Determinants of Firm Value in Indonesia a Systematic Literature Review of Accounting and Finance Research Published from 2023 to 2025

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FORMOSA NEWS - Jakarta - Mapping the Key Drivers of Firm Value in Indonesian Accounting and Finance Research. Researchers have long sought to understand what drives company worth in emerging markets, prompting a comprehensive new review of Indonesian corporate finance. Published in 2026 in the Asian Journal of Management Analytics, a study by Arya Gina Tarigan from Universitas Kristen Indonesia examines the core determinants of firm value across Indonesian accounting and finance research from 2023 to 2025. Understanding these drivers is critical for investors, corporate executives, and regulators navigating market volatility, as company value reflects long-term sustainability and shareholder wealth generation.

Background and Economic Context

In the modern business environment, company value extends far beyond basic financial returns. As Indonesia’s capital market expands with growing retail participation and robust trading activity, stakeholders increasingly evaluate firms through a multidimensional lens. Regulatory bodies like the Financial Services Authority (OJK) and the Indonesia Stock Exchange emphasize corporate governance, information transparency, and robust investor protection. Consequently, market participants weigh not only profitability, but also capital structure, dividend policies, corporate social responsibility (CSR), and environmental, social, and governance (ESG) disclosures when assessing corporate health and future earnings potential.

Research Approach and Methodology
To map these market dynamics, the study utilized a systematic literature review following established international reporting frameworks. The author searched prominent scientific databases including Google Scholar, Garuda, DOAJ, and Scopus to gather relevant quantitative studies published between 2023 and 2025. Following a rigorous screening and eligibility assessment process, the final narrative synthesis examined 48 peer-reviewed articles and research papers. This approach categorized variables into financial performance, financial structure, firm characteristics, corporate governance, ownership structure, and sustainability disclosure to identify consistent patterns and research gaps.

Key Findings on Firm Value Determinants
The review reveals that internal financial metrics continue to dominate Indonesian corporate research, though the consistency of their impacts varies across sectors:

• Profitability Leads the Field: Profitability emerges as the most frequently examined determinant, analyzed in 60.42% of the reviewed studies. Most findings indicate a positive relationship between a company's earning capacity and its market valuation.
  
• Firm Size and Scale: Firm size ranks second, appearing in 56.25% of the articles. However, its effect on value is mixed; while larger companies possess broader resource access, they can also encounter management complexities and inefficiencies.
  
• Capital Structure and Leverage: Capital structure and leverage appear in over 33% of the literature. Results show that productive debt can signal growth potential, whereas excessive financial risk can depress market valuation.
  
• Growth, Liquidity, and Dividends: Factors such as firm growth, liquidity, and dividend policies show divergent market responses, depending heavily on operational efficiency and debt management.
  
• Governance and Sustainability: Corporate governance, institutional ownership, managerial ownership, and ESG/CSR disclosures receive significantly less attention, highlighting an evolving area for future market integration.
  
• Valuation Proxies: Price-to-book value (PBV) serves asled the dominant proxy for measuring company value across the literature, followed by Tobin's Q and price-to-earnings ratios.
  

Real-World Implications and Industry Impact
These insights offer substantial value for market practitioners, corporate leaders, and policymakers. For investors and financial analysts, the findings underscore that profitability alone does not guarantee high market valuation; capital structure, risk management, and operational efficiency must be evaluated in tandem. For corporate executives, balancing debt deployment with robust governance practices helps mitigate agency conflicts and protects shareholder value. Furthermore, the growing relevance of environmental and governance disclosures highlights an expanding pathway for Indonesian firms to align with international sustainability standards and boost long-term market confidence.

Author Profile
Arya Gina Tarigan. Universitas Kristen Indonesia. Field of Expertise: Accounting, Finance, and Corporate Management Research

Source
Arya Gina Tarigan. Determinants of Firm Value in Indonesia: a Systematic Literature Review of Accounting and Finance Research Published from 2023 to 2025. Asian Journal of Management Analytics (AJMA). Vol. 5, No. 4, Tahun 2026 (Halaman 761–778)
DOI: https://doi.org/10.55927/ajma.v5i4.18908
URL Resmi: https://journal.formosapublisher.org/index.php/ajma