The Effect of Profitability on Company Value Moderated by Crisis Events (2008-2022)

Abstract

Profitability is a crucial financial indicator for companies, reflecting their ability to generate profits and overall financial health. A high level of profitability can enhance company value, which is typically measured through stock prices in the capital market. However, company value is not solely influenced by profitability. External factors, such as crisis events, can significantly impact investor perceptions and, consequently, company value. Economic crises, political crises, and natural disasters introduce uncertainty and market volatility, often leading to a decline in company value. This study aims to analyze the moderating effect of crisis events on the relationship between profitability and company value. The dependent variable in this study is company value, while profitability serves as the independent variable, and crisis events function as the moderating variable. The study focuses on examining how crisis events influence the impact of profitability on company value. The dataset comprises 30,000 data pairs collected using a cross-sectional approach from Forbes Global 2000 companies for the period 2008 to 2022. The findings indicate a significant positive relationship between profitability and company value. Additionally, the results confirm that crisis events moderate the effect of profitability on company value.