (Widhiarso, 2010).

3.4. Data Analysis Methods

This research utilizes EViews software to execute the regression modeling technique of the multi-level panel data as its data analysis method (Adeliani & Roosdiana, 2022). In practice, this panel data regression procedure requires researchers to test three alternative models: Common Effect Model (CEM), Fixed Effect Model (FEM), and Random Effect Model (REM) (Faisal et al., 2020). In order to validate which model is most appropriate, a series of formal evaluations were applied through the Chow Test (CEM vs FEM comparison), the Hausman Test (FEM vs REM comparison), and the Lagrange Multiplier (LM) Test as additional options (Faisal et al., 2020; Siregar et al., 2023). Furthermore, Andri Dwi Aprianto et al. (2020) emphasized the importance of testing classical assumptions (normality, multicollinearity, heteroscedasticity, and autocorrelation) after the best model is found so that the resulting parameters meet the criteria of the Best Linear Unbiased Estimator (BLUE). All stages of this classic assumption must be fulfilled perfectly before moving on to the next phase of path analysis.

In order to avoid misleading interpretations due to biased estimates, the validity of the regression results in this research is guaranteed through rigorous classical assumption testing. In the early stages, the Jarque-Bera method is used in normality tests to confirm whether the residual components have been normally distributed around the expected value (Siregar et al., 2023). Furthermore, the evaluation of the independent inter-variable correlation matrix was carried out in a multicollinearity test to ensure that there were no overlapping linear relationships between the predictors. Regarding residual variance, heteroscedasticity tests with the Glejser technique were carried out to ensure the homogeneity of variance in all panel data observations (Andri Dwi Aprianto et al., 2020). Finally, referring to Faisal et al. (2020), the autocorrelation test is applied to monitor whether there is a correlation between a series of observations based on the time sequence as a final requirement before the hypothesis test is executed.

The design of the multi-level causality analysis in this article is solved using the path analysis method (Path Analysis) to decompose the magnitude of direct influence (Direct effect) and indirect influences (Indirect effect) of the predictor variable (Widhiarso, 2010). The structure of the path equation is broken down into two regression substructures, where the first substructure examines the influence of profitability, dividend policy, and profit growth on profitability Price Earning Ratio (PER) as an endogenous variable between (Ermad et al., 2026). The second substructure is designed to test the influence of all independent variables along with the PER mediated variable on Company Value (PBV) (Faisal et al., 2020). Testing of the significance of the parameter coefficient was partially carried out through the t-test at a significance level of 5%, while the predictive capacity of the model was evaluated through the determination coefficient (R2) (Adeliani & Roosdiana, 2022). In order to prove the significance of the role of PER mediation in bridging the indirect influence of fundamental variables on company value, this study applied the Sobel Test (Sobel Test) which measures the strength of the magnitude of the standard error from the multiplication of the path coefficient (Widhiarso, 2010).

4. Research and Discussion Results

4.1. Descriptive Statistical Analysis

Through the cleaning of outlier data, this study collected a final total of 129 panel data observations sourced from 26 manufacturing companies in the food and beverage subsector on the Indonesia Stock Exchange. The properties and empirical characteristics of all variables in the data series were then dissected using descriptive statistical analysis. The evaluation components presented include the measurement of mean values, median values, maximum and minimum limits, and the level of data distribution described through standard deviation values. The results of the summary of descriptive data processing using the help of EViews software are presented in Table 1.

Through the Price to Book Value (PBV) proxy, the average value for the Company Value (Y) bound variable was recorded at 7.3876 times with a standard deviation rate of 59.0179 (see Table 1). The magnitude of the standard deviation value that exceeds the average indicates the high heterogeneity of PBV values in the observed manufacturing companies. The range of this data spread is indicated by the lowest value touching the figure of 0.0006 times, in contrast to the peak value of premium equities which is perched at the level of 670.9746 times.

The independent variable of profitability (X1) measured through Return on Assets (ROA) recorded an average value of 0.1005 (10.05%) with a maximum value of 0.8673 and a minimum value of 0.0001. For the Dividend Policy (X2) variable or Dividend Payout Ratio (DPR), the average value is at the level of 1.4022 with a range from 0.0001 to a high peak of 106.8509. The Profit Growth Variable (X3) gained an average of 0.5419, with the lowest profit growth contraction at the level of -0.9927 and the highest profit growth shooting to 36.2168. Meanwhile, the mediated variable Price Earning Ratio (PER) has an average value of stock price multiples of 36.7306 times with a standard deviation of 119.7187.

In general, the entire variable shows a standard deviation greater than its mean value. This pattern indicates that data between issuers is quite heterogeneous and there are a number of extreme values (outliers), especially in the PBV, DPR, and PER variables. This distribution characteristic is considered in the selection of estimation methods and assumption testing at the next stage.

4.2. Panel Data Regression Model Selection Analysis

Determining the best modeling form among the approaches Common Effect Model (CEM), Fixed Effect Model (FEM), and Random Effect Model (REM) is carried out through three formal tests, namely the Chow Test, the Hausman Test, and the Lagrange Multiplier Test. In accordance with the stratified path analysis model, the selection of this model is separated based on the Sub-Structural 1 and Sub-Structural 2 equations.

4.2.1. Chow Test

The determination of the choice of the best estimation model between the Fixed Effect Model and the Common Effect Model relies on the results of the Chow Test evaluation. The test criteria stipulate that if the significance or probability value on the Chi-square cross-section shows a number of less than 0.05, the legitimately selected model is FEM. On the other hand, if the value is above 0.05, then the right model to use is CEM.

The results of the Chow test on sub-structural 1 give a probability value of cross-section Chi-square of 0.0000. Since the value is less than 0.05, the more appropriate model at this stage is the Fixed Effect Model so the test proceeds to the Hausman Test.

In sub-structural 2, the probability value of the cross-section Chi-square of 0.3232 is greater than 0.05. Thus, the model chosen for the second equation is the Common Effect Model.

4.2.2 Hausman Test

The Hausman test is used to choose between a Fixed Effect Model and a Random Effect Model. If the probability value of a random cross-section is less than 0.05, the chosen model is FEM, and vice versa.

The results of the Hausman Test on sub-structural 1 produced a probability value of 0.0000 which was smaller than 0.05. Therefore, the estimation model used for the first equation is the Fixed Effect Model. Since the selected model is already FEM, sub-structural 1 does not require a Lagrange Multiplier Test.

In sub-structural 2, the probability value of 0.9682 is greater than 0.05 so the direction is towards the Random Effect Model. Since the previous results of the Chow Test pointed to CEM while the Hausman Test pointed to REM, the test continued with the Lagrange Multiplier Test to compare CEM with REM.

4.2.3 Lagrange Multiplier Test

The Lagrange Multiplier test is used to choose between the Common Effect Model and the Random Effect Model. If the Breusch-Pagan probability value is greater than 0.05, the model chosen is CEM.

The results of the LM test show a Breusch-Pagan probability value on the cross-section side of 0.8824 which is greater than 0.05. Thus, the estimation model chosen for sub-structural 2 is the Common Effect Model. Based on the entire series of model selection tests, sub-structural 1 was estimated using the Fixed Effect Model, while sub-structural 2 was estimated using the Common Effect Model.

4.3. Hypothesis Testing

4.3.1 Partial Test (T test)

The t-test is used to determine the influence of each partially independent variable on the bound variable. A variable is declared to have a significant effect if the probability value is less than 0.05.

So it can be concluded:

1. The Effect of Profitability (ROA) on Price Earning Ratio (PER)

Based on the results of Sub-structural regression 1 in Table 3, the profitability variable (Return on Assets/ROA) has a coefficient of -70.41433 with p-value by 0.1502. Because p-value greater than 0.05, then the fourth hypothesis (H4) is rejected, which suggests that profitability has a negative and insignificant effect on PER. This indicates that the high and low earning of accounting profits from asset management is not the main benchmark for stock exchange investors in assessing the feasibility of multiples of food issuers' stock prices (Spence, 1973). These findings support previous research that states that a company's profitability is not always an absolute stimulus driving the movement of the capitalization value of multiples of profits in the capital market (G. Ardiansyah & Kharisma, 2024).

2. The Effect of Dividend Policy (DPR) on Price Earning Ratio (PER)

Judging from the results of the partial testing in Table 3, the Dividend Policy variable (Dividend Payout Ratio/DPR) obtained a regression coefficient of 3.093149 with p-value by 0.0000. Because p-value much smaller than 0.05, then the fifth hypothesis (H5) is accepted, which proves that the dividend policy has a positive and significant effect on PER. The distribution of cash dividends is assessed by the exchange as a positive signal that is able to reduce information asymmetry as well as the risk of agency costs due to the accumulation of free cash flows (Jensen & Meckling, 1976). Investors respond to the certainty of this real cash return (Bird in the Hand Theory) with a willingness to pay a premium of multiples of higher share prices in the secondary market (Ermad et al., 2026).

3. The Effect of Profit Growth on Price Earning Ratio (PER)

The Profit Growth Variable in Table 3 has a regression coefficient of 24.03192 with p-value absolute of 0.0000. Remembering p-value is below the critical limit of 5% ($0.0000 < 0.05$), so the sixth hypothesis (H6) is accepted conclusively, which confirms that earnings growth has a positive and significant effect on PER. According to the principles of Signal Theory, the acceleration of annual profits acts as a positive signal (Good News) on the expansion of the issuer's commercial share which is running expansively (Spence, 1973). Capital market participants respond to this trend of profit growth by appreciating a fair price multiple (Growth Premium) high on the PER share ratio (Diantimala et al., 2021; Suhartono et al., 2022).

So:

4. The Effect of Profitability (ROA) on Company Value (PBV)

Based on the results of Sub-structural regression 2 in Table 4, the profitability variable (Return on Assets/ROA) has a positive coefficient of 0.969385 with p-value by 0.0006. Because p-value smaller than 0.05, then the first hypothesis (H1) is accepted, which proves that profitability has a positive and significant effect on Company Value (PBV). According to the rules of Signal Theory, the achievement of superior ROA becomes a positive signal (Good News) that management is very efficient in managing assets to generate net profit (Spence, 1973). Investors responded enthusiastically to this signal through massive stock buying, thereby driving the increase in stock prices on the stock exchange and boosting the PBV ratio of food and beverage issuers (Beatrice Angelia Puspitasari et al., 2024; Faisal et al., 2020).

5. The Effect of Dividend Policy (DPR) on Company Value (PBV)

Judging from the results of the partial testing in Table 4, the Dividend Policy variable (Dividend Payout Ratio/DPR) obtained a positive regression coefficient of 0.312408 with p-value by 0.0451. Remembering p-value less than 0.05, then the second hypothesis (H2) is accepted, which shows that the dividend policy has a positive and significant effect on the Company Value (PBV). Based on Agency Theory, the commitment to distribute cash dividends is considered as an external monitoring instrument that effectively limits managers' moral hazards over the waste of free cash flow (Jensen & Meckling, 1976). Investors who favor governance compliance and certainty of current cash returns (Bird in the Hand Theory) willing to appreciate the issuer's equity at a premium market price (Billy, 2024; Ermad et al., 2026).

5. The Effect of Profit Growth on Company Value (PBV)

The Profit Growth Variable in Table 4 has a negative regression coefficient of -0.004463 with p-value by 0.9569. Because p-value much greater than 0.05, then the third hypothesis (H3) is rejected, which means that profit growth has a negative and insignificant effect on the Company Value (PBV). This indicates that the acceleration of the annual profit of food and beverage corporations on the IDX is often ignored by investors if it is not accompanied by the stability of real dividend distribution (G. Ardiansyah & Kharisma, 2024). The market tends to be conservative and assesses fluctuations in net profit growth as a reflection of the high operational risk of issuers due to volatility in industrial raw material input prices (Nasehah & Widyarti, 2012).

6. The Effect of Price Earning Ratio (PER) on Company Value (PBV)

Based on the testing parameters of the mediation variables in Table 4, Price Earning Ratio (PER) recorded a positive regression coefficient of 0.430723 with p-value by 0.1413. Remembering p-value beyond the 5% error threshold, the seventh hypothesis (H7) is rejected, which concludes that the PER has a positive but not insignificant effect directly on the Company Value (PBV). This capital market reality reflects a shift in the behavior of investors, where high stock price multiples are not necessarily considered as a guarantee of strengthening the book value of equity (Nainggolan & Siswanti, 2025). Investors tend to value the high PER in the food and beverage sector as an indication of stocks that are already too expensive (Overvalued), so that it does not trigger an instant increase in the PBV ratio (Ika et al., 2021).

4.3.2 Simultaneous Test (F test)

The F test is used to determine the effect of the independent variables together on the bound variables.

In sub-structural 1, the F-statistical probability value of 0.0000 is less than 0.05. This means that profitability, dividend policy, and profit growth simultaneously have a significant effect on PER. In sub-structural 2, the F-statistical probability value of 0.0010 is also smaller than 0.05, so that profitability, dividend policy, profit growth, and PER simultaneously have a significant effect on the company's value.

4.3.3 Coefficient of Determination Test (R2)

The following table shows the results of the R test:

The Adjusted R-squared value in sub-structural 1 is 0.8760. This means that profitability, dividend policy, and profit growth can explain the PER variation of 87.60 percent, while the remaining 12.40 percent is explained by other variables outside the model. In sub-structural 2, the Adjusted R-squared value of 0.2102 shows that profitability, dividend policy, profit growth, and PER are able to explain the variation in the company's value of 21.02 percent, while the remaining 78.98 percent is explained by other variables outside the model.

1. Sobel Test

Through the Sobel Test, researchers proved how significant the ability of PER is to bridge the indirect influence of profit growth, dividend policy, and profitability on company value. The decision-making rules in this test stipulate that the mediation effect by PER is statistically proven if the p-value achievement shows a number smaller than 0.05.

1. The Effect of Profutability (X1) on Company Value (Y) by Mediating Price Earning Ratio (M).

The results of Sobel's test on the X1 → M → Y trajectory resulted in an M-calculated value of -1.035899 with p-value by 0.3002. Because p-value greater than 0.05, then the eighth hypothesis (H8) is rejected. This proves that Price Earning Ratio (PER) is unable to mediate the influence of profitability (Return on Assets) to the Company Value (PBV). Theoretically, the vibration of ROA information is absorbed and responded to directly by the investor (Direct effect) without psychological barriers of secondary profit multiples (Spence, 1973). This phenomenon reflects the efficiency of the market in a semi-strong form on the exchange, where net profit information is directly converted into buy decisions that escalate the value of the company (Faisal et al., 2020).

1. The Effect of Dividend Policy (X2) on Company Value (Y) by the mediation of Price Earning Ratio (M).

Based on the results of the online sobel test for the second trajectory (X2 → M →Y), a p-value of 0.0148 was obtained which significantly proves that the value is smaller than the real level of 0.05 or 5%. These empirical findings provide a statistical decision to accept the ninth hypothesis (H9), which means that the Price Earning Ratio (PER) is legitimately proven to be able to mediate the effect of dividend policy (Dividend Payout Ratio / DPR) on the Company Value (Price to Book Value / PBV) in food and beverage companies on the Indonesia Stock Exchange.

This mediation mechanism runs in the same direction as the postulate of Agency Theory (Agency Theory) and Bird in the Hand Theory. The announcement of a stable cash dividend distribution was released by management as a concrete signal regarding governance compliance in mitigating agency risks and limiting the space for free cash flow wastage (Free Cash Flow) (Jensen & Meckling, 1976). Investors in the secondary market responded positively to the certainty of the real return on capital by increasing the expected limit of the fair share price (PER) multiples (Faisal et al., 2020). The strengthening of the secondary market PER index is the main driving force to raise the daily closing price of shares to successfully catapult the achievement of the PBV ratio to the premium level (Indarti & Nurdhiana, 2021).

1. The Effect of Profit Growth (X3) on Company Value (Y) by the mediation of Price Earning Ratio (M)

Based on the results of the online sobel test for the third track (X3 → M → Y), a p-value of 0.0139 was obtained which significantly proves that this value is smaller than the real level of 0.05 or 5%. These empirical findings provide a statistical decision to accept the tenth hypothesis (H10), which means that the Price Earning Ratio (PER) is legitimately proven to be able to mediate the effect of profit growth (Growth) on Company Value (Price to Book Value / PBV) in food and beverage companies on the Indonesia Stock Exchange.

This stratified transmission mechanism runs in the same direction as the premise of Signal Theory (Signaling Theory). Information regarding the acceleration of annual net profit growth released by management acts as a positive signal (Good News) which confirms that the issuer's products have high market acceptability and an expansive business trajectory (Spence, 1973). Analysts and capital market participants evaluate these growth signals by providing valuations in the form of premium price multiples (Growth Premium) that jumped in the PER share ratio on the stock exchange (Faisal et al., 2020). The increase in the PER value of the secondary market then acts as the main catalyst to drive the strengthening of daily stock prices until it boils down to a doubling of the market book value or PBV ratio (Diantimala et al., 2021).

4.5. Discussion of Research Results

4.5.1. The Effect of Profitability on Company Value

The value of the regression coefficient of 0.9694 and the probability level of 0.0006 confirm the positive and significant impact of profitability on the company's value. Through these empirical findings, it is understood that the positive assessment of investors depends largely on how much profit can be generated from the total assets of the corporation. In the context of the food and beverage sector, the high value of Return on Assets (ROA) indicates an efficient asset governance structure and the company's expertise in maintaining business margin stability when faced with fluctuations in raw material commodity prices. In line with signal theory, strong earnings are a positive signal that the company's fundamental performance is healthy, so investors respond with a willingness to buy shares at a higher price. These results support the first hypothesis (H1 accepted).

More deeply, the significance of the influence of ROA on PBV reflects that the food and beverage sector is a real industrial sector whose valuation is heavily dependent on the strength of commercial products. When an issuer is able to print a thick profit margin on top of its operating assets, the market sees a guarantee of business continuity (Going Concern) which is promising. This fostered expectations of future dividends and capital growth, which instantly triggered the appreciation of the stock exchange share price beyond the nominal value of its book capital. These empirical findings also reinforce previous research that states that fundamental profitability robustness acts as the dominant catalyst for increasing corporate value in the capital market (Ayu et al., 2025; Suhartono et al., 2022).

4.5.2. The Effect of Dividend Policy on Company Value

Through the acquisition of a regression coefficient value of 0.3124 and a probability of 0.0451, the confirmed dividend policy has a significant positive influence in boosting the company's value. This reality reflects the market tendency to provide a premium valuation for issuers with a generous dividend distribution ratio. In addition, these findings are in line with the premise of Bird in the Hand Theory, where investors are considered to prefer the realization of certain profits through current dividend payments rather than speculation on uncertain future profits. Dividend distribution also acts as a supervisory mechanism for management, as described in agency theory, because it limits free cash flow that has the potential to be used for suboptimal purposes. Thus, the second hypothesis is accepted (H2 is accepted).

The positive response of exchange participants to the dividend payout ratio (Dividend Payout Ratio) confirms the strong preference of investors in Indonesia who tend to avoid risk (Risk aversion). The certainty of real cash inflows is valued far more than fluctuations Capital gains which are vulnerable to macroeconomic shocks. In addition, the issuer's loyalty in distributing dividends eliminates the agency's concerns regarding the misappropriation of funds by opportunistic managers. The presence of this clean governance gesture creates a premium reputation that attracts the buying interest of public shareholders, thus successfully boosting the company's book price valuation to a competitive level (Faisal et al., 2020; Pasaribu et al., 2023).

4.5.3. The Effect of Profit Growth on Company Value

Through the acquisition of a regression coefficient of -0.0045 and a significance level of 0.9569, it is proven that the company's value is not significantly affected by profit growth (non-significant negative impact). This statistical reality shows that the trend of increasing or decreasing profits from year to year is not the main indicator that is a reference for investors in appreciating the market value of a company. One of the explanations is that profit growth in the food and beverage sector tends to fluctuate sharply between years, so investors do not make it the main reference in assessing companies. Temporary profit spikes are considered less reflective of long-term performance, so the market focuses more on profitability and dividend certainty. Thus, the third hypothesis is rejected (H3 is rejected).

The phenomenon of insignificance of the direct influence of growth indicates that capital market participants are very rational and conservative towards information on changes in accounting profits. Investors are aware that soaring profit escalations are sometimes triggered by momentary non-operational gains or certain post-accounting engineering that does not reflect long-term commercial sustainability. When aggressive profit growth actually makes issuers hold cash and cut dividend distribution ratios, the market will tend to respond negatively (G. Ardiansyah & Kharisma, 2024). These findings are in line with previous empirical research that confirmed that profit growth fails to provide a direct boost to maximizing company value if real profit stability on the balance sheet is not maintained (Umbung et al., 2021).

4.5.4. Effect of Profitability on Price Earning Ratio

Profitability has a negative and insignificant effect on the PER with a coefficient of -70.4143 and a probability of 0.1502. The insignificance of this effect indicates that the high and low ROA does not determine the magnitude of the price multiples to the profit that investors are willing to pay. Conceptually this is quite reasonable, because companies with already high profits often have lower PER because the stock price is relatively proportional to large profits. On the other hand, investors sometimes give high PER to issuers with profits that are not large but are considered to have prospects. It is this non-directional pattern that makes the effect of profitability on PER insignificant, so the fourth hypothesis is rejected (H4 is rejected).

The absence of the influence of ROA on the income multiple index shows the existence of dynamics Denominator Effect on the stock exchange. Mathematically, the PER ratio puts Earnings Per Share (EPS) which is supported by profitability as a denominator. When a corporation's net profit jumps massively but the pace of stock price movements in the secondary market moves more slowly, the value of the PER multiple ratio will automatically experience a geometric depreciation. The market views thick-margin food issuers as mature investment instruments (Mature Stocks) with reasonable price fluctuations, not speculative commodities. These results are in line with previous financial studies that prove accounting profitability is not always linear with the capitalization of multiples of market fair profit (Gunawan & Alpi, 2023).

4.5.5. The Effect of Dividend Policy on Price Earning Ratio

The value of the regression coefficient of 3.0931 with a probability of 0.0000 confirms that the dividend policy contributes significantly positively to the amount of PER. This dynamic shows that the tendency of corporations to distribute large portions of dividends will be responded to by the market by providing premiums in the form of higher multiples of stock prices. Regularly maintained dividend payments trigger investors' positive sentiment towards the stability of the company's internal liquidity, thus motivating them to bid on the share price at a higher rate for each unit of profit recorded. This result reinforces the role of dividends as a positive signal as well as an attraction for investors, so that the fifth hypothesis is accepted (H5 is accepted).

Analytically, the strong correlation between the DPR and PER confirms that the transparency of dividend allocation is the most effective instrument for building the premium sentiment of secondary market investors. Based on the Signal Theory, the release of cash dividends is an undeniable guarantee that the net profit figure presented in the financial statements is real and supported by strong liquidity, not pseudo-profit resulting from accrual accounting manipulation. The high credibility of these financial statements reduces the investment risk profile in the eyes of investors, so they are willing to give a limit of multiples of prices (Multiple Valuation) which is more premium in the secondary market (Ermad et al., 2026; Rehman et al., 2025).

4.5.6 The Effect of Profit Growth on Price Earning Ratio

Profit growth has a positive and significant effect on PER with a coefficient of 24.0319 and a probability of 0.0000. These results show that companies with high profit growth receive appreciation in the form of larger price multiples from investors. Investors interpret profit growth as a signal of improved business prospects, so they are willing to pay a premium on the stock price relative to their profits. In contrast to its insignificant influence on the company's value directly, profit growth has actually proven to be strong in shaping market expectations reflected in PER. Thus, the sixth hypothesis is accepted (H6 is accepted).

The high influence of profit growth on PER represents the existence of Growth Premium on the capital exchange. According to the foundation of investment theory, one of the components that make up the PER ratio is the expected future revenue growth rate (expected growth rate). When food and beverage manufacturing issuers report the current acceleration in profit growth, market analysts will theoretically revise up the company's long-term revenue projections. The collective optimism of this stock exchange triggered a buying transaction competition that catapulted the stock market price relatively far beyond its current net profit per share achievement (G. Ardiansyah & Kharisma, 2024; Ermad et al., 2026).

4.5.7. The Effect of Price Earning Ratio on Company Value

Through a regression coefficient value of 0.4307 and a probability of 0.1413, it was confirmed that PER had a positive but non-significant effect on the company's value. This one-way relationship indicates that any increase in the PER ratio has the potential to be followed by a strengthening of the company's value, although the escalation is not considered strong enough to be statistically recognized. This can happen because the very high PER of some issuers reflects speculative expectations rather than real performance, so the market does not always convert it into an increase in market book value. As a result, the role of PER as a direct determinant of the company's value becomes weak, and the seventh hypothesis is rejected (H7 is rejected).

The inconsistency of the direct influence of PER on PBV indicates that there is a bias in the psychological assessment of market participants on the Indonesia Stock Exchange. On the one hand, the increase in PER is seen as positive as a form of increasing the attractiveness of issuers. But on the other hand, PER multiples that are too high above the industry average are often captured by institutional investors as an indication of stock prices that are already too expensive (Overvalued or experience bubble). Market fears of the risk of a price reversal (Market Correction) makes the surge in secondary profit multiples not necessarily followed by the long-term bubbling appreciation of the company's net equity book value (Ika et al., 2021; Nainggolan & Siswanti, 2025).

4.5.8. The Role of PER in Mediating the Influence of Profitability on Company Value

The p-value of the Sobel Test calculation was recorded at 0.300 (greater than 0.05), which confirms that the PER does not mediate the effect of profitability on the value of the company. The unproven function of this mediation is consistent with previous empirical facts where profitability was found to have no real effect on PER. Therefore, the relationship between profitability and company value is purely direct (direct effect), not intermediary. This indicates that capital market participants directly evaluate the performance of corporate profits in real terms rather than relying on the calculation of expectations of the price-to-profit ratio. Therefore, the eighth hypothesis is rejected (H8 is rejected).

The absence of this mediation effect emphasizes the position of the profitability variable as the primary fundamental signal that directly intersects with the response of market participants. ROA information transmission channels are proven to not require intermediaries of secondary profit multiples to be able to change investors' perception of the company's value. Investors who invest in the food and beverage sector tend to evaluate managerial efficiency in scoring profit margins independently and directly convert it into long-term investment decisions (Sihaloho & Rochyadi, 2021; Usman & Lestari, 2021).

4.5.9. The Role of PER in Mediating the Influence of Dividend Policy on Company Value

The p-value of the Sobel Test calculation was recorded at 0.014 (< 0.05), which confirms the role of PER as a mediator variable between dividend policy and company value. Because the direct effect of dividend policy on the company's value is found to remain significant, this phenomenon is classified into the form of partial mediation. This reality indicates that the stimulus provided by the dividend policy on the company's value runs through two paths, namely directly and indirectly through the intermediary of the PER ratio. Dividends distributed consistently increase market expectations of multiples of the price of profit, which in turn helps drive the company's value. This pattern confirms the position of PER as a relevant bridge on the dividend policy path, so that the ninth hypothesis is accepted (H9 is accepted).

The empirical evidence regarding this partial mediation confirms that the cash dividend allocation policy transmits its energy through two channels simultaneously. First, through direct channels where real cash releases meet the satisfaction of investors' current returns (Bird in the Hand Theory). Second, through an indirect psychological channel where the guarantee of the stability of dividend distribution reduces the perception of agency risk, thereby triggering an increase in secondary market PER multiples which in the final stage hoists up the valuation of the corporate equity book capitalization (Faisal et al., 2020; Indarti & Nurdhiana, 2021).

4.5.10. The Role of PER in Mediating the Effect of Profit Growth on Company Value

Through the achievement of a p-value of 0.013 which is smaller than 0.05, the Sobel Test confirms that PER mediates the influence of profit growth on the company's value. This empirical phenomenon is interesting to observe; Although profit growth does not show a significant direct influence on market valuations, the intervention of the PER variable is able to bridge and channel the impact of the variable indirectly. This means that profit growth first shapes market expectations in the form of higher price multiples, and it is through PER that profit growth ultimately contributes to the company's value. These findings show that PER acts as a full mediation on the profit growth path, so the tenth hypothesis is accepted (H10 is accepted).

The existence of full mediation (Complete mediation) is a very crucial conceptual finding in bridging Research gap The Effect of Profit Growth on Company Value. This econometric fact proves that accounting profit growth signals do not have the mechanical impetus to change the PBV ratio independently. Profit acceleration signals must first be resonated into the psychological space of the capital market to form Growth Premium (multiple of PER) in the eyes of stock market analysts. Only through the increase in the value of the fair share price (PER) multiples will the profit growth information of food and beverage manufacturing issuers transform into a strengthening of the actual market equity capitalization value (Diantimala et al., 2021; Faisal et al., 2020).

5. Closing

5.1 Conclusion

After going through the stages of data processing, hypothesis proofing, and in-depth discussion in the previous chapter regarding the performance of food and beverage issuers in the manufacturing subsector on the Indonesia Stock Exchange for the 2020–2024 period, the final conclusions of this study can be described as follows:

1. Profitability (Return on Assets) has a positive and significant effect directly on the Company Value (Price to Book Value). The higher the ability of food issuers to make a profit on the utilization of their assets, the stronger the positive response of investors in raising their equity market valuations.

2. Dividend Payout Ratio (DPR) policy has a positive and significant effect directly on Company Value (PBV). Issuers that distribute net cash are considered more premium by the market because they are able to guarantee certainty of real returns while reducing agency costs.

3. Profit Growth has a negative and insignificant effect on Company Value (PBV). The high volatility of annual earnings changes in the food sector has made investors ignore the current growth signals and focus more on the stability of profits and cash dividends.

4. Profitability (ROA) has a negative and insignificant effect on the Price Earning Ratio (PER). This indicates a denominator effect where the surge in net profit that exceeds the movement of secondary stock prices mathematically slopes the value of the issuer's PER multiple.

5. The Dividend Policy (DPR) has a positive and significant effect on PER. The increase in the portion of cash dividend payments strengthens secondary investor confidence in the integrity of financial reporting and reduces investment risk, thereby boosting the multiple of the issuer's fair profit price.

6. Profit Growth has a positive and significant effect on PER. The acceleration of net profit was captured by the stock exchange as a good news signal regarding the trajectory of corporate expansion, triggering a growth premium in the form of higher stock price multiples.

7. Price Earning Ratio (PER) has a positive but not significant effect directly on Company Value (PBV). PER values that are too high on the stock exchange are considered speculative or overvalued so that the market is cautious and does not immediately convert it into a strengthening of the capital book value.

8. PER does not mediate the effect of profitability on the value of the company. The fundamental profit signal is efficiently absorbed in a semi-strong form by the capital exchange, so that it directly transmits its influence to the PBV without the intervention of a fair profit price multiple.

9. PER mediates partially the effect of dividend policy on the company's value. The cash distribution signal was able to increase expectations of multiples of secondary profit prices, which further encouraged the strengthening of corporate market value.

10. PER mediates the effect of profit growth on the company's value. Purely accounting profit growth information does not have an independent mechanical driving force to change the PBV, but must be resonated first through the formation of PER index expectations on the exchange.

5.2 Suggestions

Based on the above conclusions, several strategic references were proposed for stakeholders:

1. For Food and Beverage Manufacturing Corporation Managers: Given that dividend policy plays a vital role in influencing market value both directly and through PER transmission, managers are expected to be able to formulate a stable cash dividend distribution policy. Management must also control the factory's operating costs so that the efficiency of ROA remains excellent in order to maintain the issuer's fundamental reputation in the eyes of global market participants.

2. For Investors and Capital Market Analysts: Investors are advised not to get caught up in the anomaly of short-term speculation when looking at an aggressive surge in annual earnings growth. Investors must filter fundamental analysis based on a combination of profit margin (ROA) and the loyalty history of the issuer's dividends because it has proven to be a real driver of maximizing the prosperity of long-term capital owners.

3. For Regulators (OJK and the Indonesia Stock Exchange): It is expected that regulators maintain a policy of transparency in the presentation of issuers' accrued financial statements. In addition, regulators need to encourage national manufacturing issuers to integrate green corporate governance disclosures to reduce exchange information asymmetry and mitigate the risks of external agencies in a sustainable manner.

4. For Long-Term Researchers: Further research is suggested to expand the scope of macroeconomic variables (such as inflation rates and benchmark interest rates) or environmental governance (ESG scores) to detect other dominant external factors that have the potential to influence market book value (PBV) fluctuations in the modern trading era.