OPTIMIZING FIRM VALUE THROUGH INVESTMENT DECISIONS: THE ROLE OF DIVIDEND POLICY AS A MEDIATING VARIABLE

Abstract

The objective of this research is to examine how investment decisions affect firm value in manufacturing companies, considering dividend policy as a mediating variable in the Indonesian Shariah Stock Index (ISSI). Firm value represents investors perception of a company. A high firm value indicates that investors believe the company has the potential to generate good profits in the future. This can provide confidence to investors that they can obtain a good return on their investment by investing in the company. The method used in this research is a quantitative approach with secondary data collected from the official website of the Indonesia Stock Exchange. The research sample consists of manufacturing companies listed on the Indonesia Stock Exchange, selected using purposive sampling method. The analysis technique employed is path analysis, using the Statistical Package for the Social Sciences (SPSS) software program. The research results indicate that, directly, the investment decision variable does not have an impact on the company's value, while the dividend policy affects the company's value. The dividend policy variable is able to mediate the influence of investment decisions on firm value. This suggests that prior to making investment decisions, investors will consider selecting companies that distribute dividends to shareholders. If a company increases dividend payments, investors will perceive it as a signal of optimistic expectations regarding the future financial performance of the company's management.