INTELLECTUAL CAPITAL AND PROFITABILITY TOWARDS FIRM VALUE: ANALYSIS USING QUANTILE REGRESSION APPROACH

Abstract

ABSTRACT

This study aims to analyze the influence of intellectual capital and profitability towards firm value. This is caused by the inconsistency of research result of the variable influence. The research data are 26 companies incorporated in the LQ45 company, the companies selected are the companies owned large capitalization value, so that they are appropriate for this research topic. The research data is analyzed using quantile regression. The researcher believes that the inconsistency of the research result is due to the use of OLS regression model producing the biased estimate. Quantile regression method can overcome the weakness of regression model with OLS approach because it can produce estimation value on the different level. The result shows that intellectual capital and profitability have significant influence towards firm value on the different quantile (levels). Neither intellectual capital nor profitability has no influence on low quantile. This means that both independent variables have impact to the increasing of firm value on the quantile more than 0.2. It is different from profitability that continuously give impact on the high quantile, the intellectual capital will not give impact on firm value when it is on the high quantile (quintiles 0.8 to 0.95).Based on the result of this research, the company’s management must continuously optimize the intellectual capital in order to be able to give a positive influence for the company development. This research uses a quantile regression approach to examine the influence of variables, up to now, especially in Indonesia is still rare the research in the field of accounting using this approach.

KeyWords: Quantile Regression, Intellectual Capital, Profitability, Firm Value