The Mediation Influence of Value Relevance of Accounting Information, Investment Decision and Dividend Policy on the Relationship Between Profitability and the Company’s Value

Abstract

Abstract:This study aimed to analyze the influence of profitability on the company's value, and determine whether this influence intervenes the value relevance of accounting information, investment opportunities and dividend policy, assuming that investors act rationally so that the fundamental aspects of the financial statements become major factor in the shares investment decision. The contribution of this research is to provide input to the management about the importance of maintaining and improving performance in order to give satisfaction to investors and provide expectations for the return on investment which can ultimately increase the company's value. This study design is causality with the unit of analysis is the samples taken by purposive sampling technique on a population of listed companies on the IDX Kompas 100 index from 2011 -2014. The analysis technique used is Path Analysis. The results from this study are: 1. Profitability has significant and positive influence on the company's value; 2. Profitability has no significant and positive influence on the value relevance of accounting information; 3. Profitability has negative and significant influence on investment opportunities; 4. Profitability has significant and positive influence on the dividend policy; 5. The value relevance of accounting information has significant and negative influence on the company's value; 6. The investment opportunities have no significant and positive influence on company's value; 7. Dividend policy has no significant and positive influence on company's value; 8. The value relevance of accounting information, investment opportunities and dividend policy have not been able to mediate the influence of profitability on company's value.Keywords: Profitability, value relevance of accounting information, investment opportunities, dividend policy, the company's value. PREFACEScott (2009) says the concept of value relevance of accounting information explains how the investors would reach on the announcement of the accounting information contained in the financial statements. The investors' reaction will prove that the accounting information is very important in the investment decision consideration process.The faster and more actual investors get the information, the market will be more active, as reflected in the stock trading activity. Thus, stock market will be more efficient (Collinset al,1997; Gjerdeet al,2011;Thinggaard and Damkier, 2008;Ayuningtyas and Kurnia, 2013).The motivation of this study are, first, to re-examine the factors used by previous research that ended in contradictory result (research gap) on the influence of profitability, of accounting information value relevance, investment policy and dividend policy on

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