The Impact of Macro Economy on Firm Values and Financial Performance as an Intervening Variable: An Empirical Study of LQ-45 Banking Industries in Indonesia

Which are Exchange Rates, Inflation, Central Bank Rate, as independent variables, on Value Firms (Price to Book Value), as a dependent variable, and its Financial Performance (Return on Assets), as an interning variable. Methodology/Technique - The study uses a path analytical method of the SPSS for determining a strong causal relationship between independent variable and the dependent variable either directly or indirectly. Findings - The paper finds that Exchange Rate does not impact on ROA; Inflation negative significantly impacts on ROA; Central Bank Rates positive significantly impact on ROA; ROA does not impact on PBV; Exchange Rate negative significantly impact on PBV; Inflation does not impact on PBV; Central Bank Rate does not impact on PBV; ROA does not mediate its impact of Exchange Rates on Firm Value (PBV); ROA does not mediate its impact of Inflation on Firm Value (PBV) and ROA mediate its impact of Central Bank Rates on Firm Value (PBV). Novelty - The paper uses corporate performance (Return on Assets) as an intervening variable to test the indirect effect on firm values (PBV). Type of Paper: Research paper