The Relevance of a Firm's Value Determinants Moderated by Inflation: An Empirical Study of Indonesian Manufacturing Firms

The relevance of factors that determine a firm's value is a key aspect of financial analysis in conditions of macroeconomic instability. Inflation acts as an important moderator, altering the strength and direction of these factors' influence on companies' market value. This necessitates an in-depth study of the relationship between inflationary processes and the determinants of business value. This study aims to analyze the factors influencing a firm's value in the Indonesian manufacturing sector, with a particular focus on firm size, age, and inflation. Using an ex post facto quantitative approach, this study examines the relevance of firm size and age to firm value, as measured by Tobin's Q. Data were collected from 163 manufacturing firms registered at the Indonesian Stock Exchange (IDX) using a purposive sampling technique. Data analysis was conducted using Moderated Regression Analysis (MRA) to verify the proposed hypotheses. Research results show that firm size has a significant but negative relevance on firm value, indicating that large asset capacity does not automatically increase market value amid economic uncertainty. Conversely, firm age is not significantly associated with firm value, indicating that long-term operational experience is no longer a guarantee of investor confidence in the era of technological disruption. A crucial finding of this study is that inflation acts as a pure moderator, significantly influencing the linkage between a firm's internal characteristics and market value. This strengthens agency theory, which holds that macroeconomic pressures, such as inflation, widen the conflict of interest between managers and shareholders in strategic decision-making. Additionally, inflation emphasizes the importance of operational efficiency as a corporation's defense mechanism. Overall, the firm's value on the Indonesian Stock Exchange (IDX) is currently decided more by strategic agility and management's ability to align agency interests to face macroeconomic shocks. This study deepens the understanding of the nature of factors affecting firm value and provides recommendations for firm managers, investors, and government agencies.