THE EFFECT OF PROFITABILITY, LIQUIDITY, AND LEVERAGE ON FIRM VALUE WITH DIVIDEND POLICY AS INTERVENING VARIABLE (Case Study on Finance Sector In Indonesian Stock Exchange 2016-2020 Period)

: The purpose of this study aims to examine the effect of profitability, liquidity, and leverage on firm value of dividend policy as an intervening variable. This have a look at uses quantitative methods by collecting secondary data, specifically financial statements and annual reports of companies in the financial sector listed on the Indonesia Stock Exchange (IDX). The sampling technique used purposive sampling and obtained a total sample of 26 companies. This study uses path analysis using the SmartPLS 3.3.3 statistical tool. The results of the study prove that profitability has a negative and insignificant effect on dividend policy, liquidity has a negative and significant effect on dividend policy, leverage has a positive and significant effect on dividend policy, profitability has a positive and significant effect on firm value, liquidity has a negative and significant effect on firm value, leverage has a positive and significant on firm value, dividend policy has a negative and insignificant effect on firm value, dividend policy is not able to mediate profitability on firm value, liquidity has no direct effect on firm value through dividend policy, dividend policy has an indirect effect of leverage on firm value in the financial sector listed on the Indonesia Stock Exchange (IDX) for the 2016-2020 period.


Introduction
The firm value is a mirrored image of the stock charger and valuation of the company, so that the higher the valuation of the employer, the call for shares inside the capital market will incrase and the better the inventory price, the fee of the enterprise also will increase. Stock offer high return opportunities, so risk is also high. When conducting an analysis, an investor can do the analysis in two ways: fundamental analysis or technical analysis. A basic analysis is an analysis based on a company's financial performance. On the other hand, technical analysis is an analysis that allows investors to predict future stock movements by looking at past charts and focusing on stock movements.
Inside the era of pandemic that hit Indonesia in 2020, the financial quarter has skilled a decline in the cost of business, as indicated by the Price to Book Value (PBV). This may be visible within the following figure: however has a small effect on the employer's inner budget as it reduces retained profits and vice versa.

Literature Review Signalling Theory
According to Suganda (2018), signal theory is an action by management that communicates information to investors that can ultimately change the investor's decision to view the states of a company. The theory of signaling blue-chip companies by consciously giving signals to the stock market. Profitable companies avoid selling stocks and try to generate the new capital they need by other means. Meanwhile, investors with bad prospects tend to sell shares. The financial report is used for decision making by shareholders and is the most important part of performing basic analysis. The financial statements of interest are external users (external management). Since internal users (control managers) have a direct relationship with the company and are well aware of the corporation's activities, theis dependence on accounting information is less than of external users. Information asymmetry can be reduced by providing signals to shareholders in the from of Internet Financial Information (IFR) and establishing an internal control structure to prepare financial statement at the request of investors. When information is released, market participants analyses it and interpret it as a good signal (good information) or a bad signal (bad information). If the release of information is a good signal, investors will be interested in the stock and the marketplace will react to changes in volume.

Profitability
Profitability is a ratio that measure a company's ability to generate earnings at the level of sales, assets and capital. According to Kasmir (2013), this ratio measure the effectiviness of a corporation's managemen, expressed as profit from sales and investment income. Profitability relates to effectiviness of management in operating a agency's operations over a specific period of time, which is reflected in a employer's ability to generate earnings. Good company management affects the level of profit a organization generates. The higher this is, the greater the wealth earned by the company's owners increases as profitability increases. The essence of using the profitability ratio is to show the effectiviness of the corporation's.
There are previous studies studies by Sugiastuti et al (2018), Abrar et al (2017), Dewi and Abundanti (2020) showing the results that profitability has a positive and significant effect on dividend policy. Meanwhile, research from Pattiruhu and Paais (2020) states that profitability does not have a positive and significant effect on dividend policy. And research conducted by Lembong (2020) states that profitability has a negative and significant effect on dividend policy.
Previous research conducted by Setyabudi (2021), Mulyani et al (2017), Tui et al (2017), and Mubyarto (2020) stated that profitability had a positive and significant effect on firm value. Research conducted by Markonah et al (2020) stated that profitability has a significant effect on firm value.
Previous research conducted by Putri and Wiksuana (2021), Tahu and Susilo (2017) stated that dividend policy was not able to mediate profitability on firm value. Meanwhile, research conducted by Santosa et al (2020) states that profitability has a positive effect on firm value through dividend policy as an intervening variable.

Liquidity
Is the ability of a business enterprise to meet its short term obligations in a timely manner. This is a company's ability to meet its financial obligations that must be met immediately, or a corporation's ability to meet its financial obligation upon billing. Sudana (2011), liquidity ratio serves as a measure of employer's ability to meet its short term financial obligation. Liquidity is a component of corporation's cash flow and current assets and current liabilities, and its ability to convert certain current assets into cash to pay current liabilities (for example, a enterprise must collect receivables or promote inventory to receive cash funding). Depends on if the above understanding, it is possible to describe a corporation thst has the ability to pay and meet any financial obligations it has to fulfil immediately. The company can be said to be liquid and vice versa if it has no solvency. It is declared as illiquid.
There are previous research conducted by Ahmad and Wardani (2014), Mauris and Rizal (2021) stated that liquidity has a negative and significant effect on dividend policy. Meanwhile, research by Adityo and Heykal (2020), Angelia and Toni (2020), Admi et al (2019) said that liquidity has no significant effect on dividend policy.
Previous research conducted by Kristianti and Foeh (2020), Sukmawardini and Ardiansari (2018) stated that liquidity has a negative and significant effect on firm value. Meanwhile, the research conducted by Tahu and Susilo (2017) and Sondakh (2019) stated that liquidity has a positive and significant effect on firm value. And research conducted by Ningsih and Sari (2019) states that liquidity has no effect on firm value.
Previous research conducted by Sutrisno and Panuntun (2020) stated that dividend policy was not able to mediate liquidity on firm value. Research conducted by Rahmasari et al (2019) states that liquidity has no effect on firm value through dividend policy. Meanwhile, research conducted by Kristianti and Foeh (2020) states that dividend policy is able to mediate the effect of liquidity on firm value.

Leverage
According to Kasmir (2014 : 153), leverage ratios are used to measure a company's ability to pay all its long-term and short-term obligations if the company is liquidated. The leverage ratio is the ability to of a company to finance its business by comparing its own and foreign capital. This ratio shows the comparison of the funds provides by the owner to the funds borrowed from the creditors. Therefore, the more debt the capital structure has the higher the risk and the higher the interest cost the lender charges the corporation.
There are previous research conducted by Endang et al (2021) and Wahjudi (2018) suggest that leverage has a negative effect on dividend policy. Meanwhile, research conducted by Hadian (2019) and Abrar et al (2017) stated that it has a significant effect on dividend policy.
Previous research performed by Ibrahim and Isiaka (2020) and Kanta et al (2021) stated that leverage has a negative effect on dividend policy. Meanwhile, research conducted by Mulyani et al (2017) said that it had a positive and significant effect on firm value. And the research conducted by Butar-butar et al (2021) states that it has no direct effect on firm value.
Previous studies conducted by Ramadhani et al (2018) and Setyabudi (2021) stated that dividend policy cannot mediate leverage on firm value. Meanwhile, research by Kanta et al (2021) states that dividend policy is able to mediate the effect on firm value in a negative direction.

Dividend Policy
According to Sartono (2010), dividend policy is a decision to dividend the income earned by shareholders or investors as dividends or to hold them in the form of retained earnings to uses to finance future investment. A policy related to the determinantion of income (revenue) distribution among users of income to be paid to shareholders as dividend or used by the company. Income can be invested in the company. The corporation's management may make decision regarding the distribution of dividends, whether these dividends will be distributed to shareholders or will be held in the form of retained earnings to finance future investments.
Previous research conducted by Sugiastuti et al (2018) said that dividend policy has a negative and insignificant effect on firm value. Meanwhile, research conducted by Santosa et al (2020), Sudiani and Wiksuana (2018) states that it has a positive effect on firm value. And research conducted by Tandean et al (2021) and Soewignyo et al (2020) states that dividend policy doesn't directly affect firm value.

Frim Value
According to Muchtar (2021), this is a certain condition achieved by a corporaton showing public trust in the company after years of operation since its establishment. If the company is evaluated, so good future prospect, the value of the stock will be high. On the other hand, if the price of the company is significantly lower, the outlook for the stock price will also be lower.

Hypothesis
There is a hypothesis in this study as follows: H1: Profitability has a positive and significant effect on dividend policy. H2: Liquidity has a negative and significant effect on dividend policy. H3: Leverage has negative effect on dividend policy. H4: Profitability has a positive and significant effect on firm value. H5: Liquidity has a negative and significant effect on firm value. H6: Leverage has positive and significant effect on firm value. H7: Dividend policy has a negative and insignificant effect on firm value. H8: Profitability has a positive and significant effect on firm value through dividend policy. H9: Liquidity has an indirect effect on firm value through dividend policy. H10: Leverage has an indirect effect on firm value through dividend policy.

Research Method
The amount of sample in study were 94 companies that financial sector. This study applies a purposive sampling technique to determine the quality of the population obtained, there are the following criteria: 1. 94 companies listed on the Indonesia Stock Exchange (IDX) in addition to those inside the financial sector.

Results Descriptive Statictical Analysis
In this study, descriptive statistical have the aim of knowing the variable used. The results of the statistical descriptive analysis are shown in tabular from as follows:  Table 1 shows the statistical descriptive results of the ROA, CR, DER, DPR, and PBV variables which include the minimum, maximum, mean, and standard deviation values.

PLS Algorithm Output Results
Below is a summary of the results of the Partial Least Square (PLS) technique by appling SmartPLS 3.3.3 by showing a path diagram as follows:

Analysis of the From Assessment (Outer Model)
In the PLS output results, the results of the latent variables of profitability, liquidity, leverage, dividend policy, and firm value show the number 1,000 which means these indicators have an influence on profitability, liquidity, leverage, dividend policy, and firm value.

Structural Model Analysis (Inner Model)
1) The direct effect coefficient of profitability on dividend policy is -0,166. This shows a negative results, so the conclusion is that profits can reduce the quality of dividends.
2) The direct effect coefficient of liquidity on dividend policy is -0,193. Showing negative results, the conclusion is that the lower the CR acquisition will affect the distribution of dividends.
3) The direct effect coefficient of leverage on dividend policy is 0,062. With this showing a positive results, the conclusion is that the higher the leverage, the lower the profit and the lower dividend paid. 4) The direct effect coefficient of profitability on firm value is 0,496. So the results are positive, so the conclusion is that the higher the profits, the higher firm's valuation. 5) The direct effect coefficient of liquidity on firm value is -0,291. So the negative, conclusion is that the lower level of liquidity, the lower the firm value. 6) The direct effect coefficient of leverage on firm value is 0,302. The positive results conclude that the lower the leverage, the higher firm value. 7) The direct effect coefficient of dividend policy on firm value is -0,053. Which is a negative results, which means that dividends will be distributed more and more so that investor's can evaluate the company well.

Validity Test
1. Convergent Validity Test

Source: Data processed by SmarPLS 2022 Reliability Test
Serves to measure the internal coefficient of the measuring instrument using two ways, namely cronbach's alpha with a number exceeding 0,6 and composite reliability with a number greater than 0,7.

Source: Data processed by SmartPLS 2022
Based on the table above, the results show that the value of cronbach's alpha is greater than 0,6 and composite reliability has results above 0,7. So, the variable is declared reliable.

Structural Model (Inner Model)
The structural model uses R-square projections to measure the level of transition of independent variables which will be presented in the following table:

Source: Data processed by SmartPLS 2022 Discussion Profitability on Dividend Policy
The study of the first hypothesis suggests the relationship between profitability on dividend policy. It can be seen that the significance value of the profitability variable as indicated by Return on Assets (ROA) is 0,070 > 0,05 and coefficient value is -0,166. The results display that profitability has a negative and insignificant effect on dividend policy. The effect show that at low ROA levels, the enterprise continues to pay high dividends to maintain the company's reputation in the eyes of traders. This means that the company's inability to generate profitability can affect the employer's dividend distribution. So it is not in accordance with the first hypothesis showing that has a positive and significant effect, and there are research that support the results of the hypothesis, namely Lembong (2020). The conclusion 1 is rejected.

Liquidity on Dividend Policy
The second hypothesis shows the relationship among liquidity on dividend policy. it can be seen that the significance value as indicated by Current Ratio (CR) is 0,010 < 0,05 and coefficient value is -0,193. The results of the calculation of liquidity statistics have a negative and significant effect on dividend policy. Which means an increase in the CR price held by a company affects the change in the dividend policy decline. Too much liquidity means that proportion of current assets is not profitable, which reasons financial institution to apply working capital and reduces the employer's efficiency in paying dividends to investors. So a liquid doesn't necessarily mean a better dividend payout. So the results coincide with previous research from Ahmad and Wardani (2014), Mauris and Rizal (2021). With this it can be concluded that hypothesis 2 is accepted.

Leverage on Dividend Policy
The hypothesis when proving that the relationship between leverage and dividend policy. It can be seen that the significance value as indicated Debt to Equity Ratio (DER) is 0,570 > 0,05 and coefficient value is 0,062. The results show that leverage has a positive and insignificant effect on dividend policy. This means that its ability to pay dividends is not affected by the size of the debt it owns. The leverage ratio of the company increase and the debt (liabilities) has to perform is high and vice versa. That is inversely proportional to the initial hypothesis that leverage has a negative effect on dividend policy. studies that supports the results of the hypothesis from Hadian (2019) and Abrar et al (2017). So in conclusion hypothesis 3 is rejected.

Profitability on Firm Value
In the fourth hypothesis, the relationship between profitability and firm value. It can be seen that the significance value as indicated by ROA is 0,001 < 0,05 and coefficient value is 0,496. The results show that profitability has a positive and significant effect on firm value. This is in accordance with the initial hypothesis which assumes positive and significant. This means that the high value of the company's ROA affects the excessive price of that it. ROA is a tool that measures the level of return of an asset used to generate revenue. It can be said that a corporate can create it profits that affect its corporate value by managing its assets. Previous studies that support the results of this hypothesis are from Setyabudi (2021), Mulyani et al (2017), Tui et al (2017), and Mubyarto (2020). Then hypothesis 4 is rejected.

Liquidity on Firm Value
This hypothesis shows the relationship between liquidity and firm value. It can be seen that the significance value as indicated by CR is 0,000 < 0,05 and coefficient value is -0,291. The results show that liquidity has a negative and significant effect on firm value. This is in accordance with the initial hypothesis which states that liquidity has a negative and significant effect. This means that better the value of the CR held by the business enterprise, the lower the impact on the corporate value can be. If liquidity is too high, there will be a lot of idle cash and the company may not meet its short-term obligations, which can hamper a company's ability to make a income. There are previous studies that support this hypothesis,