Signaling theory emphasizes the role of managerial decisions in communicating insights to investors regarding a company’s anticipated performance. Additionally, this theory highlights the significance companies place on the dissemination of information that influences external parties when making investment decisions.. Signaling theory is an important concept in finance that explains how companies can use certain actions to communicate information to shareholders, investors, or financial markets. Signal theory distinguishes positive and negative signals, namely corporate actions that indicate company performance, and negative signals, namely dividend cuts, issuance of additional shares, sale of company assets (Safitri & Kadarningsih, 2025).

According to Indrarini (2019), firm value represents how investors view the effectiveness of a company’s management in utilizing the assets under their control, and this perception is typically linked to the performance of the company’s share price. Firm value plays a vital role in a business, as increases in value are usually accompanied by higher stock prices, signaling greater shareholder wealth. In this study, firm value is measured using the Price to Book Value (PBV) ratio, which compares the market price of a company’s stock to its book value per share. This ratio serves as a common tool for determining whether

a stock is undervalued or overvalued. The calculation of the PBV ratio is shown as follows:

Price to Book Value Ratio =

Market Price Per Share

Book Value Per Share

The profitability ratio is utilized to gauge a firm’s effectiveness in generating income relative to various financial elements such as sales, revenue, assets, or equity, based on predetermined evaluation criteria. The results of this assessment serve as a benchmark for measuring managerial effectiveness— indicating strong performance if targets are met, or revealing inefficiencies if outcomes fall short (Fitriana, 2024). In this research, profitability is measured using the Return on Assets (ROA) ratio. ROA illustrates the extent to which a company leverages its overall assets to produce post-tax earnings. As noted by Siswanto (2021), this metric provides insight into how well the company manages its asset base. The formula used to compute ROA is provided below:

Eaning After Tax

Return on Assets =

Total Assets

The The liquidity ratio represents a firm’s ability to meet its short-term financial commitments. Essentially, it indicates how prepared a company is to pay off its immediate debts, especially those nearing their due dates (Fitriana, 2024). According to Siswanto (2021), liquidity ratios are financial tools that measure a company’s capacity to fulfill obligations that must be settled within a one-year period.

In this study, liquidity is evaluated using the Current Ratio (CR), recognized as one of the most accessible and commonly applied measures of a company’s near-term financial condition. The CR determines the relationship between current assets and current liabilities, thereby providing a straightforward picture of how effectively a firm can cover its short-term obligations (Horne & Wachowicz, 2008). The formula used to determine the Current Ratio is presented below:

Current Ratio =

Firm size is commonly used as an indicator to determine the scale of a business, which can be assessed using several criteria such as total assets, logarithmic measurements, market value, and other financial indicators. Moreover, the size of a company can also be illustrated through values like total revenue, total asset volume, average turnover of assets, or the average total value of a firm's assets (Novari & Lestari, 2016).

In this research, the size of the company is quantified using the logarithmic approach, where the total asset value is converted into its natural

logarithm to represent the firm’s overall scale (Hartono, 2016). The equation used

to determine firm size is detailed as follows:

SIZE = Ln (Total Assets)

Brigham and Houston (2019) describe dividend policy as a strategic decision that determines what portion of a company’s current profits will be paid out to shareholders as dividends and what portion will be retained for reinvestment. Similarly, Utami & Artini (2024) explain that dividend policy pertains to decisions about how earnings are allocated—either by distributing them to shareholders or reinvesting them within the business. Essentially, it is a managerial judgment made each fiscal year, requiring leadership to decide the amount of profit to be shared as dividends and the amount to be kept as retained earnings for supporting ongoing and future business operations.

In this study, the dividend policy is measured using the Dividend Payout Ratio (DPR), which expresses the fraction of earnings per share that is paid out to shareholders as cash dividends. This metric helps illustrate how much of the profit per share is allocated to dividends. The calculation formula for the Dividend Payout Ratio is presented as follows:

Dividend Payout Ratio =

Dividends Per Share Earnings Per Share

H1: Profitability has a positive effect on Firm Value H2: Liquidity has a positive effect on Firm Value

H3: Company Size has a positive effect on Firm Value H4: Dividend Policy has a positive effect on Firm Value

H5: Dividend Policy can moderate the effect of Profitability on Firm Value H6: Dividend Policy can moderate the effect of Liquidity on Firm Value

H7: Dividend Policy can moderate the effect of Company Size on Firm Value

The target population for this study comprises companies operating in the energy sector that were listed on the Indonesia Stock Exchange (IDX) from 2018 to 2023, totaling 83 entities. This research utilized a non-probability sampling technique, specifically the purposive sampling method. This approach entails selecting sample units based on particular criteria that have been established in accordance with the aims and needs of the study. The criteria for sample selection are detailed as follows:

This research adopts a documentation-based data collection technique, relying on the financial reports officially released by the sampled companies. This method is considered appropriate since the information needed is historical and can be openly accessed via the Indonesia Stock Exchange (IDX) website and the individual websites of the respective companies.

Data Analysis Tools

This study utilizes the Moderated Regression Analysis (MRA) technique to examine how profitability, liquidity, and firm size affect firm value, with dividend policy acting as a moderating factor. The research is conducted on energy sector firms listed on the Indonesia Stock Exchange (IDX) over the period from 2018 to 2023. The data analysis was performed using EViews version 13.

Drawing on sample data obtained from the financial reports of companies listed on the IDX between 2021 and 2024, this research offers a descriptive summary of the variables under investigation. The descriptive statistics cover key metrics such as the total number of observations, the lowest and highest values, the average (mean), and the standard deviation.

Descriptive Statistics

Source: Data processed by researchers, 2025

Partial Significance Test (t-Test)

Furthermore, this study employs both a t-test and Moderated Regression Analysis (MRA) to examine the effects of profitability, liquidity, and firm size on firm value, with dividend policy functioning as a moderating variable. The results of the t-test used to evaluate statistical significance are summarized in the table below.

Partial Significance Test (t-Test)

Dependent Variable: Y Method: Panel Least Squares Date: 07/09/25 Time: 22:14 Sample: 2018 2023

Periods included: 6

Cross-sections included: 17

Total panel (balanced) observations: 102

Source: Data processed by researchers, 2025

Based on the results presented in the table above, the summary of the t- test significance findings is as follows:

1.985, and the p-value is 0.011, which is below the 0.05 threshold. Therefore, H1 is accepted, indicating that profitability (ROA) has a significant and positive effect on firm value (PBV).

A robustness test is an analytical approach employed to assess the reliability and validity of a research model, ensuring that the results are consistent and free from bias (Ferreira et al., 2017). Various techniques can be utilized to conduct such a test; in this study, the robustness test was carried out by altering the proxy used for the dependent variable—firm value—by replacing the Price to Book Value (PBV) with the Price Earnings Ratio (PER). This substitution was made because PER has been widely adopted as an alternative proxy for measuring firm value in prior research, including the works of Kurniawan et al. (2020), Kustinah (2019), and Mira Firdiyanti & Hani Fitria Rahmani (2023).

Dependent Variable: Y

Method: Panel EGLS (Cross-section random effects) Date: 07/11/25 Time: 22:53

Sample: 2018 2023

Periods included: 6

Cross-sections included: 17

Total panel (balanced) observations: 102

Swamy and Arora estimator of component variances

Source: Data processed by researchers, 2025

Based on the robustness analysis results shown in the table above, the significance of the t-test can be interpreted as follows:

The results of this study indicate that profitability, measured using Return on Assets (ROA), exerts a significant and positive influence on firm value in the energy sector. This finding implies that firms with higher profitability tend to be viewed more positively by investors, leading to an increase in their market valuation. This aligns with the signaling theory, which argues that firms demonstrating solid financial performance—reflected through profitability ratios—send favorable signals to investors. The findings are consistent with previous research conducted by Putri & Sutopo (2024), Kusuma & Mahroji (2024), Arrahman & Mahardika (2023), Maharani & Murtanto (2024), and Alifian & Susilo (2024), all of which concluded that profitability positively and significantly affects firm value in energy sector firms.

However, when a robustness check was performed by replacing the proxy for firm value from Price to Book Value (PBV) to Price Earnings Ratio (PER), the effect of profitability on firm value was no longer statistically significant. This suggests that the influence of profitability on firm value is sensitive to the chosen proxy. Unlike PBV, which reflects historical financial structure, PER better captures market expectations regarding a firm’s future earnings potential.

The research findings indicate that liquidity has an inverse correlation with firm value, as assessed through the Price to Book Value (PBV) metric, among energy sector companies. This suggests that higher liquidity levels may correspond to lower market valuations. Such a relationship implies that investors might not necessarily interpret elevated liquidity positively—particularly in capital-intensive sectors like energy. Although strong liquidity typically reflects a company’s ability to fulfill short-term obligations, in financial markets, especially within the energy industry, excessive liquidity might be seen as a sign of underutilized capital. These conclusions are consistent with previous research by Nadaredo et al. (2025) and Tjiptadi (2024), which also reported no meaningful link between liquidity and firm value in this sector.

Additionally, when the robustness test was conducted by altering the firm value proxy from PBV to Price to Earnings Ratio (PER), the results showed that liquidity had no significant effect on firm value. This outcome implies that regardless of a company’s liquidity position, the market does not place

substantial weight on short-term solvency when evaluating earning potential through the PER metric. While liquidity is generally viewed as a key indicator of financial health—representing a firm’s ability to meet near-term liabilities—in the context of the energy sector and PER-based valuation, investors seem to prioritize earnings performance and operational productivity over asset-based strength.

This study reveals that firm size has a notable and positive influence on firm value within the energy sector, as evidenced by the Price to Book Value (PBV) ratio. This finding implies that larger energy firms tend to possess higher market valuations, as indicated by elevated PBV figures. In the energy industry, companies with substantial size often benefit from enhanced production capacity, well-developed infrastructure, privileged access to essential natural resources, and strategic roles in both national and global energy supply chains. Moreover, larger size generally reflects business maturity and established operational systems. These conclusions align with the findings of earlier studies by Nadaredo et al. (2025), Baining et al. (2024), Rusyanto et al. (2022), and Widiyati (2020), all of which found a significant positive relationship between firm size and firm value in this sector.

On the other hand, the robustness test—conducted by substituting PBV with the Price Earnings Ratio (PER) as the proxy for firm value—showed that firm size does not have a statistically significant effect when PER is used. This indicates that the impact of firm size on firm value may depend on the valuation metric employed. The variation in findings can be explained by the differing characteristics of PBV and PER: while PBV reflects how the market values a firm's assets relative to their book value, often influenced by asset holdings and financial structure, PER focuses on the firm’s earnings potential and reflects investor sentiment regarding future profitability.

The study reveals that dividend policy does not exert a significant effect on firm value, as indicated by the Price to Book Value (PBV) metric in energy sector companies. This outcome suggests that dividend distribution decisions are not a primary determinant of how the market assesses a company's worth in this particular industry. A possible rationale behind this finding is that investors in the energy sector are more inclined to focus on factors such as long-term growth opportunities, operational durability, and variations in energy commodity prices, rather than immediate returns in the form of dividends. These results align with previous studies by Amaliyah & Agustin (2021) and Efpriati & Sumarni (2024), which also observed that dividend policy did not have a meaningful impact on firm value. This may be because investors tend to prioritize future growth prospects and capital gains over current dividend income.

Moreover, robustness analysis employing the Price to Earnings Ratio (PER) as an alternative firm value proxy reaffirmed that dividend policy remains statistically insignificant in influencing firm performance. This finding reinforces

the notion that dividend policy is not a crucial element for investors when firm value is evaluated using earnings-based metrics like PER. Since PER captures the relationship between share price and earnings per share, it is generally more responsive to a company’s short-term profit-generating capacity and operational performance than to dividend decisions.

The research findings indicate that dividend policy does not serve as a moderating factor in the relationship between profitability and firm value among companies in the energy sector. This means that regardless of whether a firm adopts a high or low dividend payout, the influence of profitability on firm value—measured using the Price to Book Value (PBV) ratio—remains unchanged. Theoretically, this outcome stands in contrast to signaling theory, which suggests that dividend distributions provide a positive signal to investors about a company’s solid financial health and promising growth prospects. However, in the context of the energy sector, dividend policy does not appear to function as a meaningful supplementary indicator of profitability.

These results are consistent with previous studies by Budiasih et al. (2023) and Effendie et al. (2024), which also reported that dividend policy fails to moderate the relationship between profitability and firm value. This consistency implies that the effectiveness of dividend policy as a moderating variable may depend heavily on industry-specific characteristics and current market conditions.

Nevertheless, when a robustness test was conducted by replacing PBV with the Price to Earnings Ratio (PER) as the measure of firm value, a different result emerged. Under the PER metric, dividend policy was shown to significantly moderate and enhance the effect of profitability on firm value. This suggests that when firm value is evaluated through an earnings-based perspective, dividend payouts more effectively convey profitability signals to investors. Since PER reflects the market's valuation of a company's earnings relative to its share price, it serves as a more responsive indicator of the signaling power embedded in dividend decisions.

This study reveals that dividend policy acts as a moderating factor in the relationship between liquidity and firm value within energy sector companies. Specifically, the positive association between liquidity and firm value is amplified when firms adopt a consistent or high dividend distribution strategy. In this context, dividend payments play a supporting role by reinforcing the connection between a company’s ability to meet short-term obligations and its perceived market value. This outcome aligns with the principles of signaling theory, which suggests that consistent dividend payouts convey a message of financial robustness and steady cash flows to investors. The findings are in agreement with prior research by Zahra et al. (2025), Indrawaty & Mildawati

(2018), and Shalihah (2024), all of which concluded that dividend policy intensifies the effect of liquidity on firm value.

Additionally, a robustness test—conducted by replacing Price to Book Value (PBV) with Price to Earnings Ratio (PER) as the measure of firm value— confirmed the consistency of these results. The analysis showed that dividend policy continues to enhance the impact of liquidity on firm value when PER is used as the valuation proxy. This suggests that companies exhibiting high liquidity along with a stable dividend policy are perceived more favorably by investors, particularly in terms of earnings potential, than those that do not distribute dividends despite having similar liquidity levels.

The findings of this research indicate that dividend policy does not function as a moderating variable in the relationship between firm size and firm value within the energy sector, particularly when firm value is assessed using the Price to Book Value (PBV) metric. This implies that changes in dividend distributions—whether substantial or minimal—do not significantly alter the impact of firm size on firm value. In essence, dividend policy neither strengthens nor weakens this relationship. Typically, larger companies are perceived to have more stable operations, greater access to capital, and a more dominant position in the marketplace. These results align with earlier studies by Rahmawati et al. (2023) and Gunawan & Imronudin (2025), who also found no moderating effect of dividend policy in this context.

Additionally, the robustness test, which involved using the Price to Earnings Ratio (PER) as an alternative measure of firm value, reinforces these findings. The analysis revealed that dividend policy likewise does not influence the relationship between firm size and firm value when earnings-based performance is considered. This outcome suggests that even though large firms may enjoy operational scale and financial advantages, dividend policy does not enhance their perceived value from the investor’s perspective when measured using PER. One possible explanation is that the energy sector’s capital-intensive nature and long-term investment orientation may lead investors to place less importance on firm size as a driver of profitability in the near term.