The Determinants of Firm Value and Financial Performance in Islamic Stocks

One of the company’s long-term goals is to maximize the firm value. It is the present value of the company, which can be a prospect in the future. Therefore, the problem in this study is the factors that affect the company’s value in the Jakarta Islamic Index for 2015-2019. This study analyzes the influence of Intellectual Capital, Good Corporate Governance, and Debt to Equity Ratio on Firm Value directly and indirectly through Financial Performance. The data used in this study is panel data using purposive sampling, and there are 17 stocks listed on the Jakarta Islamic Index for 2015-2019 period. The analysis technique of this research is Partial Least Square. The test results of the direct effect show that Intellectual Capital, Debt to Equity Ratio, and Financial Performance have a significant impact on Firm Value on the Jakarta Islamic Index. Corporate governance has a substantial effect on Financial Performance. Meanwhile, indirect testing proves that the Financial Performance variable can only mediate the impact of Corporate Governance on Firm Value. However, it cannot mediate between the relationship between the variable intellectual capital and debt ratio to equity.


INTRODUCTION
The welfare of shareholders can be carried out by creating high corporate value. Maximizing shareholder wealth through company value is a long-term contrary to the research results of Salempang et al. (2016), Umaiyah & Salim. M. Noor (2018) and Setia Rini et al. (2018) state that Return On Assets does not affect Price to Book Value because companies cannot manage their assets effectively; on the other hand, assets can increase firm value.
Investors tend to be willing to pay high prices to companies that manage their intellectual resources optimally to create added economic value. The research conducted by Chen et al. (2005) said that the higher the intellectual capital a company has, the higher the share price investors are willing to pay.
They were supported by Yovita & Amrania (2018) and Septiana (2018), which state that companies with high intellectual resources can be the primary driver in creating added value and increasing competitiveness to maximize profits, profitability, and company value. However, on the other hand, intellectual capital does not influence company value, according to Jayanti & Binastuti (2017) research results, because many companies still prioritize only tangible assets and put aside intangible assets (Suryanti et al., 2020).
The formation of company value can also be influenced by implementing corporate governance in ensuring the safe use and management of company assets and equity to generate profits. Transparency and independence in accountability are the main pillars in financial management to avoid manipulating financial report numbers in the public sector (Agriyanto, 2018). Given that financial reports are a vital source of information for the basis of economic decision-making, including investing (Agriyanto et al., 2016). Therefore, to make it happen, companies need to implement good corporate governance. So that investors and stakeholders believe that the assets and invested capital are appropriately managed, therefore they can bring short-term and long-term benefits (Oktaryani et al., 2017). Santoso (2017) and Haryono & Paminto (2015) stated that the variable Good Corporate EQUILIBRIUM, Volume 9, Nomor 1, 2021

Salma Khoirunnisaa Arribaat, Imam Yahya and Ratno Agriyanto
Governance could stimulate financial performance to optimize firm value. It can mean that the variable Good Corporate Governance can influence Price to Book Value significantly. However, on the other hand, Wahyudi & Chairunesia (2019), Nugroho & Agustia (2017), Kartika & Utami (2019) stated that the composition of Good Corporate Governance does not affect company value.
The firm value will increase when the company uses optimal debt to generate maximum profits (Hamidy et al., 2015). The theory of Modigliani and Millers said that a company would be able to increase its value when using maximum debt in its capital structure. Sriatun et al. (2016) and Misran & Chabachib (2017) found that the Debt to Equity Ratio can significantly influence Price to Book Value. The results of research support this by Burhanuddin et al. (2019) and Sutrisno & Yulianeu (2013 This research uses Signaling Theory, in which the company informs the market well about the company's internal conditions. So that the market will respond to this positive information, this will cause prices to rise so that company value and financial performance will increase. Internal company information is provided in the form of periodic financial reports. The market response comes after the company publishes the financial statements. Therefore, the calculation of the PBV change value is represented by the delta PBV. The Price to Book Value change in Price to Book Value before and after the company publishes its financial statements.
Based on the series of arguments and research gaps raised from several previous studies above, utilization of Intellectual Capital, implementation of Good Corporate Governance, and Debt to Equity Ratio are believed to influence the variables of financial performance and firm value. It is interesting to investigate further to prove the hypothesis, in theory, is accepted or rejected. The factors considered influence firm value to become the concern for the company to increase its firm value and become a tool for investor consideration before making investment decisions. Therefore, this study was conducted to analyze and determine the relationship between the influence of Intellectual Capital, Good Corporate Governance, and Debt to Equity Ratio on Firm Value and Financial Performance in companies listed on the Jakarta Islamic Index for the period 2015-2019.

Signaling Theory
Signaling theory is an attitude the company's management takes to inform or indicate capital owners about how the company management considers prospects (Oktaryani et al., 2017). Companies can increase their value if they can reduce information asymmetry by providing positive signals to the market in the form of financial reports and certainty about future company prospects (Triagustina et al., 2015).

Pulic (2000) innovated an intellectual model known as the Value Added
Intellectual Coefficient (VAIC TM ) method to describe the efficiency of value creation from managing the company's tangible assets and intangible assets.
Intellectual resources are stated as sources of exclusive and high-value knowledge, including strategic assets that impact the relationship between intellectual capital and company performance. It is appropriate for companies to want their sources of knowledge to be the main driver in creating added value; therefore, it can maximize profitability and company value (Septiana, 2018). Based on the theoretical foundation and empirical results above, hypothesis 1 and 2 can be formulated as follows:

Good Corporate Governance
Good Corporate Governance is referred to as a means that limits the attitude of managers in prioritizing their interests compared to prioritizing the interests of holders to increase company value (Kultys, 2016). Institutional ownership is the share of shares owned by external companies such as government institutions, financial and non-financial companies, and private companies, excluding the public (Yang et al., 2009). Independent Commissioner is a member of the board of commissioners who do not have share ownership in the company and has no relationship with other members of the board of commissioners who may cause him not to act independently (Putri & Maksum, 2020

Debt to Equity Ratio
Capital structure is the composition of funding sources originating from internal companies in retained earnings and equity participation and external companies in short-and long-term debt. The theory of Modigliani and Miller states that "The company will be able to increase its value when using maximum debt in its capital structure". The trade-off theory assumes that if the company uses debt higher than its capital, its value will increase, provided that the debt to equity ratio has not reached its maximum (Purwanto & Agustin, 2017). Based on the theoretical foundation and empirical results above, hypothesis 5 and 6 can be formulated as follows:

Financial Performance
A financial performance ratio measures the effectiveness of financial management in managing assets and capital into profit (Rizki et al., 2019). Brigham & Houston (2010) said that Return on Assets is a ratio that describes the capacity of the company to create profits from assets used for the company's operations during a period. Therefore, increasing return on assets will increase firm value because if the rate is high, then the company's profitability is also high. Based on the theoretical foundation and empirical results above, hypothesis 7 can be formulated as follows:

Firm Value
According to the theory of the firm, increasing company value is a goal that companies want to achieve by the desires of capital owners because a high company value is equal to the high level of welfare and prosperity obtained by capital owners and stakeholders (Setia Rini et al., 2018). The firm value determines the welfare of the owners of capital and the company's long-term goals. The higher the company value, the higher the company value. The impact is that investor interest in investing is high because they see a significant level of welfare (Maryanto, 2017). Based on the theoretical foundation and empirical results above, hypothesis 8, 9, and 10 can be formulated as follows:   The analytical method chosen is PLS-based SEM. PLS is a powerful analytical method because it is not based on many assumptions (Astakoni & Nursiani, 2020).
The use of PLS-SEM is advisable to estimate models that use secondary data like in this research. PLS estimation is helpful for testing models that use panel data is made to test between exogenous and endogenous. Furthermore, the researcher will get the coefficient and p-value values for drawing conclusions. The R-Square test and the influence of the variables were obtained from the bootstrapping process (Khairiyani & Mubyarto, 2019).
Sobel Test to examine the indirect effect of independent variables toward dependent variable through intervening variable. The structural model in this study is as follows; Y 1 = 1 X 1 + 2 X 2 + 3 X 3 + e 1. Y 2 = 1 X 1 + 2 X 2 + 3 X 3 + 4 Y 1 +e 2 .

RESULTS AND DISCUSSION
This research has a dependent variable, namely PBV, three independents variables are IC, GCG, and DER, and the intervening variable is ROA. A descriptive statistic is one part of data analysis to describe the characteristics of the data from each variable used in this study. The descriptive statistic can be seen in Table 1 as follows: The maximum and minimum values of GCG are 0.57 and 0.08, with mean values is 0.37 and 0.09 for standard deviation values. Moreover, the third independent variable, DER has a standard deviation value of 0.705; the mean value is 1.044, 0.14, and 2.91 for the maximum and minimum value of DER. .292 Source: Secondary data processed, 2020 Table 2 shows that the R-Square value of the ROA construct is 0,281. It means that the structural model of the independent variable on the dependent variable is weak. The IC, GCG, and DER variables explained the ROA variance of 28,1%, and the remaining 71,9% was influenced by other factors not examined in this study. Then, the R-Square value of the construct ∆PBV is 0,325. IC, GCG, DER, and ROA variables explained the PBV variance of 32,5%, and the remaining 67,5% was influenced by other factors not examined in this study.

The Effect of Intellectual Capital on Firm Value
The estimation parameter to test the effect of Intellectual Capital on firm value shows that the t value is higher than the t table (2.070 > 1.99), indicating that H 2 is accepted. It means that Intellectual Capital has a significant effect on the Firm Value of listed companies on the Jakarta Islamic Index. Chen et al. (2005) stated that the higher the intellectual resources owned by the company, the higher the value of shares that investors are willing to pay. The results of this study support Purnamasari (2017), Yovita & Amrania (2018), and Sunarsih et al. (2019), who concluded that intellectual capital has a significant effect on firm value as measured by price book to value (PBV). Ulum (2008) states that the effective and efficient use of intellectual resources will stimulate the company's creation to encourage investors to invest.

The Effect of Good Corporate Governance on Financial Performance
The estimation parameter to test the effect of Good Corporate Governance on Financial Performance shows that the t value is greater than the t Supervision and monitoring carried out by the largest shareholder are very important in increasing the company's profitability-the higher the institutional ownership, the tighter the supervision on company management. The position of the independent commissioner ensures the strategies adopted by the company, monitors management in managing the company, requires transparent and effective accountability implementation (Saputra et al., 2017). Independent commissioners encourage management performance to achieve company goals, including the goal of generating significant profits. This research is in line with Larosa et al. (2019) and Oktaryani et al. (2017), which states that good corporate governance significantly affects financial performance.

The Effect of Good Corporate Governance on Firm Value
The estimation parameter to test the effect of Good Corporate Governance on Firm Value shows that the t value is smaller than the t  commissioners are unable to intervene in inappropriate board decisions due to which investors respond negatively to this situation and impact the decline in company value (Rusli et al., 2020).

The Effect of Debt to Equity Ratio on Financial Performance
The estimation parameter to test the effect of Debt to Equity Ratio on Financial Performance shows that the t value is smaller than the t table (0.377 < 1.99), indicating that H 5 is rejected. It means that the Debt to Equity Ratio has no significant effect on the Financial Performance of listed companies on the Jakarta Islamic Index.
Companies that already have sufficient assets to fund company activities include managing company assets. Therefore, the company uses internal sources of funds in retained earnings and equity participation in its capital structure.
The company does not want to take risks because it uses foreign funds, namely debt, in the short and long term. The results of this study support the findings

The Effect of Debt to Equity Ratio on Firm Value
The estimation parameter to test the effect of Debt to Equity Ratio on Firm Value shows that t value is greater than t  Sukoco (2013) and Septariani (2017) support the results of this study by stating that the Debt to Equity Ratio has a significant effect on firm value.

The Effect of Financial Performance on Firm Value
The estimation parameter to test the effect of Financial Performance on Firm Value shows that the t value is greater than the t  (2018), Triagustina et al. (2015), and Sinaga et al. (2019), which states that financial performance and firm value have a significant negative relationship. This situation can be caused because the profit retained by the company is too large, and the return on assets distributed to investors is minimal. The profitability generated by the company tends not to be shared with shareholders but is used for the company's operations and to expand its investment projects.
Testing the indirect effect is conducted by using the Sobel test to observe the effect of the independent variable on the dependent variable using intervening variables. The Sobel test can be carried out using the following formulations:  (Siti et al., 2020). Thus, the role of financial performance as a mediator has failed.

The Effect of Good Corporate Governance on Firm Value through Financial Performance as Intervening
Based on the results of the Sobel Test formulation, it is known that the effect of the variable good corporate governance on firm value variables with the financial performance variable as an intervening has a value of t value greater than t table (2.078651 > 1.99). Therefore, hypothesis H 9 is accepted. Good corporate governance has a significant effect on firm value with financial performance as an intervening variable.
Financial performance can mediate the relationship between independent commissioners and institutional ownership of firm value. In the perspective of signaling theory, financial performance is a variable used as a reference by investors to assess a company's share price, regardless of whom the company is led and how much institutional share ownership is in the company (Widnyana, 2019). The increasing number of independent directors will increase share ownership and company profits; thus, investors will be attracted to invest their capital (Kadarningsih et al., 2020). According to a financial perspective, company value can be created if the company can generate a return of capital more remarkable than the cost of capital (Suprayitno et al., 2015).

The Effect of Debt to Equity Ratio on Firm Value through Financial Performance as Intervening
Based on the results of the Sobel Test formulation, it is known that the influence of debt to equity ratio variable on the firm value variable with the financial performance variable as intervening has t value less than t table (1.306284 < 1.99).
Therefore, the hypothesis H 10 is rejected, debt to equity ratio has no significant effect on firm value with financial performance as an intervening variable.
The research results by Setia Rini et al. (2018) state that the share of company capital used as debt collateral to creditors cannot stimulate company performance in generating profits. Meanwhile, on the one hand, profitability is used as an analytical tool to assess a company which is usually reflected in its share price. This study indicates that the company has sufficient internal funds to fund company activities, including managing company assets. The low debt ratio used results in a low-interest expense; therefore, it does not reduce the profit generated by the company. Observing that debt to equity ratio does not affect the return on assets, financial performance cannot mediate the relationship between capital structure and firm value.

This research implies that the creation of firm value is what companies
should give the concern. The market price, which is higher than the company's book value, will attract investors to invest with the notes that the company has provided a favorable description of the future. Investors are more interested in companies that provide great wealth with little risk. All aspects of company management must be paid more attention, especially in making business policies that will impact profitability and the creation of value. This study is limited in terms of time and object of research. It is expected that the next researcher can add variables and the period of the study. Therefore, the results of the research could be broader.