Profitability Firm Size and Dividend Policy in Explaining Corporate Value Enhancement

Abstract

This study examines the influence of dividend policy, firm size, and profitability on firm value using a document study approach. These three factors are recognized as essential indicators shaping investor perceptions regarding the stability and long-term prospects of a company. Profitability serves as a signal of a firm’s capacity to generate earnings efficiently, firm size reflects operational reliability and market strength, while dividend policy represents management’s strategic decision in distributing profits to shareholders, thereby potentially affecting investor confidence. The analysis is based on a systematic review of academic studies published in the last five years, both international and national journals that explore the financial determinants of firm value. The findings indicate that profitability has a significant positive impact on firm value, firm size demonstrates contextual variations depending on industry characteristics, and dividend policy acts as a financial signal that can enhance market perception of firm value. These results reinforce the applicability of signalling theory and the bird-in-the-hand theory in explaining investor behavior within modern capital markets.