The Effect of Financial Architecture and Profitability on Company Value in the Indonesian Capital Market

This study aims to examine the effect of financial architecture variables and profitability on the dependent variable of firm value. Financial architecture variables consist of four dimensions: (1) ownership structure, (2) capital structure, (3) corporate governance, and (4) board of commissioners. The analysis is carried out together with comprehensive or multidimensional finance. Architecture (second order measurement model) for firm value. Measurement of variables from each indicator (first order measurement model) is used to measure the value of the company. Whereas profitability is measured based on Return on equity (ROE). This research is a quantitative study, which departs from the positivistic paradigm, which sees that all events occur in a causal relationship where causes occur earlier than results. The study was conducted on the non-financial sector listed on the Indonesian Capital Market, the Indonesia Stock Exchange (IDX) in 2017. This location was chosen because: (1) IDX is the only Capital Market in Indonesia that trades complete securities, (2) Data available on the IDX is complete and easily obtained, (3) IDX data is accurate and reliable. The findings of this study are that the company's financial architecture has a significant and positive influence on firm value; company profitability has a significant and positive influence on the value of the company. This study has originality which reexamined the influence of financial architecture and profitability on firm value. Novelty (1) Determination of one variable value of financial architecture comprehensively using the calculation of the Second Order Measurement Model. (2) Using Return on equity (ROE) as a measure of profitability variables.