The Effect of Capital Structure, Profitability and Dividend Policy on Intrinsic Value of Firm

Abstract

Objectives: To investigate the effect of capital structure, profitability and dividend policy to intrinsic value of firm on property and real estate companies listed in Indonesia Stock Exchange.Method/Analysis: The data of this study are analyzed using path analysis at alpha 5%. The population of this study are the property and real estate sector companies listed on Indonesia Stock Exchange from period 2013 to 2015 and the sample are 51 companies. Capital structure and profitability as independent variable, dividend policy as intervening variable and intrinsic value of firm as dependent variable which is the present value of projected free cash flow to firm.Findings: The result of the study finds that capital structure and profitability have significant effect on intrinsic value of firm. Dividend policy have no significant effect on intrinsic value of firm. The results also show that dividend policy is not a mediating variable between capital structure and profitability to intrinsic value of firm.

Keywords: Capital Structure, Profitability, Dividend Policy, Intrinsic Value of Firm, Free Cash Flow to Firm