The Influence of Capital Structure to the Firm Value with Profitability as Intervening Variables

The shareholders have the interest to increase the firm value in order to maximize its wealth. This study aims to find out the profitability ability in mediating the influence of capital structure with firm value. The population of this study is the pharmaceutical company listed in Indonesia Stock Exchange (IDX). Census study method is used as sampling method by utilizing eight pharmaceutical companies. Data analysis tool used in this study is the panel data regression with 5% of significance level. The result of this study shows that profitability is able to mediate the influence of capital structure on firm value because the debt will increase the firm value, and the increase of firm value will be bigger if debt can increase the profitability of the company. The samples of this study have not reached the optimum point on their debt level, thus the addition of debt proportion that can increase the profitability can be used in order to achieve higher firm value.     Keywords: capital structure, firm value, profitabilit