The Impact of Financial Decision-Making Quality on Firm Value in Manufacturing Firms

Murtiadi Awaluddin

Abstract

Firm value remains a central indicator of corporate performance. However, empirical evidence on how internal financial decision-making processes contribute to firm value remains limited, particularly in manufacturing firms operating in emerging economies and in studies based on primary managerial data. This study addresses this gap by conceptualizing financial decision-making quality as a multidimensional managerial capability and examining its effect on perceived firm value. A quantitative research design was employed using survey data collected from managers and financial executives of manufacturing firms. Financial decision-making quality was measured through investment analysis, financing structure decisions, and financial risk evaluation, while perceived firm value was assessed using indicators related to competitiveness, growth prospects, and sustainability. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results indicate that financial decision-making quality has a positive and statistically significant effect on perceived firm value. Firms with higher-quality financial decision-making processes tend to report stronger perceived firm value. However, the findings should be interpreted with caution due to the cross-sectional design and the use of perception-based measures, which may be subject to respondent bias. This study contributes to the literature by providing direct empirical evidence on the role of managerial financial decision-making quality as an internal determinant of perceived firm value in emerging economy contexts. The findings highlight the importance of strengthening managerial financial capabilities as a strategic lever for enhancing firm performance.

 

Keywords: financial decision-making quality; perceived firm value; manufacturing firms; emerging economies; managerial financial capability; PLS-SEM.

 

DOI https://doi.org/10.55463/issn.1674-2974.53.5.4


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