Determinants of Firm Value in ASEAN Islamic Banking: The Mediating Role of Profitability

Zahrotul Jazilah (Universitas Islam Negeri Maulana Malik Ibrahim Malang)
Titis Miranti (Universitas Islam Negeri Maulana Malik Ibrahim Malang)

Al Dzahab
Vol. 7 No. 2 (2026): Al Dzahab: Journal of Economics, Management, Business and Accounting

Purpose: This study aims to analyze the influence of intellectual capital (IC), capital adequacy ratio (CAR), and risk management disclosure (RMD) on increasing the value of Islamic banking through financial performance as an intermediary. Design/Methodology/Approach: This study employs a quantitative method with an explanatory-causal approach. The sample consists of 16 Islamic banks in the ASEAN region that have published complete and consecutive annual financial reports for the period 2018-2024, selected using purposive sampling. Data were sourced from secondary sources and analyzed using panel data regression and the Sobel test (mediation test). Findings: The findings reveal that intellectual capital has a notable impact on firm value. In contrast, the capital adequacy ratio and risk management disclosure do not have a significant effect on firm value within ASEAN's Islamic banking sector. Furthermore, profitability plays a crucial role in influencing firm value in this context. Intellectual capital also significantly affects profitability in ASEAN's Islamic banking sector. On the other hand, the capital adequacy ratio and risk management disclosure do not have a significant impact on profitability in ASEAN's Islamic banking sector. Profitability serves as a mediator for the influence of intellectual capital on firm value in ASEAN's Islamic banking sector. However, it does not mediate the effects of the capital adequacy ratio and risk management disclosure on firm value in this sector. Research Implications: The study is unique because it thoroughly evaluates this dual-theory model in different ASEAN countries from 2018 to 2024, adding to the limited cross-country evidence in ASEAN Islamic banking. Unlike intellectual capital, the capital adequacy ratio and risk management disclosure do not provide competitive advantages or credible market signals. This suggests that investors may see them mainly as compliance measures rather than value-creating resources. In practice, regulators and management should move from strict compliance-focused frameworks to standardized disclosures of knowledge-based assets and strategic development of intellectual capital. This approach will ensure sustainable financial performance in the region and increase firm value.